South  Asian Petrochem and Egyptian Petrochemicals Holding Company will jointly float a  new company, Egypt India Pet Chem, in September this year.

 

SAPL intends to start a new manufacturing facility in  Damietta in Egypt with an installed capacity of 315,000 tonnes a year.

The unit will produce PET resin. The greenfield project will be set up in association with a Chinese engineering company. It has entered into a JV with ECHEM, a nodal agency for the development of the petrochemicals industry in Egypt. SAPL will hold 70 per cent of the equity in its Egyptian subsidiary.

 

The estimated cost of the project is around $100 million. The money would be raised through a mix of equity and debt.

 

Egyptian and European banks have already been approached for the same.

 

Canara Bank [Get Quote] was funding $15 million, said C K Dhanuka, vice-chairman, SAPL. The manufacturing unit will be  operational by the end of 2009.

 

The company plans to penetrate the markets in Western Europe, West Asia and Africa. It aims to tap institutional buyers in the region through direct sales.

 

The proposed project in Egypt is in line with the company's strategy to make an enhanced focus on the export market to tap emerging global opportunities.

SAPL's turnover in the international market increased by 15 per cent to Rs 691 crore (Rs 6.91 billion) last year, while its domestic turnover declined from Rs 336 crore (Rs 3.36 billion) in 2005-06 to Rs 327 crore (Rs 3.27 billion) in 2006-07, a fall of  2.6 per cent.