Deepak Nitrite diversifying into import substitute polymers

Chemical intermediates major Deepak Nitrite is diversifying into engineering plastics or polymers and has lined up an investment of about ₹14,000 crore over the next 4-5 years to manufacture polycarbonate, methyl methacrylate (MMA), poly methyl methacrylate (PMMA) resins and compounds as import substitutes. Most of this capex will come up at Dahej in Gujarat, chairman and managing director Deepak C Mehta tells Fortune India.

Nearly 20% of India’s total polymer demand is currently met through imports. In the financial year 2022-23, India’s polymer imports were 3.93 million tonnes and the polymer trade deficit was about 3.3 million tonnes, according to estimates of the Chemicals and Petrochemicals Manufacturers Association (CPMA). Total polymer demand in India was 17.1 million tonnes and had a 12% growth in FY23. The India polycarbonate market is estimated to be about 180,000 tonnes and is expected to reach 280,000 tonnes by FY32, according to research firm Chemanalyst. At present, major companies catering to polycarbonate demand in India are multinationals like Covestro AG, Lotte Chemical Corporation and SABIC, say sources.

Polycarbonate, MMA and PMMA are material science-based advanced engineering plastics and have wide applications. Most of these products are at present not manufactured in India, despite double-digit demand growth every year in recent years. Polycarbonate resin and compounds are used extensively in electrical and electronic components, high-end telecommunications devices, automotive, aviation and defence, renewable energy, medical devices and consumer durables. The plant will also manufacture MMA and PMMA resins and compounds used in construction, lighting, automotive, TV and smartphone displays, healthcare devices, cabinets and furniture.

Similarly, the plant will also produce Aniline, a primary building block for making rubber chemicals, dyes and intermediates, key pharmaceuticals, agrochemical and speciality chemicals, electronic chemicals and coatings and certain polymer applications. Deepak Nitrite has floated a new arm Deepak Chem-Tech to implement the expansion.

"These materials can withstand high temperatures and can be used in emerging sectors - like in making casings for batteries, the semiconductor industry, and automobiles using several polycarbonate products like headlights etc. We are starting with a two lakh tonne capacity," says Mehta.

Deepak has signed a term sheet with Petronet LNG to offtake 2.5 lakh tonnes of propylene, the main raw material, and 11000 tonnes of hydrogen from Petronet's Dahej unit. "That will also help us to get into several hydrogenation-based products where we are already and we can replace it with the hydrogen that we get from Petronet," explains Mehta.

In 2018, Deepak Nitrite made a similar diversification into phenol, solvents acetone and Isopropyl alcohol (IPA), all import substitutes. It started with two lakh tonnes and now the capacity is three lakh tonnes. Deepak Phenolics had to debottleneck its plants to meet demand last year. Mehta says in the next 4-5 years, phenol capacity will be expanded to about 7 lakh tonnes a year. That move has so far saved more than $3 billion of foreign exchange for the country, says Mehta.