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Reliance to shut Pune facility

August 11, 2007 12:25 IST

Reliance Industries will soon close down its polyester intermediate mono-ethylene glycol manufacturing facility at Kurkumbh near Pune, which was acquired two years ago, to house centralised storage facilities for its retail operations under Reliance Retail.

The Kurkumbh unit, which manufactures MEG from industrial alcohol, has 90 employees on its rolls and another 250 contract labourers.

RIL has already started to wind up some of the smaller plants at the 150-acre site, about 70 km from Pune. Plans are afoot to shift its entire equipment to other units of RIL and Indian Petrochemicals Corporation across Maharashtra and Gujarat.

 While RIL will transfer the employees at Kurkumbh to other units, it will retain the local contract labourers for the new venture. Sources said RIL planned to convert the facility within a year into a centralised retail goods and perishable items storage unit with advanced cold chain management systems. It will serve a 100-km area, including Pune.

Reliance Retail, with plans to invest about Rs 250,000 crore (Rs 2,500 billion) within next five years to set up a chain of hypermarkets, super markets and speciality stores across the country, was likely to set up a similar facility at Navi Mumbai to serve the Mumbai region, sources said.

A RIL spokesperson declined to comment.  Sources said though the makeover would require huge investment, difficulty in finding a large area for the warehousing needs of Reliance Retail prompted the decision. Further, production at the unit was hit last year due to non-availability of raw material from local sources and RIL had to import about 400 million litres of molasses to run the plant.

"The plants are new and can be integrated into our other MEG plants. We have three MEG manufacturing units at the Hazira petrochemical complex in Surat," a RIL executive said. In a similar move, RIL is currently converting its National Organic Chemicals Industries premises near Turbhe in Navi Mumbai as its corporate headquarters, by shifting the petrochemical plant there to other locations. 

RIL had acquired the defunct glycol manufacturing division of SM Dyechem in August 2005 for Rs 105 crore (Rs 1.05 billion) from the Industrial Development Bank of India, mainly to venture into production of MEG from alcohol, as an alternate source of ethylene oxide to manufacture MEG.

The acquisition helped RIL to become the fifth largest MEG manufacturer in the world, with an additional capacity of 80,000 tonnes a year to reach a capacity of 8.32 lakh tonnes a year. RIL spent another Rs 70 crore (Rs 700 million) to revive the unit, and had to set up an additional effluent treatment facility to treat the discharge from the plants at Kurkumbh, which is a land-locked area.

PB Jayakumar in Mumbai