Indian refractory companies, who supply refractories worth around ₹ 7,000 crore (approx. 1076 million USD) per annum to companies in the core infrastructure businesses like steel, alloy, power, cement etc. are in a quandary, stuck with unpaid dues which account for half of their profits due to a number of steel firms facing insolvency process under National Company Law Tribunal (NCLT). “We are facing the problem of unpaid dues of ₹ 130-140 crore, following NCLT proceedings on some of the iron and steel companies. It is almost half the industry's profits. This is posing a huge challenge for refractory industry since steel industry consists of 70 percent of our customer base“, said Hakimuddin Ali, chairman of Indian Refractory Manufacturers' Association (IRMA). NCLT has already begun processing cases involving Essar Steel, Bhushan Steel and Electrosteel Steels. Ali who represents Imerys, is managing director of Calderys India added, "Since our customers include cement and power companies too hence we apprehend this problem may get bigger in the days ahead."
Article continues after Ads -
The refractory industry in India, reached a comfortable position after having achieved a growth of more than 25 per cent in exports just a few years ago is now struggling hard for survival. Refractories are the fundamental pre-requisites (raw materials) for any high temperature operation. Their main purpose is either to confine or to transfer heat. For all high temperature operations whether metallurgical or non-metallurgical, a refractory lining is necessarily required for their containment and retention of heat etc. Read: Uses and Applications of Refractories and Refractory Products in our Daily Life
The shaky financial condition of many refractory clients has added to the woes of an industry that is struggling to rein in costs after a 40 per cent hike in cost of raw materials that are largely imported from China. India currently imports 40 percent of its refractory raw material including graphite, fused and calcined alumina and high-grade clays from China in addition to magnesia, a critical input for various refractories. Moreover, the industry is battling higher input costs. The crackdown by Chinese authorities on polluting units in steel and other industries has drastically cut down supplies. About 25 percent of finished products in refractory sector come from China where prices have also shot up. "We are stuck with 3-4 year long term contracts with our customers who typically pay us per tonne of steel produced," Ali added.
Indian Refractory industry is dominated by 10-12 large players such as IFGL Refractories, Bharat Refractories, Vesuvius, Calderys etc. to name a few. It is reported that the industry is operating at 60 percent of capacity or at 1.2 MT out of its total capacity of 2 MT. “The sector is small but critical and its needs have to be addressed keeping this in mind“, Sameer Nagpal, CEO of Bharat Refractories said. Nagpal, who heads Advocacy at IRMA, said it is only recently that the industry has realized the need for raising its voice to be heard by policy makers. Refractory spends usually account only 2-3 percent of total steel industry expenses, though without refractories, the latter cannot operate. “Domestic steel output can be increased by 10-15 percent through the use of good-quality refractory material. We would request the steel ministry to formulate a National Refractory Policy within the National Steel Policy to provide a road map for the industry and classify refractories as a critical component“, Mr. Nagpal said.
(Source: ET, edited)