In an interview with Parmod Sagar, CEO & Managing Director, RHI Magnesita India about recent acquisition of two leading refractory manufacturers in India, Dalmia OCL and the refractory division of Hi-Tech Chemicals and future plans for RHI Magnesita India.
(Parmod Sagar, CEO & Managing Director, RHI Magnesita India)
What are the major challenges and opportunities that RHI Magnesita India foresees in the refractory market in the coming years?
The refractory market in India will experience significant growth in the near future, driven by increased demand in various industries such as steel, cement, glass, non-ferrous metals, and petrochemicals. We expect the Indian refractory industry to grow at a CAGR of 12% at least till 2025. Driven by the projected high growth of steel and cement industry on the back of massive infrastructure spending by the Govt, revival of the real estate and automobile sector. India’s domestic refractory consumption is likely to see exponential growth. This is further propelled by the global de-risking of China as the preferred supplier for both refractories as well as raw materials. The recent geo-political developments have spotlighted India as an alternative source to China for cost-effective and high-quality refractories. Currently, the country meets almost 50% of its refractory requirements through imports. But this is very likely to change over the next 3-4 years. All major refractory multinationals are seeing the opportunity that India’s Atmanirbhar ambitions bring to them and have pipelined investments for expanding manufacturing capacity in the country. All major refractory makers are now looking at India as the alternate Global manufacturing hub for refractories. The larger players, including RHI Magnesita, together have announced investments of more than USD 500 Million to expand production capacities in India. Furthermore, developing new technologies and materials could enhance the efficiency and performance of refractories in various applications, providing additional opportunities.
However, there are also challenges to consider, such as the high import dependency on refractory raw materials due to India’s absence of refractory-grade raw materials. This, coupled with the rising cost of raw materials, freight and energy, has led to a continuous increase in the cost of production. The supply and price situation has become highly volatile, complex and unpredictable in the post COVID world.
How does RHI Magnesita India plan to tackle these challenges and leverage the opportunities in the refractory market?
To leverage the opportunities in the market, we are pursuing a range of strategies, including expanding our India production footprint through brownfield expansion of existing facilities as well as inorganic expansion. We have recently acquired two leading refractory companies in India, which has increased our India production to more than 500 kTon from 172 kTons. Out of this, almost 150 kTon is unutilised capacity, which gives us enough headroom to service the future demand from the steel, cement and other user industries. We are further investing in some newly acquired plants to modernise them to improve productivity and quality. Our strategic aim is to develop India as the manufacturing and R&D hub for India and the larger market of the middle east and Africa. We have also been working on making some import substitute high-end products in India. We are gradually transferring technology from some of the European and American plants of the parent company to make these products in our Indian manufacturing units. This aligns well with the “Make in India” mission of the Govt. of India. Our focus on sustainability is another key strategy, and we are exploring ways to create eco-friendly refractory solutions that can help our customers reduce their carbon footprint.
Could you elaborate on the key role of the refractory business in the growth of India’s manufacturing prowess?
Refractories keep these industries “firing”; without refractories, none of these core metals, cement, energy, gas, or glass can be produced. The refractory industry is an enabler for these industries’ growth in India. As the country’s manufacturing sector continues to grow, the demand for refractories will increase significantly in the coming years. Additionally, given the government’s push to increase steel capacity to 300 million tonnes by 2030 and a capex increase of INR 10 lakh crore announced during this year’s Union Budget, it is an opportune moment for the refractory business to be at the forefront of India’s manufacturing story.
How is RHI Magnesita India contributing to the growth of India’s manufacturing sector?
Further, RHI Magnesita is investing roughly INR 3600 crore in India over the next two to three years, which would be used to expand organically as well as take the inorganic route and modernise Indian manufacturing facilities. We intend to modernise our newly acquired assets in India by enhancing automation and introducing international-standard machinery. AI (artificial intelligence) and data-driven digital technologies are being brought to India as part of its objectives for improved and modern refractory performance. We have already deployed such digital solutions at multiple integrated steel plants. All these need solid R&D on the back of it. We have set up a world-class R&D centre in India at Bhiwadi recently. This centre works with the Global R&D network of 4 other centres in Europe, the Americas and China.
RHI Magnesita is known for its technological advancements and innovations. Could you shed some light on the key innovations or advancements that have helped you stay at the forefront of the industry?
Some of the key advancements and innovations that have helped us maintain our position as a leader in the industry include:
Our holistic focus on innovation and technological advancement has allowed us to remain at the forefront of the industry and provide our customers with solutions that can assist them in staying competitive in the market. We will continue to invest in research and development and utilize our global expertise to develop new and innovative solutions that can address the changing needs of our customers in various industries.
What are your present and future plans to expand its presence in the Indian market?
We are dedicated to expanding our foothold in the Indian market and providing our customers with top-of-the-line, inventive, and sustainable refractory solutions that can help them improve their efficiency, productivity, and sustainability.
What are the upcoming projects or initiatives that you are working on currently?
Could you provide details about the fundraising that has happened in the recent past and the future fundraising plans of RHI Magnesita India? And how do you plan to utilize the funds raised for its growth and expansion in the Indian market?
How is RHI Magnesita India ensuring sustainability and environmental responsibility in its operations?
Sponsored by: ACRI (The Association of China Refractories Industry), Tangshan YinNaiLian E-Business Co., Ltd.
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