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Corporate - Outlook
Shell Global to advise Chennai Petro on process improvements

M. Ramesh

Chennai , Aug. 2

Chennai Petrochemical Corporation Ltd (CPCL) has mandated Shell Global Solutions Inc to identify the gaps in its various areas of operations, such as energy conservation and product mix, and suggest remedial measures.

CPCL's Managing Director Mr K.K. Acharya told Business Line today that with process improvements the Manali refinery's gross refining margin (GRM) could easily be raised by 50 cents a barrel - or Rs 100 crore addition to the bottomline.

In the first quarter of the current year, CPCL achieved a GRM of $6.64, after a subsidy burden of $1.9.

Resid upgradation

To raise the margins, the company is planning a `resid upgradation project,' which would `crack' the heavy furnace oil that collects at the bottom of the refinery into the higher value petrol and diesel. But this project is a few years away.

CPCL expects the pre-feasibility report of the consultants - Engineers India Ltd - by the end of this month, after which it will place the project proposal before its board of directors.

The project could cost anywhere between Rs 4,000 crore and Rs 5,000 crore.

But in the meantime, the company intends to do its best to raise margins through process improvements.

There is another 50 cents-a-dollar gain to be made if the central sales tax could be avoided. CST cannot be avoided unless CPCL is merged with its parent company and buyer of its products, Indian Oil Corporation.

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