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Refwin Interview with Mr. Tiwari, Chairman of IRMA, CEO of OCL India
2015-06-16

Jun 16, 2015

1. As you said this March in Shanghai, the annual output of refractories in India is 1.4 million tons, with 0.2 million imported to India. How about the annual consumption of refractories in India? Can you introduce the current situation of Indian refractories sector? (Output, import and export, numbers of producers and traders, etc.)

 
Mr. Tiwari: Refractories consumption in India is around 1.6 Mill MT, as explained in Shanghai. Consumption of refractories is around 1.8 Mill MT including unorganized sectors. There are many consuming units whose data is not readily available, hence the actual consumption could be more than 1.8 Mill MT. This should also be noted that the consumption increases when major projects, particularly in steel sectors are taken up. Therefore, there would be year to year fluctuation in the consumption. The table below gives a clear idea of the Indian market where the domestic turn over as well as import are dropping and export is constant.
Indian Refractory
2011-12
2012-13
2013-14
Sales Turnover (Million $)
1067
1038
1004
Import(Million $)
460
450
404
Export (Million $)
207
216
210
 
 
 
 


 
2. With more top refractories players aiming at Indian market, what are the major advantages of Indian refractories sector?
 
Mr. Tiwari: The domestic refractory players have thorough understanding of local market conditions and have skilled manpower for manufacturing and application. In India raw materials are imported, there are various raw materials e.g. Graphite, Fused Alumina, Calcined Aluminas, Low Grade Magnesite, High Grade Clays, etc which are used in manufacturing refractories successfully. Top players of the world are bringing new technologies, process improvements and thereby creating an environment of excellence. This is a very strong motivating factor for domestic refractory industries to improve continuously for sustained global presence.
 
 

3. Under the global downturn situation, what are the major challenges faced by Indian producers in terms of production, sales, management or labor force? What is your opinion on effective measures to overcome the difficulty?
 
Mr. Tiwari: Global down turn have definitely affected Indian refractory industries and as rightly pointed out by you, the challenges exist in low capacity utilization and therefore low sales or low profitability due to intense competition. As far as management and labour force is concerned, there are laws which are followed and as such each management is able to handle this down turn situation successfully. Of-course, when there is sharp erosion in the volume, some plants have to hold the operations temporarily and await for opportunities to arise. Lower profitability has also meant very low investment in R&D and led to slow improvement in refractory products and processes domestically.

4. With regard to the credibility and sharp bargaining complained by some suppliers who intend to cooperate with companies in India, is it a real situation? What is your suggestion to those suppliers?
 
Competitiveness is the essence of business. Any supplier, who has to initiate business in India, has to follow the practices of each consuming company. These organisations have several methods of procurement, for example, direct purchase of material, purchases on the basis of cost per tonne of liquid steel, etc. Every supplier has to follow these rules and generally there are no deviations.
The user industry also looks for references to establish the credibility of the supplier and its products. We experience this in other international market also. India is no exception. Suppliers must make efforts to offer best products to ensure that performance is better than others, if not equal. This way they will be able to get continuous enquiries for doing regular business.
Indian refractory users are hard bargainers and look for good quality products at most competitive prices.

5. As more merges and acquisitions occurred, what can we expect for the development Indian and global refractories industry in next 5 years?
 
Mr. Tiwari: As far as operational requirement of refractories is concerned, the trend worldwide as well as in India, is towards reduction in refractory cost per tonne of finished product. This requires full spectrum of R&D, manufacturing, marketing, application & services. Companies which are looking forward to equip themselves to grow in future will have to have all the above. Mergers & Acquisitions are generally taking place to enhance the existing facilities of a given company. This business enhancement model is well accepted everywhere. Most likely, single product companies would like to tie up or to be part of a conglomerate to enhance their values. This should be true for mid size companies which are sandwiched between high cost of raw material and dropping prices of finished product.
In coming next 5 years more globalization is expected, especially in Asia because as per various forecasts, steel production which is a major consumer of refractories, is likely to be on high growth path, particularly in India. However, Europe style consolidation within the Country is a distant possibility because a large number of companies are in Small & Medium sector and are basically family owned companies.
 
 
About IRMA
IRMA organizes, biennially, conferences on Refractories called IREFCON, which is very well accepted by refractory fraternity worldwide. The next IREFCON is scheduled to be held in January 2016 in the city of Hyderabad.
Additionally, IRMA has developed a Training Centre in collaboration with Dalmia Institute of Scientific & Industrial Research (DISIR) for on the spot application training of new entrants. This is helping refractory industry in big way.
 
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