Working on a basket of products to increase our presence in specialty chemical segments: Navanit Narayan, Chief Executive Officer, Haldia Petrochemicals

We are fully committed to adopting a sustainable approach across our operations and building a more ESG-compliant business environment

Haldia Petrochemicals Ltd. (HPL) is a modern naphtha based Petrochemical Complex. HPL is the second largest manufacturer of polyethylene  in India with a total capacity of 700 KTA. The company has initiated a Rs. 5,500 crore capex plan for an integrated OCU-Phenol project, with a combined capacity of 560,000 TPA of phenol and acetone. Navanit Narayan, Chief Executive Officer, Haldia Petrochemicals talks about the challenges and oppportunities in the Indian petrochemicals industry as well as his company's expansion plan and performance...

What role does Haldia Petrochemicals Ltd. (HPL) envision playing in the broader context of India's petrochemical industry expansion, and how does it plan to collaborate with other stakeholders to achieve these ambitious investment goals? 

The growth of the Indian petrochemical industry is crucial considering it is generating raw materials for various end-use segments such as agriculture, infrastructure, pharmaceuticals, appliances, automobiles, textiles, packaging, construction etc. Integrated petrochemical complexes like HPL generate huge downstream value creation facilitating large investment and employment creation in downstream chemical and polymer processing.  Growth of polymer processing in West Bengal is testimonial to success of such collaborative business models. 

The large petrochemical industry landscape requires investment and collaboration at multiple levels to achieve self-sufficiency to meet growing demand from a large population base. To realize the goal of “Atmanirbhar Bharat” we need to invest in Plant, People and Processes and HPL is ready to collaborate and establish an ecosystem for our stakeholder which perpetuates the growth cycle for all. We have been very focused in our investment strategy to reduce the country's imbalance of niche chemicals and committed an investment of Rs 5,500+ crore in India’s first Integrated Phenol Complex. With our strong relationship with Lummus Technology and bonds created with technology leaders over the last 25 years, we intend to collaborate and invest to bring state-of-the art petrochemical technologies for niche applications in the Indian market.  

We are dedicated to ensuring reliable and cost-effective material supply for our customers along with strong customer and business development support to facilitate large downstream investments in chemical and polymer processing. We have always been proactive in capacity building for human resources to meet growing demand of highly skilled manpower and would work closely with academia, industry bodies, government and other stakeholders to nurture and develop the talent pipeline needed to meet huge demand as we grow.  

You would also appreciate that a positive policy framework is essential to achieve leapfrogging growth of the industry. We, along with industry peers, can collaborate with the Government to develop an enabling policy framework which provides long-term competitiveness of Indian petrochemical industry on the global scale and thus realize the shared dreams of Atmanirbhar Bharat. 

HPL’s financial performance has experienced fluctuations, with operating profits impacted by declining tolling margins in recent years. Could you elaborate on the factors that influenced HPL's revenue performance during FY 2024-25 (so far) and what strategies were implemented to navigate these challenges?  

The petrochemical industry is a typical commodity industry having cyclicity in industry performance. The current financial performance is not typical of HPL and decline in profitability has been witnessed by almost all producers in Asia, Europe etc. 

The major factor influencing current performance is significant capacity creations, especially in China whereas demand growth has been stagnant post covid in several parts of the world. Margins are squeezed globally from intense competition between global suppliers to reach the customer base. In India, we have also been adversely impacted by intense competition after commissioning of one of the largest plants in the country.  

We have been very focused in our approach to manage the current downcycle. We have progressively moved to an enviable cost position for a naphtha-based producer in the country and the world. An organization-wide initiative, Project FEISTY (Focused EBITDA Improvement through Systematic Transformation) was undertaken to optimize conversion and logistics costs to ensure that the current downcycle is well managed. Apart from managing costs, we have also taken a focused approach to add new products and diversify the product basket with countercyclical margin products. 

Can you provide an overview of HPL's capital expenditure initiatives undertaken in FY 2024-25, particularly focusing on any major projects or acquisitions? What's your plan for FY 2025-26?  

We have initiated a Rs 5,500 crore capex plan for an integrated OCU-Phenol project, with a combined capacity of 560,000 TPA of phenol and acetone, through one of our step-down subsidiaries. We expect to complete the project in the first half of 2026. We are also evaluating several chemical downstream projects and expect to take final investment decisions soon. 

In November 2024, HPL signed a license amendment with Lummus Technology to enhance the production capacity of its upcoming Phenol and Acetone Plant in Haldia, West Bengal.  What strategic objectives does HPL aim to achieve with the expanded phenol and acetone production capacities, and how will this impact the domestic and international markets?  

HPL through its subsidiary Adplus is planning to set up a state-of-the-art single location phenol manufacturing facility in India. This capacity expansion aligns with HPL’s ambitious growth strategy and reflects the company's commitment to supporting India’s chemicals industry. Our partnership with Lummus Technology has enabled the efficient design of India’s largest integrated phenol plant. This expansion marks a major milestone for HPL, reinforcing our role in driving the nation’s industrial growth and advancing its role in the production of vital chemical intermediates. 

Phenol project is an idea creating an ecosystem of phenol and acetone downstream which was not available in the eastern part of India. Now, such an ecosystem creates a lot of opportunities not only for us to grow but also for the other players to grow. We see the Phenol project to facilitate significant investment in the downstream segment, further improving the chemical industry ecosystem in West Bengal and the eastern region.  

HPL recently entered into a significant 10-year naphtha supply agreement with QatarEnergy. What factors influenced HPL's decision to secure this long-term naphtha supply agreement with QatarEnergy, and how does it align with the company's strategic objectives? 

HPL sources 50 per cent of its feedstock from the Middle East and relies on local refiners for the rest of its feedstock needs. Managing crude oil fluctuations and its impact on our feedstock prices remains a major challenge. The fluctuating crude prices due to various global factors have encouraged us to get into a strategic 10-year agreement (through its 100 per cent subsidiary, HPL Global Pte Limited, Singapore) with QatarEnergy, to secure long-term naphtha supply. Under this agreement, QatarEnergy will supply a total of up to two million tons of naphtha to HPL over the next ten years, starting from the second quarter of 2024. This agreement is in line with our focused and innovative approach to secure long-term competitive advantage.   

HPL announced plans to establish a polycarbonate production plant in West Bengal, with an estimated investment of over Rs 8,500 crore. Could you elaborate on the factors influencing HPL's decision to venture into polycarbonate production, and what are the anticipated benefits for the company and the region? 

We would like to reiterate our vision to create an ecosystem which will transform not only West Bengal but eastern and northeastern regions of India. Chemical downstream projects are one of the means to create that ecosystem. As a part of these, we are evaluating multiple opportunities including Polycarbonates which are entirely being imported in the country. These projects are synergic to our current and future chemical product basket. However, these are still in early stages of evaluation and would not like to assign any capex, timeline and benefits at this stage.  

HPL is commissioning a specialty Low Molecular Weight (LMW) polymer project, expected to increase the topline of the specialty chemical business by about Rs. 100 crore per annum. What are the key applications and markets targeted by the LMW polymer project, and how does HPL plan to position itself as a leading player in the specialty chemicals segment? 

Adplus, a step-down subsidiary of HPL inaugurated its state-of-the-art zero-waste LMW PE Wax manufacturing plant in Haldia in 2024. The products, under the brand “Polyfast”, is providing benchmarked quality product to various industries such as plastics and rubber, bitumen roofing membranes, hot melt adhesives, paints, ink, toners, paper coatings, high altitude road surfacing, and even cosmetic and skin care products.

This is a small foray in the specialty chemical segment by the group. However, we are keenly evaluating and working on a basket of products to increase our presence in specialty chemical segments and expect to unveil our road map soon.

What digital transformation initiatives has HPL implemented recently to enhance operational efficiency and maintain a competitive edge in the petrochemical industry? 

Digital transformation has played an integral role for us in building an ecosystem of trusted business stakeholders both internal and externally. HPL has adopted a multi-pronged approach for its digital journey towards process automation, reliability, troubleshooting and to improve operational efficiencies.  

In a recent technological advancement initiative, we have introduced Real-Time Optimization (RTO) services for Naphtha Cracker Unit (NCU). This RTO system is supporting HPL’s journey of achieving operational excellence through undertaking technology driven transformative programs aimed at process/ performance optimization.

An integrated RTO allows HPL to take full advantage of the plant’s overall economic potential. The goal of RTO is to maximize the profit and excellence of the NCU functions and establish the target set points for the operating variables at which the profit is maximum.

How is HPL integrating sustainability into its operations and product offerings to address environmental challenges and contribute to a greener future?

We are committed to leaving no stone unturned in our endeavour of harbouring a sustainable approach in our operations and developing a more ESG (Environment, Social and Governance) compliant business environment. A dedicated ESG team is working diligently to develop and implement sustainable actions towards environmental conservation. 

We have installed 1 MWp Solar Power Plant in December 2021. In terms of rainwater harvesting, we use more than 8, 74,356 m3 of rainwater (FY 23-24), thereby conserving the natural resources (fresh water). We are implementing several water recycle and reuse projects and progressing gradually towards Zero Liquid Discharge (ZLD).

With a total 1.25 Lac of trees in our greenbelt, we are planning to further increase the number of trees. In terms of clean technology, we are implementing Pipe Coal Conveyor to transport coal from port to plant to replace transfer through trucks. 

HPL has a history of engaging in CSR activities, focusing on areas such as education, healthcare, and environmental sustainability. Could you highlight some of HPL's key CSR initiatives undertaken in 2024, and how they have impacted the communities involved? 

HPL through its subsidiary Adperma (Advanced Performance Materials Private Limited) in FY 2024-25 focused on 7 verticals in line with the SDGs and India’s position in strengthening the SDG Goals. The verticals include education, healthcare, infrastructure, sustainable development, women empowerment and equal status, sports and environment.  

Under the education category, the company has taken up support in building of a new school in a remote village, infrastructural development projects for schools, building of smart classrooms, upgradation, and construction of science laboratories for schools which were spread in and around Purba Midnapore district. For healthcare - medical equipment, ambulances donation to medical facilities and free medical checkup camps have been organised. Under women empowerment projects, we are training women to make products out of water hyacinth and jute, and sanitary napkins. To empower underprivileged youth, we have also conducted two and three wheeler service technician training in Haldia and fruit tree plantation across schools in Haldia continued for the second year as a part of environmental activity.