GAIL Mangalore Petrochemicals Limited, (formerly JBF Petrochemicals Limited), a 100% subsidiary of GAIL (India) Limited was entirely taken over from JBF Industries Limited in a competitive bid in CIRP process. The scope of the entity includes setting up a 1.25 MTPA Purified Terephthalic Acid (PTA) plant at Mangalore Special Economic Zone (Mangalore SEZ or MSEZ) in Karnataka. Ayush Gupta, Director (HR), GAIL India & Chairman, GAIL Mangalore Petrochemicals Limited talks about the company's implementation strategy and how GMPL is going to add to GAIL's petrochemicals portfolio... 

What is the current status of GAIL Mangalore Petrochemicals Limited (GMPL) and how its collaboration with GAIL (India) influences its strategic direction and what synergies have been realized from this partnership?

The GAIL Mangalore Petrochemicals Limited (GMPL) plant was acquired through National Company Law Tribunal (NCLT), followed by a capital infusion to revive its operations. The plant had been non-operational for seven years, so we first needed to assess the extent of damage and identify components that required replacement. While feasibility reports were available, several aspects remained uncertain at the outset.

I am pleased to share that both the estimated cost and timeline are well within control. In fact, the actual costs have come in lower than initially projected, and the schedule remains largely on track. Although we had initially targeted commissioning the plant by August or September 2025, there has been a slight delay. We now expect to commission the plant by the end of December 2025 or, at the latest, early January 2026. Trial production should begin around that time. With pre-commissioning activities already underway, we have initiated the boiler revival process and are progressing in phases, with a goal to complete this by October 2025.

So far, a total capital infusion of approximately Rs 59,691 lakh has been made, and the plant revival is progressing steadily. Of this, Rs 39,425 lakh has been invested as equity. The majority of this capital has come from GAIL, which underpins GMPL’s financial strength. GAIL’s board had approved this equity investment at the time of acquiring the plant through the NCLT process, ensuring a guaranteed cash flow within the approved limits.

Two critical aspects for commissioning the plant revolve around raw material sourcing and operational readiness. One key input is paraxylene, the primary feedstock for producing PTA, which is essential for polyester manufacturing. Initially, we had planned to source paraxylene through an agreement with MRPL, and discussions with them are ongoing. At the same time, we are exploring the option of importing paraxylene via the sea route. Infrastructure is being developed for this purpose, including laying pipelines from the port to the plant. We are actively coordinating with port authorities, working on setting up a pumping station, and arranging temporary storage facilities at the port to ensure an uninterrupted supply chain. In the coming month, we plan to issue an Expression of Interest (EOI) to onboard additional suppliers and create a diversified, empaneled vendor base.

On the marketing front, we have already initiated outreach efforts and are in discussions with potential customers. GAIL’s marketing team is providing strong support in finalizing warehousing and sales agreements, leveraging their established presence in the petrochemical sector. Both paraxylene sourcing and PTA marketing will be managed by GAIL’s marketing division.

How do the company's recent initiatives, such as the PTA plant revitalization, contribute to India's vision of self-reliance in petrochemicals under the Atmanirbhar Bharat initiative?

With PTA added to the product mix, GAIL’s petrochemical portfolio will become fully integrated across all product segments within the next year. This positions us strongly in the market, especially as domestic demand for petrochemicals is projected to triple over the next decade. Currently, a significant share of these is imported, creating substantial opportunities for import substitution and enhancing the long-term prospects of India’s petrochemical sector.

GAIL is in the early stages of planning another ethane cracker plant. While the financial structuring is yet to be finalized, this move is aligned with anticipated demand in the petrochemical sector. Meanwhile, the PTA to be produced at the GMPL plant represents a niche product with substantial demand, particularly in the textile industry. GAIL’s established reputation for delivering high-quality products will be a significant advantage as we enter an already competitive market across India. This will be crucial, as a robust marketing strategy must accompany the commencement of production.

We are also receiving strong support from our technology licensor. Notably, we successfully renegotiated the licensing agreement with INEOS, which was originally in place with JBF Petrochemicals Limited. Given the seven-year hiatus and the absence of returns during that period, we were able to secure a more favorable deal. This renegotiation is a key milestone, as the licensor's backing during the commissioning phase, and beyond, will help ensure consistent product quality and long-term success for GMPL.

Sustainability and social responsibility are also central to our commissioning efforts. One of the significant challenges during the plant acquisition was resolving issues related to project-displaced persons. Out of 115 individuals identified, an initial list of 75 was prioritized for employment. Almost all of them have now been re-engaged, many of whom had worked at the plant previously, contributing valuable experience and support to the commissioning process. A few opted not to join, and the remaining are in the process of being integrated.

I must appreciate the fact that we have received support from the Port Authority and all the government departments. Besides, the Development Commissioner has been very helpful to make sure that the plant gets reviewed and commissioned soon. The Ministry of Petroleum and Natural Gas played a vital role in getting the clearances and approvals besides helping in resolving the issues at ground level. 

With your new plant getting commissioned, how do you see GAIL as a major player in the Indian petrochemical scenario?

GAIL is poised for a significant capacity expansion across its petrochemical portfolio. With the commissioning of the PTA unit at the GMPL plant, alongside the existing BCPL portfolio, and the upcoming Usar and Pata petrochemical plants, we are entering a transformative phase. Once operational, the GMPL plant will contribute 1,250 KTA of PTA, Usar will add 500 KTA, and Pata will bring in 60 KTA. These additional volumes are expected to come online within the next year, marking a major shift that will significantly impact the petrochemical landscape in India. This expansion will undoubtedly alter market dynamics and intensify competition. While it will be a challenging journey for GAIL to establish a strong market foothold, we are confident in our strengths—particularly our commitment to product quality, fair contracting practices, and reliable execution, all hallmarks of a Maharatna public sector enterprise.

Historically, GAIL lacked a diverse product portfolio, which limited our ability to scale competitively. However, with these three plants nearing commissioning targeted for late 2025 to early 2026, we will soon be in a position to serve a broad spectrum of customers across the country. The coming year promises to be exciting, as several other players are also eyeing entry into the market. Over the next two years, we anticipate a game-changing evolution in India’s petrochemical sector.

Why did you choose the PTA for this GMPL plant? Is it going to cater to the domestic demand or you are also looking at exporting as well?

In the initial phase, there wasn’t much of a choice as the plant was originally designed for PTA production. While exploring options for portfolio expansion, we identified PTA as a missing product in GAIL’s offering. This particular plant became available at the right time, and although other players were interested, GAIL emerged as the highest bidder.

We also see potential for further expansion, given the availability of additional land. Since the plant is located within a SEZ, there are certain export obligations we need to fulfill, and we are open to exploring those opportunities when they arise. For now, however, our primary focus remains on catering to the domestic market.

What change you brought it in your strategy to meet the tight deadline within the estimated budget?

Several critical factors contributed to the success of this project, beginning with clear and structured planning from day one. This included early and active engagement with key stakeholders such as MSEZ and the relevant ministry. Initially, there was scepticism in the market, with concerns that GAIL had overpaid for the asset. We were aware that any deviation from our profitability projections would be closely scrutinized, so we adopted a disciplined approach from the outset.

A key strategic decision was to operate with a lean team, just 50 people, but their dedication and efficiency were exceptional. They played a vital role in resolving major challenges, including settling issues with project-displaced families, renegotiating the license with INEOS, and coordinating with vendors. Their efforts ensured that all critical matters were handled professionally and on time, avoiding potential delays or cost overruns.

During the period when the licensor agreement was being renegotiated and the EPC contract was under finalization, the team proactively carried out significant groundwork. This helped us assess the plant's equipment condition and saved considerable time, boosting our confidence in the plant’s readiness. The experience of GAIL’s project team was instrumental, especially during maintenance activities, ensuring smooth progress. The small but highly capable team deployed at GMPL proved to be one of the best, playing a crucial role in managing risks and keeping the project firmly within both time and cost parameters.

Given the fluctuations in global petrochemical markets, what strategies are in place to mitigate potential risks?  Five years from now, what would be the contribution of petrochemicals that you envisage because the market is huge?

The petrochemical market is inherently volatile and cyclical, making it challenging to predict price movements, especially with numerous plants operating globally. However, this very cyclicality also presents opportunities to capitalize on favorable market conditions. The upcoming five-year cycle appears to be entering an uptrend, making GAIL’s entry into this space both timely and strategic.

Expanding into a broader product range at this juncture positions GAIL advantageously. The next five years are expected to be transformative for the petrochemical industry in India, and GAIL’s portfolio expansion is likely to contribute significantly to its overall revenue, and we hope, to its profitability as well.

In terms of Corporate Social Responsibility (CSR), GAIL has been known to help the local communities. With the commissioning of plant on anvil, how do you plan to help the local community?

From a local economic perspective, the revival of the plant, which had been shut down for seven, will bring widespread benefits. Beyond the regular workforce, a significant number of contractual employees will be engaged, positively impacting nearly 500,000 families. The local community is understandably enthusiastic about the new livelihood opportunities this project will create.

In addition to directly employing members of the project-displaced families, the commissioning of the plant is expected to generate further employment needs. Opportunities will also arise through transport contracts and various support services, helping stimulate the entire local economy and surrounding ecosystem.