IVL 'on course' to achieving target by 2014; eyeing more acquisitions
Indorama Ventures, the world's largest integrated polyester chain manufacturer, has no plan to slow down its acquisitions or investment in green-field projects even though it is likely to exceed its production capacity target in three years.
“To have a combined capacity of PTA, PET and polyester exceeding the target of 10 million tonnes by 2014 is not our problem after we said we’re investing US$700 million (Bt21.7 billion) for PTA, PET and polyester plants in India. Whether we’ll adjust the target depends on the updated capacity by the end of this year,” CEO Aloke Lohia said.
PTA stands for purified telephthalic acid and PET for polyethylene terephthalate.
Lohia was speaking last week on the sidelines of IVL’s annual conference, which gathered all executives of the company’s subsidiaries worldwide to update them on the status of the petrochemical industry and economic situation and to discuss the market trend this year.
Since the company in 2010 embarked on an ambitious plan to invest $3.8 billion on mergers and acquisitions (M&A) and green-field projects to raise its production capacity to 10 million tonnes by 2014, it has spent $1.5 billion and achieved capacity of 6.5 million tonnes from its wholly owned companies and joint ventures. It is confident that it can achieve the target by 2014.
IVL’s operations in India will go online by 2014 with annual capacity of PTA of 1.2 million tonnes, PET of 500,000 tonnes and polyester of 300,000 tonnes.
The Middle East was the next destination for IVL’s polyester chain plants. The plant under consideration in a Middle Eastern country will produce only PTA and PET with the same capacity and investment as the Indian facilities. The company expects to finalise the project by the middle of this year.
“We expect to have 7.5 million tonnes by the end of this year. If we can have manufacturing in the Middle East in addition to the certain capacity in India, we’re likely to have more than 11 million tonnes by 2014,” he said.
The company will keep an eye open for opportunities in the markets where the demand for PET and polyester to produce water bottles and garments is growing. Despite the economic uncertainty in Europe, where IVL acquired some polyester companies like Trevira, IVL is still confident that the nature of consumer-driven products like bottled water and apparel will boost its growth.
IVL would expand both upstream and downstream in the polyester chain. The company’s strategy is to acquire through M&A assets in speciality markets, which are for downstream petrochemicals. Then it will invest in green-field projects for upstream markets, which are the PTA and PET products, to ensure enough supply for the downstream businesses. This strategy will give IVL competitive operating costs and coverage of the whole chain for polyester and PET.
IVL expects revenue to climb to $8 billion this year from about $6 billion last year.
The company also wants to diversify into biochemicals, which may be the next phase of its investment after 2014. The talks between IVL and Netherlands-based Purac to develop a polylactic acid plant in Thailand with capacity of 10,000 tonnes per year is at an advanced stage. It is a good step for developing biochemicals soon, he added.
