Inox Air Products, a manufacturer of industrial gases, has put investments worth $2 billion on the backburner owing to the economic recession and the crash in crude oil prices.

The company had been in talks with Reliance Industries and Essar Oil for pet coke gasification projects at their Jamnagar refineries. It had also planned to expand into the photovoltaic space. But these have now been shelved.

"Any gasification project needs massive quantities of oxygen. However, with oil prices crashing, gasification is no longer viable," Siddharth Jain, director, Inox Air Products, told DNA Money.

Inox had been in talks with Moser Baer and Reliance for its photovoltaic plans. "Our talks with the companies are on the backburner now," Jain said. The photovoltaic process involves creating electricity from light and requires vast quantities of the specialty gas fluorine.

Inox, however, sees great scope in the metals fabrication space.

Jain feels, though the steel sector had slowed down from its peak in August-September 2008, demand has started picking up.

Inox recently set up Steel Authority of India's (SAIL's) largest oxygen plant on a build-own-operate basis. "It's a 15-year contract and will boost our revenues and help the topline hit Rs 700 crore," Jain said. By end-March, Inox expects to touch a turnover of Rs 550 crore.

Inox is investing $250 million over three years in various projects that include two more gasification plants for SAIL. One of these will be the steel major's largest oxygen plant, at 2,500 million tonne per day (tpd), in Bhillai. Another project will be a 210 tpd oxygen plant for Salem Steel. The investment will be funded through internal accruals and debt.

Due to the slowdown, Inox is also experiencing a delay in setting up its plants as delivery of components, 60% of which are sourced from overseas, is taking longer. "Two years back, we could set up our projects in 18 months. Now, it will take 24-30 months because of the longer delivery time by vendors," Jain observed.

Inox Air Products is a 50:50 joint venture between the Inox Group and the US-based Air Products & Chemicals Inc.

Madhumita Mookerji DNA