Profit-making Assam Petro-Chemicals Limited Incurring Loss Now

Staff Reporter

Guwahati: The high input cost and lower price realization of methanol resulted in a financial loss of Rs 7863.74 lakhs for Assam Petro-Chemicals Limited (APL) during the financial year 2023-24. One of the few profitable state government undertaking companies, APL had been running at a profit until 2021-22, after which the company has been running at a loss due to the high import price of methanol.

Like 2022-23, the financial performance of APL was not good during the year ending on 31st March, 2024, because of the high production cost of methanol. The company purchased 90% of natural gas used as feedstock at the Administered Price Mechanism (APM) gas price of USD 6.5 per Metric Million British Thermal Unit (MMBTU) and the balance 10% at the non-APM average price of USD 8.19 per MMBTU, the 2023-24 annual report of APL said.

This feedstock price was very high, due to which the cost of material consumed was paged at Rs 9124.00 lakh against the sales turnover of Rs 8781.25 lakh during the year ending on 31st March, 2024. The company earned a total income of Rs 8949.89 lakhs in the financial year ending on 31st March, 2024, which was 17.24% less than the previous financial year.

It should be mentioned here that 2022-23 started with a very disappointing note for the company as the Government of India hiked the natural gas price by 210% for the period effective from 1st April, 2022, to 30th September, 2022, and a decline in the methanol price in the international market. The company earned total income of Rs 10,813.97 lakh in the financial year ending on March 31, 2023, which was 17.14% less than the previous financial year of 2021-22.

However, the company incurred an unprecedented loss of Rs 6736.07 lakh during the financial year 2022–23 compared to Rs 2267.77 lakhs of profit in the immediately preceding financial year. The company earned revenue of Rs 10,405.60 lakhs from production during that year.

The high input cost and lower price realization of methanol resulted in a financial loss of Rs 7863.74 lakhs during the financial year 2023-24. The company earned revenue of Rs 8781.25 lakh from operations during the year. The revenue share of formalin and methanol sales in the financial year 2023-24 was 86.77% and 13.23%, respectively.

It was stated that the price of methanol and formalin in India remained lower in FY 2023-24 compared to the preceding year. The company sold 91,319 MT of methanol produced at the 500 TPD methanol plant during the year. The price of methanol in India depends on its import price at Kandla Port, Gujarat. The average price realization of methanol during the Financial Year 2023-24 was less than the previous year due to the lower methanol import price at ex-tank at Kandla Port.

Assam Petro-Chemicals Limited has been in the petrochemicals business for the last 53 years. The company is producing methanol and formalin in its plants located at Namrup in the Dibrugarh district of Assam. The installed daily production capacities of these two methanol and formalin plants are 100 tonnes and 125 tonnes, respectively. The company is also operating a formalin conversion plant at Raninagar, West Bengal, which has a daily production capacity of 25 tons. The company successfully commissioned its new 500 TPD methanol plant on 8 April 2023, which was formally inaugurated by Prime Minister Narendra Modi on 14 April 2023. This new plant has already achieved its rated capacity of methanol production.

The annual installed production capacities of methanol and formalin, considering 330 days of operation of the plants in a year, are 33,000 MT and 41,250 MT, respectively. Commissioning of the 500 TPD Methanol plant has added 1,65,000 MTs of Methanol to its annual installed capacity. The 200 TPD Formalin project is under implementation stage, and as per the revised schedule, this plant will be commissioned in October 2024. On successful commissioning of the new 200 TPD formalin plant at Boitamari, the annual formalin production capacity of the company will be increased to 1,07,250 metric tonnes. The company is marketing its products in India and also exporting to Bhutan, Nepal, and Bangladesh at a globally competitive price.

The additional saleable quantity of methanol and formalin will enable the company to venture into new geographical boundaries, cater to the growing demand of the existing customers, and reduce imports of equivalent quantities of methanol.

Methanol is one of the most demanded chemicals globally. Global methanol market size is USD 30.9 billion in 2023 and set to become USD 38.2 billion by 2028 at a Compounded Annual Growth Rate (CAGR) of 4.2%. The Indian methanol market is completely dependent on the imported methanol. India imports about 96% of its total methanol demand. The domestic demand for methanol in FY 2022-23 and FY 2023-24 was 2846.32 thousand MT and 3191.04 thousand MT, respectively.

Also Read: Assam State Fertilizers and Chemicals Limited Staff going without Pay for 5 Years (sentinelassam.com)

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