1

SALICYLIC ACID

CONTENTS

SECTION I PRODUCT CHARACTERISTICS AND SPECIFICATION SECTION II PRODUCT APPLICATIONS SECTION III INDIAN MANUFACTURERS SECTION IV IMPORT/EXPORT LEVEL SECTION V PRICE DETAILS SECTION VI INDIAN DEMAND SECTION VII BROAD OUTLINE OF MANUFACTURING PROCESS SECTION VIII RAW MATERIAL REQUIREMENTS, UTILITY

AND AVAILABILITY SECTION IX GLOBAL SCENARIO SECTION X DISCUSSIONS ON ECONOMIC CAPACITY, PROJECT COST AND PROFITABILITY PROJECTIONS SECTION XI SWOT ANALYSIS

SECTION XII FACTORS INFLUENCING THE POSITION FOR

A NEW INDUSTRY AND RECOMMENDATIONS

2

SECTION - I

PRODUCT CHARACTERISTICS AND SPECIFICATION

Alternate name 2-Hydroxybenzoic acid

Appearance Salicylic acid is obtained as white crystals, fine

needles or fluffy white crystalline powder.

Molecular weight 138.12 Molecular formula C6H7O3

Melting point 158 deg.C Boiling point 211 deg.C Stability Salicylic acid is stable in air and may discolour

gradually in sunlight. The synthetic form is white and odourless. When prepared from Natural Methyl Salicylate, it may have lightly yellow or pink tint and a faint, wintergreen like colour.

Action of heat When rapidly heated at atmospheric pressure, it decomposes into phenol and carbon dioxide.

Solubility One gram dissolves in 460 ml water; 15 ml boiling water;2.7 ml alcohol; 3 ml acetone; 42 ml chloroform;3 ml ether; 135 ml benzenes; 52 ml oil turpentine Solubility in water increases by sodium phosphate, borax, alkali acetates or citrates.

pH of saturated aq. solution 2.4

Toxicity LD50 500 mg/kg

Product Specification Salicylic acid product size distribution Crystalline powder 10 to 100 microns. +20m 90% +40m 40% +60m 60%

3

USP grade Salicylic acid USP grade complies with the following standards of purity as established by the United State Pharmacopeia. Assay Salicylic acid contains not less than 99.5% and not more than 101% of C7H6O3,calculated on the dry basis. Product Description White crystals, usually in fine needles, of fluffy, white crystalline powder,. Has a sweetish followed by an acrid, taste and is stable in air. The synthetic form is white and odourless. Solubility Slightly soluble in water and in benzene; freely soluble in alcohol and ether; soluble in boiling water; sparingly soluble in chloroform. Melting Point : 158 to 161 0C Loss on drying : Loses not more than 0.5% of its weight when dried over silica gel for three hours Residue on ignition : Not more than 0.05% Chloride : Not more than 140 ppm Sulphate : Not more than 200 ppm Heavy metals : Not more than 20 ppm

4

SECTION II

PRODUCT APPLICATIONS

2.1 Pharmaceutical sector Salicylic acid is used medicinally as an antiseptic, disinfectant and anti-fungal agent. It is applied externally as a dusting powder, lotion or ointment for the treatment of dandruff, ecxema, psoriasis and parasitic skin diseases. To destroy warts or crone, it is applied in a collodion or as a plaster. It has been used internally in equine gastric tympany. 2.2 Miscellaneous sector As preservative of food products, but its use for this purpose is forbidden in some countries. 2.2.1. Resin Systems There are many foundry resin systems in use. Salicylic acid is a small component in only the Shell Process. Salicylic acid is used as a cross linking agent in the Phenol-Formaldehyde Resin used as a sand core and mould binder and imparts higher tensile strength. More recent developments have demonstrated that higher concentrations of Salicylic Acid than previously used further improved cold and hot tensile strength and would reduce cure and machine processing time. The continuing interest in energy and environmental considerations has led to the low energy processes, which typically do not use Salicylic Acid. Therefore, a zero or small negative growth for Salicylic Acid is predicted in foundry-resin applications. Salicylic acid has also been used in other phenolic resin applications i.e., binders for grinding wheels, fibre glass and breake linings etc. 2.2.2. Dyestuff Industry Some Salicylic Acid is used as an intermediate in the manufacture of dyes. Specifically, it is a coupling agent for azo dyes and a chelating agent in chromium dyes. It has been used in Benzidine dyes until Benzidine was determined to be carcinogenic.

5

SECTION III

INDIAN MANUFACTURERS

Indian manufacturers of Salicylic acid include the following * Andhra Sugars Ltd., Regd Office: Venkatarayapuram, Post Box. No. 102, Tanuka - 534 215 Factory add: Kovvur Works, A.P. West Godavari Dist. - 534 350 * Alta Labs P. Ltd., Factory: Girivihar, Khopali, Dist. Riagad, Maharashtra Office add: Alta Bhavan, 532, Senapathi Bhapat Marg P.B. No.-7019, Dadar, Mumbai - 400 028. * Gujarat Organics Ltd., Factory Add: Shed No. 127/1 GIDC Ankleshwar, Dist Baruch- 393002 Gujarat Regd Office: 3A, Barodawala Mansion, Ist floor, 81, Dr. Annie Besant Road, 1111 Worli, Mumbai - 400 018 * Quimica India (A division of Emtex Industries (India ) Ltd.) Regd Office: 413-G, Besantwadi, Kalbadevi Road, Mumbai - 400 002 Factory add: Plot No. F/4, MIDC, Post Badlapur, Dist Thane

Indian installed capacity 4500 tonnes per annum

6

SECTION IV

IMPORT AND EXPORT LEVEL

Present import level Around 200 tonnes per annum Countrywise Imports Period April 2001 to March 2002 Country Quantity in Kgs Belgium 45 China P RP 85441 France 102525 German F REP 350 Italy 550 Singapore 2400 Spain 3600 UK 100 USA 50 Sample of individual imports of Salicylic Acid Period 2002 Name of the Importers Quantity in

tonnes Value in Rs. Country Date Port

Link Pharma Chem Ltd.

10.000 544855 China 01.02.2002 to 09.02.2002

Mumbai

Gujarat Organics Ltd. 0.031 4816 Indonesia 01.03.2002 to 08.03.2002

Mumbai

Link Pharma Chem Ltd.

10.000 553931 China 01.05.2002 to 07.05.2002

Mumbai

Link Pharma Chem Ltd. 10.000 554496 China 18.06.2002 to 24.06.2002 Mumbai Link Pharma Chem Ltd.

10.000 540257 China 01.08.2002 to 07.08.2002

Mumbai

Aries Dyechem Inds. 3.000 137719 China 17.09.2002 to 24.09.2002

Mumbai

7

4.2. Present export level Around 150 tonnes per annum Countrywise Exports Period April 2001 to March 2002 Country

Quantity in Kgs

Argentina 1500 Australia 2000 Belgium 3500 German F REP 50 Israel 42040 Italy 13100 Japan 500 Kenya 350 Netherland 2000 Pakistan 100 Spain 2000 Sri Lanka 15750 Uganda 1152 UK 12000 USA 39800 Sample of individual exports of Salicylic Acid Period 2002 Name of the Exporters Quantity in

tonnes Value in Rs. Country Date Port

Doshil 0.250 37394 Mombasa 01.02.2002 to 15.02.2002

Mumbai

Kim Chemicals Ltd. 0.448 67329 Colombo 01.04.2002 to 30.04.2002

Mumbai

Gujarat Organics Ltd. 0.500 39000 Colombo 01.07.2002 to 15.07.2002

Mumbai

Kim Chemicals Ltd. 0.420 63375 Colombo 01.07.2002 to 15.07.2002

Mumbai

Sanjay Sales Corpn. 3.000 223313 Durban 01.07.2002 to 15.07.2002

Mumbai

Newton Pharma 0.200 49955 Dar E Salaam 01.08.2002 to 19.08.2002

Mumbai

Newton Pharma 0.200 49955 Dar E Salaam 20.08.2002 to 31.08.2002

Mumbai

Shiv Dial Sud & Sons. 0.002 551 Djibouti 02.09.2002 to 16.09.2002

Mumbai

Greenstar Impex P.Ltd. 0.012 1255 Djibouti 17.09.2002 to 31.09.2002

Mumbai

8

SECTION V

PRICE DETAILS

Basic price Salicylic acid IP grade Rs.110 per kg Taxes and duties Extra as applicable

9

SECTION VI

INDIAN DEMAND

User Sector • Antiseptic, disinfectant and anti-fungal agent. • Resin Systems • Dyestuff Industry Down Stream Products of Salicylic Acid A number of down-stream products can be produced form Salicylic acid which include the following. 1. Methyl Salicylate 2. Aspirin (Acetyl Salicylic Acid) 3. Benzyl Salicylate 4. Salicylanilide 5. Butyl Phenyl Salicylate 6. 5-Sulpho Salicylic acid - in the manufacture of bulk drug Doxycline 7. 5-Chloro Salicylic acid - in the manufacture of bulk drug Glibenclamide 8. Salicyazo Sulpha Pyridine 9. Sodium Salicylate 10. Phenyl Salicylate or Salol 11. Hexyl Salicylate 12. TrichloroSalicylic acid 13. Phenyl Ethyl Salicylate 14. Lead Salicylate 15. Sodium Para Amino Salicylate 16. Amyl Salicylate 17. Para Amino Salicylic Acid 18. Di Nitro Salicylic Acid 19. 5-Amino Salicylic Acid 20. 3-Amino-5-Sulphonic Salicylic Acid 21. Salicyl Sulphuric Acid 22. Salsalate or SalicylSalicylic Acid 23. 5-Benzyl-5-Acetyl Methyl Salicylate - in the manufacture of bulk drug Salbutamol 24. Choline Salicylate 25. Magnesium Salicylate 26. Basic Bismuth Salicylate 27. Menthyl Salicylate 28. Iso amyl Salicylate 29. Methylene -5,5-Salicylic acid 30. Salicylamide 31. Calcium Salicylate

10

32. Lithium Salicylate 33. Potassium Salicylate 34. Acetyl Salicyl Salicylic acid 35. Soventol Salicylate 36. Glycol Salicylate 37. Lysine acetyl Salicylate 38. Di Ethylamine Salicylate 39. Iso Butyl Salicylate 40. Iso Propyl Salicylate Demand Sector

Demand in tonnes per annum

Aspirin 2100 Dyestuff 400 Pharmaceutical other than Aspirin 70 Salicylates 800 Miscellaneous 15 3385 Estimated growth in demand : 8 to 9 % per annum

11

SECTION IX

BROAD OUTLINE OF MANUFACTURING PROCESS

Process details General Details There are three reaction steps involved in producing Salicylic acid from the starting material namely Phenol. First, Sodium Phenolate is prepared by reacting Phenol and aqueous Sodium Hydroxide. The resulting solution is heated and evaporated to dryness. Second, a direct solid gas (Kolbe-Schmitt) reaction between Sodium Phenolate and Carbon Dioxide is performed, producing Sodium Salicylate. Third, the (ortho) Sodium Salicylate is dissolved in water and converted to Salicylic Acid by acidification with Sulphuric Acid A tiny portion of the reactants will form undesired by-products such as Para Hydroxy Benzoic acid and Para isophthalic acid. The selected reaction conditions will minimise the formation of these organic acids. However, any by-products which are produced will be separated from the Salicylic Acid crystals along with the formed aqueous Sodium Sulphate and unreacted Phenol. Active Carbon and Sodium Hydrosulphite are used in the process to decolourise and purify the Sodium Salicylate, prior to acidification with Sulphuric Acid. Description of the Batch Process This batch process is begun by charging the carboxylators with fresh Phenol, aqueous Sodium Hydroxide and recovered Phenol from previous batches. Sodium Phenolate is formed immediately. The resulting solution is heated and evaporated to dryness while still in the reactor. The water and unreacted Phenol are recovered for use in subsequent batches by distillation.

12

Next, the dry Sodium Phenolate is reacted with Carbon Dioxide to produce Sodium Salicylate. This is done by pressurising the carboxylator and blanketing the Sodium Phenolate with pure Carbon Dioxide gas. After completion of the carboxylation, any free Phenol in the reaction product is recovered by vacuum distillation. The crude sodium Salicylate is dissolved in water and pumped from the reactor to a treatment tank, where the solution is decolourised with active Carbon and Sodium Hydrosulphite. The carbon is removed from the solution by filteration and then the solution is pumped to a precipitation tank. Sulphuric acid is then added to precipitate pharmaceutical grade Salicylic Acid. The slurry of Salicylic Acid crystals and process water is pumped to a centrifuge for separation. The moist crystals are then conveyed to a dryer for final water removal. The dried crystals are packaged in Polyethylene lined paper drums or stainless steel into bins for sale, storage or transport. The seperated process water (mother liquor) from the Salicylic Acid production contains Salicylic Acid, by-products, Phenol and Sodium Sulphate. The extraction plant is used to clean the process water of organic impurities and to recover the recycled Salicylic Acid and phenol. The organic acids and the Phenol are extracted from the mother liquor to the organic solvent Methyl Iso Butyl Ketone (MIBK) in a liquid-liquid extraction column. The waste water from the extraction column is then transferred to another tank for pH neutralisation. From here, the waste water is pumped to a steam stripping column to remove most of the remaining MIBK and other organics. Finally, the water is sent for waste water treatment as a solution of Sodium Sulphate with trace quantities of organic compounds. This portion of the extraction plant is operated continously. The extracted Salicylic Acid, by-products and Phenol are re-extracted from MIBK and seperated through a series of batch re-extraction and precipitation steps using Sodium Hydroxide and Sulphuric Acid. The recovered Salicylic Acid and Phenol are recycled back to the Salicylic Acid process, while the regenerated MIBK is recycled to the solvent tank, which feeds the extraction column. The by-products are removed with the waste water from this extraction process.

13

Sources of technology * The Andhra Sugars Ltd., Venkatarayapuram, Post Box No.102,Tanuku-534 215. Andhra Pradesh Plant and mahcinery suppliers Name of the equipment Name of the suppliers

Boilers Cethar Vessels Ltd.,

No.4, Dindigul High Road, Trichy Firetech Boilers Pvt. Ltd. No.211, 2nd Cross, 38th Main, B.T.M. Layout 2nd Stage, Bangalore-68

Glass Lined reactor Gujarat Machinery Manufacturers Ltd., Churchgate House, 32-34, Veer Nariman Point Fort Mumbai – 400 001

14

Nutche filter

Aristo Engineers J-3, Vikas Udyog Nagar, Behind Kasturi Tiwer Phatak-Goddeo Road, Bhayander (E), Thane-401 105 A.V. Industrial Plastics Corp. 202/Him Shikhar, 1st Floor, Plot No.113 Sector 21, Near Apna Bazar Nerul, Navi Mumbai-400 706 Bifriends Engineering Works Klm College, Sant Narsi Mehta Marg, Parsiwadi, Ghatkopar (W), Mumbai-400 084

Centrifuge

Hydrabad Met Chem. Pvt. Ltd., 34, C.I.E., Phase II, Gandhinagar, Opp. IDPL Colony Hyderabad-500 037 Spark Engineers Pvt. Ltd., 5/332, State Bank Colony II Salem-636 004

15

Dryers

The Anup Engineering Ltd., Behind 66 KV Electric Sub Station Odhav Road, Ahmedabad-382 415 ATRE Thermal Products Pvt. Ltd., Pushpa Heights, 1st Floor, Bibwewadi Corner, Pune-411 037

16

SECTION VIII

RAW MATERIAL REQUIREMENTS, UTILITY AND AVAILABILITY

Raw material requirements Basis: 1000 kgs of Salicylic acid Phenol 715 kgs Carbon dioxide 400 kgs Sodium hydroxide 100% 450 kgs Sulphuric acid 96% 525 kgs Methyl isobutyl ketone 2 kgs Activated carbon 10 kgs Auxiliary chemicals in minor amounts Utility Power 900 units Fuel 200 litres Raw material availability Name of the raw material

Name of the supplier

Phenol Hindustan Organic Chemicals Ltd Herdillia Chemicals Ltd., Thane

Sulphuric acid EID Parry India Ltd., Chennai Tanfac Industries Ltd., Cuddalore

Activated carbon Core Carbons Pvt. Ltd., Coimbatore

Methyl Isobutyl Ketone To be imported

17

SECTION IX

GLOBAL SCENARIO

Global manufacturers of Salicylic acid include the following: 1. Allchem Industries Inc 4001 New Berry Road Suite E-3, Gainsville, FL32607 2. EM Industries Inc, Fine Chemicals Div 5 Skyline Dr, Hawthrone, NY 10532 3. R.W. Greeff & Co., Inc 777 West Putnam Avenue, Greewich, CT 06830 USA 4. Penta Manufacturing Co., Research Organics Inc, P.O. Box 1448, Fairfield, NJ 07007 USA 5. Rhone-Poulenc North America Inc, Rhone-Poulenc, Pharmaceutical Ingredients CN 7500, Cranbury, NJ 08512-7500 USA 6. Mitsui Pharmaceutical Inc 12-2, Nihonbashi 3-Chome, Chuo-Ku, Tokyo 103. Japan 7. Mitsui Toatsu Chemiclas Inc 2-5 Kasnmigaseki, 3-Chome, Chiyoda-Ku, Tokyo-100 Japan

18

SECTION X

DISCUSSIONS ON ECONOMIC CAPACITY,

PROJECT COST AND PROFITABILITY PROJECTIONS Economic capacity 600 tonnes per annum Project cost Rs.512 lakhs Assessment of project cost 1. Land S.No. Description Cost

Rs.in lakhs

1.1 Cost of land of 2 acre at Rs.5.5 lakh per acre 11 1.2 Cost of levelling, laying internal roads/fencing and

compound wall 1.1

Subtotal 12.1 2. Building S.No. Description Cost

Rs.in lakhs

2.1 Factory building of area 500 sq.m. at Rs.3200/sq.m. 16 2.2 Non-factory building of area 80 sq.m.at Rs.4500/sq.m. 3.6 Subtotal 19.6 3. Cost of Plant & Machinery S.No. Description Cost

Rs.in lakhs

3.1 Cost of basic plant and machinery 200 3.2 Instrumentation and control 15 3.3 Pipelines and valves 20 3.4 Structurals for erection 10 Subtotal 245 3.5 Octroi, excise duty, sales tax, etc.at 12% 29.4 3.6 Packaging and insurance charges (2%) 4.9 3.7 Transportation charges (2%) 4.9 3.8 Machinery stores and spares (2%) 4.9 3.9 Foundation charges (2%) 4.9 3.10 Installation charges (2%) 4.9 Total cost of plant and Machinery 298.90

19

4. Technical know-how fees Rs.5 lakhs 5. Miscellaneous fixed assets S.No. Description Cost

Rs.in lakhs

5.1. Electrification 6 5.2. Steam boiler and auxillaries 10 5.3. Water storage tank, borewell etc. 5.50 5.4. Fuel storage tank 4.0 5.5. Laboratory equipment 3.50 5.6. Office machinery & equipment 4 5.7. Material handling equipment, packaging machinery,

weigh balance, etc. 5.50

5.8. Diesel generator 4.4 5.9. Effluent treatment 3.5 Total 46.4 6. Preliminary & Pre-operative expenses: S.No. Description Cost

Rs.in lakhs

6.1. Preliminary expenses 2.50 6.2. Pre-operative expenses:- 6.2.1 Establishment 3.00 6.2.2 Rent rates and taxes 3.50 6.2.3 Travelling expenses 35 6.2.4 Interest and commitment charges on borrowings 2.5 6.2.5 Insurance during construction period 5 6.2.6 Other preoperative expenses and deposits - 6.2.7 Interest on deferred payment - Total 51.50 7. Provision for contingency Rs.30.14 lakhs 8. Working capital margin Rs.47.96 lakhs 9. Total project cost Rs.512 lakhs 10. Means of finance (Rs. in lakhs) Promoter's contribution 205 Term loan from financing institutions 307 Total project cost 512

20

11. Financial statements Cost of production A Variable cost

Rs. in lakhs

Raw material and utilities 322.04 Spares and maintenance 17.93 Selling expenses 33

Total variable cost (A)

372.97

B Fixed cost

Salaries and wages 12 Interest on term loan and working capital loan 81.15 Depreciation 36.85 Administrative expenses 19.80

Total fixed cost (B)

149.8

C. Total cost of production (A+B)

522.77

D. Selling price per kg. (in Rupees)

110

E. Annual sales turnover

660

F. Net profit before tax (E-C)

137.23

G. Breakeven point in %

52%

21

SECTION XI

SWOT ANALYSIS

Strength Growing demand for Aspirin production

Weakness Small capacity plant

Opportunity Export

Threat Raw material price fluctuation

22

SECTION - XII

FACTORS AFFECTING THE POSITION OF A NEW INDUSTRY

AND RECOMMENDATION The predominent applications and demand level for Salicylic Acid is in the production of Aspirin. In the developed countries, it is seen that the demand level for Aspirin is almost stagnant, mainly due to the intense competition from other Analgesics such as Paracetamol, Ibuprofen and others. However, the demand for Aspirin in developing countries is bound to have growth trend, in view of the comparatively low cost of the product and product familiarity. It can be reasonably considered that the demand for Aspirin/Salicylic acid would go up in tune with the industrial and economic growth rate of the country. Apart from Aspirin, Salicylic acid also finds applications in the pharmaceutical sector and for the production of several downstream Salicylates. At the moment, there are only a few producers in the country for Salicylic acid, leaving scope for fresh additional capacity creation. Considering the relevance and importance of the product and likely growth rate in demand,Salicylic acid project can be favourably considered for investment.