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CHAPTER III

PROFILE OF KOTHARI PETROCHEMICALS LIMITED

Company History - Kothari Petrochemicals Limited, Chennai

Kothari Petrochemicals Limited (KPL) is a public limited company in

the private sector belonging to the H.C. Kothari Group of Companies. The

Company has been promoted by Kothari Sugars and Chemicals Limited

(KSCL) the flagship company of H C Kothari Group. The Company was

incorporated at Madras on 28/04/1989 under the name and style of Kothari

Petrochemicals Limited.

During the period 1989-95, the company was exploring the viability of

various petrochemical projects, and evaluating their techno-economic

feasibility.

The Company is presently implementing a project for the manufacture

of Caustic Soda and Chlorine at Karaikal in the Union Territory of

Pondicherry.

Main Objects of the Company

The main objects as set out in the Memorandum of Association of the

Company are as follows:

1. To implement letters of intent/licences received/to be received by

Kothari Sugars and Chemicals Limited, a Company registered in the

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state of Tamil Nadu relating to Petrochemicals Project to be established

at Manali Complex in the State of Tamil Nadu or elsewhere in India.

2. To carry on in India and in any part of the world the business of

processing, converting, manufacturing, formulating, using, buying,

dealing, aquiring, storing, packaging, selling, transporting, distributing,

importing, exporting and disposing of all types of petrochemicals like

Polybutenes, lubricant and lube oil additives, Naphtha, Methane,

Ethylene, Propylene, Butanes, Naphthalene, Cyclohexane,

Cyclohexanone, Benzene, Nitro Aromatics, Phenol, Acetic Acid,

Cellulose, Acetate, Vinyl Acetates, Caprolactam, Adipic Acid,

Hexamethylene, Diamine Orthoxylene, Pthalic Anhydride, Alkyd resins,

Unsaturated Polyester Resins, Polyester fibres and films, mixed Xylenes,

Paraxylene, Meta-xylene, Toluene, Cumene, Phenol, Styrene, Synthetic

Rubbers, Butanes, Butadiene, Methacrolein, Maleic Anhydride,

Methacrylates, Urea, Methanol, 1-2 Butane diol, Formaldehyde, UF, PF

and MF resins, Polymethyl Methacrylate, acetylene, PVC, Methanol,

Melamine and derivatives thereof, whether liquid, solid, or gaseous,

dichloride, Ethylene Oxide, Ethyleneglycol, Polyglycols, Polyurethanes,

Paraxylenes, Polystyrenes, Polypropylene, Isopropanol, Acetone,

Acrylonitrile, Acrolein, Acyclicesters, Acrylic Fibres, Allyl Chloride,

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Epicholorohydrin, aliphatic and aromatic alcohol, aldehydes, ketones,

vinyl chloride, acrylics, and all gases, Epoxy resins and all other petro

chemical products and polymers in all their forms like resins, fibres,

sheets, mouldings, castings, cellophane, disinfectants, insecticides,

fungicides, deodorants, as well as bio-chemical, and other preparations,

Hydrogen peroxide and compounds of peroxide, Nitrochloro benzenes,

Chlorobenzenes and derived compound thereon.

3. To carry on in India and in any part of the world business of processing,

converting, manufacturing, formulating, using, buying, dealing,

acquiring, storing, packaging, selling transporting, distributing,

importing, exporting and disposing all types of chemicals, heavy

chemicals including Soda Ash, (Sodium Carbonate) of all grades,

Sodium Bicarbonate of all grades, Sodium Chloride of all grades,

Caustic Soda of all grades Compounds, Citric Acid and its derivatives,

Hydrochloric Acid, Calcium, Oils, Greases, Synthetic chemicals derived

from Petroleum hydro-carbons elements chemicals compounds and

products of any nature and kind whatever including by-products,

derivatives and mixtures thereof.

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Corporate Vision

Kothari Petrochemicals vision is “to be a vibrant force that continually

innovates to add value to customers, employees and all stakeholders including

nature.” We remain committed to environmentally sustainable development

and continual innovation and investment to be the market leader in the global

Polybutene market.

Our Values

• Energy that builds confidence, vibrancy and teamwork backed by

youthfulness and group history

• Freedom that breeds professionalism, innovation, growth, trust

• Quality that manifests in products, people, processes

• Nature that is reinforced by eco-friendly decisions on all business

initiatives

Personal Mission Statement of Our Team Members

To use our capabilities to the maximum in delivering something of

significance every day.

Outlook

We are thus well positioned to supply the world market with

international-quality Polybutene to meet this growing demand.

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The versatile applications of the Polybutene (special grades) have incited

a potent demand for its derivatives across Asia Pacific, Middle East, Far

Eastern Countries and USA. The strongest growth in Polybutene demand is in

Asia, a region in which Kothari has grown as a trusted supplier to many large

companies, such as Exxon Mobil, Infineum, Chevron, BP Castrol and Lubrizol.

We are focused on effectively combining our core competencies and

cognizance of the industry to capture a sizeable global market share as well as

bring our Polybutene faster to market. To this extent, we are constantly

expanding our global network of facilities and service centers.

Quick Statistics

Exports of our products are climbing at 135% per year and there has

been an amazing 603% increase since 2006.

A staggering increase in the exports every year is a key reason of our

rapid expansion around the world. Our product’s acceptance by global giants

like Infineum and Castrol because of its quality and dependability of delivery

drives us to script unheralded chapters in the industry.

We are growing by investing in infrastructure and global talent, and

continue to strengthen our position by means of high quality production plants,

convenient locations, and above all a very amicable and long-term relationship

with our customers and employees.

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Global Strategy

To accentuate our global presence, we will:

• Recruit and retain the best talent

• Respond quickly to our customers' needs in order to build their

confidence in our company and our products

• Work effectively and efficiently with other organizations

Twenty countries around the world to which we export our product

Belgium

Brazil

China

Indonesia

Japan

Malaysia

Netherlands

Portugal

Saudi Arabia

Singapore

South Africa

Taiwan

UAE

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Germany

France

UK

USA

New Zealand

Australia

History and Overview

Even before India tasted the nectar of independence one man had already

set out to chase his dreams, to script one of the major success stories of the

century. Late Mr. C.M. Kothari, in the year 1919, laid the foundation for the

emergence of a multifaceted conglomerate – The Kothari Group.

After him his son, the late Mr. H.C. Kothari took up the task of

accomplishing his father’s dream and from then the wheel never stopped. With

Mr. H.C. Kothari at the helm, the Group flourished with numerous path-

breaking initiatives. His legendary presence even today, motivates the Group to

explore newer business possibilities that add value to life.

Under the leadership of Mr. B.H. Kothari, the HCK Group founded the

Pioneer Fund, India’s first mutual fund (later sold to Franklin Templeton),

diversified into private equity and real estate investing, and became a vanguard

in India for environmentally sustainable development best practices.

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Today the H.C. Kothari Group is a powerful entity in India, and a rapidly

growing brand across the world with specialized interests in:

• Petrochemicals

• Sugars and sugar byproducts

• Green energy, such as ethanol and co-generation of power

• Safe deposit and locker services

• Biotechnology

• Private equity investments

Since 60 years, the Kothari Group has maintained long-term

relationships with society. Agri-based communities surrounding the plants

have been blessed with diverse development initiatives that spell the greatest

good for the greatest number. The intention of giving back and contributing to

the community drives each one of us at Kothari Petrochemicals as well.

Responsibility Grows On

We are a major contributor to social and community development, and

as we continue to grow and evolve, the commitment and responsibility to serve

our communities grows as well.

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Touching Bases Regularly

Our continuous dialogue with the community exemplifies our

commitment and earnestness to understand and address issues of mutual

interest and concern.

Win-Win Participation

By promoting public participation we are able to share timely and

accurate information on how to foster our strong tradition of improving

environment, culture and human services in the community.

Enlightening Relationships

We develop and maintain collaborative relationships with organizations

and individuals in the community and educating them about our policies,

products, and programs

Supporting Education. Building Careers

We contribute to the education and welfare of young people to make

them competent and also offer opportunities to take up exciting careers with us

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Employer Satisfaction

Our employees who volunteer to play an important part in our

community projects and campaigns are encouraged and rewarded

Management

Name Designation

B H Kothari CEO

B H Kothari Chairman and Managing director

G Narayanaswamy Director

N Rangarajarathinam President - Finance

P K Rudra Director

P N Devarajan Director

P S Balasubramaniam Director

S Sundaramurthy Company Secretary & Compliance Officer

S Sundaramurthy Secretary

The performance highlights of the Company for the year are

summarized below.

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1. Financial Performance (Rs. in Lakhs)

Particulars 2011 - 2012 2010 - 2011

PBIDT 945.20 1,219.18

Interest 122.47 48.46

Profit after Interest before 822.73 1,170.72 Depreciation and Tax Depreciation & Goodwill 171.95 279.90

Profit after Depreciation 650.78 890.82 &Goodwill Tax Expenses 221.99 183.71

Profit After Tax 428.79 707.11

Profit/(Loss) brought 52.67 (312.47) forward from previous year Profit available for 481.46 394.64 Appropriation Proposed Dividend 294.23 294.23

Dividend Tax on 47.73 47.73 Proposed Dividend Balance Carried to 139.50 52.67 Balance Sheet

A part of the renowned HC Kothari Group, we are the largest producer

of premium quality Polybutene in India. Since our founding in 1990, the

company has enjoyed a strong market position in India with a rapidly growing

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brand across the globe that represents quality, customer responsiveness,

dependability and a commitment to the environment.

In the financial year 2007-2008, Kothari Petrochemicals commissioned a

second plant in Manali that doubled our production capacity to 22,000 MT per

annum in order to supply Polybutene worldwide. We have offices in Chennai,

Manali, Mumbai and Belgium, and supply to customers in 20 countries around

the world.

Global Outlook

In the year 2007-2008, the company undertook aggressive restructuring

of its leadership team, business processes and culture to strengthen its position

as a trusted brand worldwide. The restructuring actions have resulted in

improved operating efficiency, superior global consistency, and strengthened

financial performances. We have metamorphosed from a regional company to

a global business and continue to implement best practices that are shared and

implemented globally.

Quality through Innovation & Technology Improvements

Innovation and technology improvements remain the industry’s most

critical competitive factor. Continued investment and acceleration in them have

resulted in high quality levels of our products that are unmatched in India, and

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at parity with the leading global suppliers of polybutene. An ISO 9000 and ISO

14000 certification only adds value to our statement.

Enviable Clientele

We're committed to providing high quality Polybutene products to meet

the needs of a variety of customers.

Our products have been tested and certified by major customers, such

as Infineum, Lubrizol, Shell and Exxon, and are used across a wide range of

industries worldwide.

Industries Served

With every industry, requirements and needs change. Our Polybutene

works for various applications in multitudinous industries across the globe.

Marketed worldwide under the KVIS brand name, our product has time and

again delivered the goods and exceeded our clients’ expectations to no

measure.

A Global Leader A Global Citizen

Kothari Petrochemicals Health, Safety and Environment strategy is

based on active involvement of every employee. As part of the HC Kothari

Group, which has significant interests in green energy research and

development, we are committed to being an environmentally friendly producer

of products, which in turn are cleaner and non-toxic.

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Polybutene Production

The manufacturing process of Polybutene in Kothari, Manali is based on

Cosden Technology, USA. The state-of-the-art plant was commissioned in

March 1990 with modern equipments. Finer control of all processes is possible

through the centrally controlled DCS system.

The plant started with a capacity of 5500 TPA of Polybutene. Over a

period of time, the plant capacity has been increased to 11000 TPA of

Polybutene using in-house expertise and de-bottlenecking. With increase in the

demand of Polybutene, a similar capacity of another 11000 TPA plant was

installed within the plant premises and was commissioned in early 2008. The

trained manpower helped smooth commissioning of plant in record time with

on spec product.

This integrated Polybutene complex is capable of manufacturing

different grades of Polybutene and the overall capacity stands at 22000

MT/Annum. Kothari Polybutene complex is having a fully automated lab to

track the product quality on a continuous basis. The qualified and trained

manpower supports manufacturing & troubleshooting apart from being actively

involved in R&D and Product development activities.

ISO 9000 certification of first unit was obtained in the year 1994 and it

was upgraded to ISO 9001:2000 in the year 2001. Similarly, ISO 14001

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certification was obtained in the year 2002 and was upgraded to ISO

14001:2004 in the year 2005.

The major sections of this Polybutene Manufacturing Complex includes

• Feed Preparation Unit

• Reactor Section

• Neutralization Section

• Distillation

• Product Storage

Feed Preparation Unit

Kothari feed preparation unit is versatile and capable of handling C4

hydrocarbon from different sources. This section is designed to take care of

trace sulfur that comes along with C4. The free moisture is effectively removed

in this section.

Reactor Section

The polymerization of isobutylene is a liquid phase reaction catalyzed by

Aluminum Trichloride (catalyst). It is an exothermic reaction where heat

removal and maintaining reaction temperature is very critical. This requirement

is met by using qualified and trained Process Engineers operating DCS.

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Neutralization Section

The reactor effluent is effectively washed using properly engineered

Neutralizers. Sampling adheres to ISO Procedure and the highest standards of

quality are maintained.

Distillation Section

The polymer stream is passed through a series of distillation columns to

make on spec product. All columns have sophisticated internal packing/trays

that speak for quality.

SPC/SQC monitoring helps to sustain the quality of product and process

capability.

Product Storage

The purified product is taken to the product storage tanks where it is

stored under a blanket of nitrogen to prevent deterioration of product color.

Cosden Technology:

A process for the production of poly-n-butenes having a reduced content

of isobutylene from isobutylene-containing C4 feed stocks in a molecular

weight range between 1,300 and 350 under controlled polymerization

conditions, at a temperature range of 65 DEG -115 DEG F and in the presence

of promoted aluminum chloride in quantity of 0.02 to 0.1% by weight based on

total hydrocarbon feed, and the poly-n-butene products so produced.

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Polybutene from Kothari is better for lubricant, adhesives and paint

industries businesses and better for the environment:

Kothari Polybutenes are sold in market in different grades with

commercial names as KVIS 10, KVIS 30, KVIS 100 and KVIS 200.

Better for Lubricants

Kothari polybutenes demonstrate very low deposit formation. Unlike

typical lubricants, our polybutenes depolymerize cleanly when heated above

250 degrees Celsius.

• Low toxicity

• Good thickening properties

• High shear stability

Applications include: non-staining metal lubricants, specialist

compressor lubricants, low toxicity/energy efficient gear oils and greases.

Better for Two Stroke Engine Oils

Kothari polybutenes are a proven cost effective alternative for lowering

emissions in two-stroke engines - a chief concern among many countries with

increasingly strict environmental standards.

• Cleaner burning

• Reduced corrosion and scoring

• Elimination of engine deposits

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Kothari polybutenes offer enhanced performance compared to most

other polybutenes.

Better for Oil and Fuel additives

In engine oils, derivatives of Kothari polybutenes are used as ashless

dispersants (such as PIBSA) to minimize deposits and prevent oil thickening

and formation of sludge. These polybutene-based additives.

• Improve fuel economy

• Provide environmental benefits due to lengthening the life of oil in the

engine, and providing cleaner-burning engines

• For gasoline engines: reduce deposit formation and removes deposits

already present in carburetors, fuel injectors and intake systems, valves

and pistons

• For diesel fuel: used to clean fuel injectors

Better for Stretch/Cling Wrap Films

Higher grade Kothari polybutenes, such as KVIS 30 and KVIS 200 are

often used in cling wrap, due to their tackiness, good clarity, clinging

properties and durability.

Examples include film, stretch wrap, bale silage wrap

We are fully capable of customizing our polybutene viscosities and

grades to suit your unique needs.

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Better for Adhesives & Sealants

Pressure Sensitive Adhesives

• Kothari polybutenes are vital ingredients in many pressure-sensitive

adhesives (PSAs) and hot-melt adhesives (HMAs)

• Modify softness, tackiness, cohesive strength, and water resistance

• Polybutenes are better than mineral oils due to low color, resistance to

oxidation, no toxicity

• Examples of adhesives that can be improved with polybutene in-clude:

adhesives for surgical tapes; cements for leather; paper; paper laminates,

labels and tapes; masking and friction tapes; colourless adhesives; foil

and fiber lamination; and industrial tapes

Water Based Pressure Sensitive Adhesives

• Polybutene emulsions minimize organic vapor emissions in water-based

pressure sensitive adhesives

• Less expensive: These emulsions also offer enhanced adhesion and

temperature stability while lowering adhesive costs for packaging,

labels, and product assembly

Hot Melt Adhesives

• Kothari polybutenes perform as a polymer extender, plasticizer, tackifier

and wetting agent

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• Polybutenes decrease the melt index and increases the cold temperature

flexibility

• Examples include: packaging, disposable soft goods, carpet, shoes, and

furniture, book binding, carton sealing

Sealants

• Kothari polybutenes plasticize and add tack to elastomer based sealants

• They are softer and more easy to use as sealants

• Less utilization of solvents, which is environmentally beneficial

Kothari polybutenes are often used as a replacement for drying oils in sealant

and putty formulations

• Improved stickiness, or adhesion

• Longer life

• Less shrinkage

• Lower oil to filler ratios

Better for Paints & Coatings

Our polybutenes are a viable alternative to acrylic bases, since they improve

water repellency and result in lower manufacturing costs

• Water resistance

• Low color

• Plasticization

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• Better adhesion

• Replaces volatile solvents

Examples include: waterproofing for porous substances, such as wood or

concrete, hot-applied thermoplastic road marking paints, masonry paints

Environmentally Friendly Pest Control

Kothari polybutene is rapidly becoming the number one choice for

environmentally friendly pest control in agriculture, such as vineyards and

other delicate crops.

• Tackiness of polybutene can increase the effectiveness of pesticides and

insecticides

• KVIS 200 can be used to physically trap insects, and are often used in

vineyards and other delicate crops as a non toxic method of pest control

• Mixed with low molecular weight polyethylene, the resultant tacky gel

can be used for tree banding to trap tree climbing pests

Better for Electrical Insulation Applications

Kothari polybutenes are hydrophobic and non-conductive, and are thus

used as electrical insulation across a wide range of applications. Its low

chloride content and high level of purity result in resistance to oxidation and

gas evolution under electrical stress.