Textile major Indo Rama Synthetics (India) Limited (IRSIL), the largest unit in Butibori industrial estate, is planning an 3,500 crore expansion, but not in Nagpur. A site away from Nagpur may finally get some strategic advantage for the company whose Chairman OP Lohia, often laments about the decision to set up a plant here. The region saw a series of development on the industrial investment front during the last year. Mihan saw fresh investment from IT major Infosys, defence PSU Bharat Dynamics Limited (BDL), and is now setting up a plant in Amravati and BHEL planning to have one in Bhandara.
IRSIL and Thailand-based Indorama Ventures Limited (IVR), a company promoted by his brother Aloke Lohia, have signed a memorandum of understanding (MoU) to build a plant manufacturing pure terephthalic acid (PTA). It is the raw material for making polyester yarn which is produced in IRSIL's Butibori plant. With the new plant, IRSIL also plans to foray into making plastic bottles for which PTA is a raw material too. This will make it the second company after Reliance to have an in-house PTA making capacity.
"So far we have been sourcing PTA through import as well as domestic vendors. However, having an own plant will lead to an assured supply of raw material and also improve margins," Lohia told TOI. He was in the city on a visit to the Butibori plant.
Even as IRSIL is the largest investor in Butibori, for Lohia choosing Nagpur was not a very good decision. The plant started in early 1990s with this company becoming the second investor in newly set up Butibori area. "We chose Nagpur hoping that it would eventually emerge as a textile hub, where yarn made at this plant would be consumed. But it failed to develop as one, despite several efforts by local leaders. Now, the end-users of yarn are far-off in down south in Tirupur or Gujarat. Supplying there adds to the cost," he said. There was a choice to start in Panipat as IOC had plans to have a PTA plant those days, which eventually started. This would have ensured proximity to the raw material sourcing centre at least. Nagpur is neither close to a raw material source nor the end-users' market, he said.
About the new plant he said, "It will require around 200 acres of land and will be set up in a coastal area. As the raw material for making PTA will have to be imported proximity to the ports will lead to a logistical advantage instead of having the plant in Nagpur," said Lohia. The company is in talks with various governments both in Maharashtra as well as southern states for getting the land. "We may go for government land but are open to other options too," he said. The plant may take three years to start.
Lohia, however, evaded a direct reply on why should a corporate not directly purchase private land offering the oustees a substantial price. "The country has to choose between a higher GDP or agriculture," was his answer.