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Wednesday, Mar 13, 2002

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Corporate - Restructuring

Tata Refractories to go in for revamp, focus on exports

Jayanta Mallick

KOLKATA, March 12

TATA Refractories Ltd (TRL) is drawing up a major restructuring plan.

Mr C.D. Kamath, Managing Director of TRL, told Business Line that this involved reducing plant and equipment age by 10 to 15 years over a two-year timeframe, manpower re-engineering and a qualitative shift towards high-value non-steel refractories with a clear accent on exports.

"We are orienting ourselves more toward a globalised scenario. Currently, exports constitute about 12 per cent of TRL's total sales turnover of about $50 million. We intend to push it up to the 20 per cent level in about three years,'' Mr Kamath said.

TRL recently made inroads into the high-alumina refractories sector in the overseas market. "In fact, TRL has begun exporting this item to China, which, over the last decade or so, has emerged as the most competitive refractory manufacturing country in the world,'' he pointed out.

Though the TRL Managing Director did not spell out the investment figure in terms of new equipment installation, according to company sources, TRL is poised to make sizeable investments to counter obsolescence during 2002-2003. Over the next two years, the company plans to replace most of the equipment, whose average age is around 25 years.

Additional investments are also expected to be made for certain balancing equipment for diversified niche items.

TRL would like to overcome its dependence on steel refractories to some extent in view of a prolonged recession in the international steel sector, which has led to around 50 per cent overcapacity in the refractory industry.

Moreover, implicit in the worldwide trend towards reducing specific consumption of refractory items per tonne is the fact that the "survivors'' would be those who produce high-end items and have other non-steel products in their portfolio.

According to industry sources, since the aluminium sector globally is showing a clear trend towards reaching the end of the existing depression, demand from that industry is almost certain to increase in the coming months. On the other hand, there is no growth in demand on the steel horizon. On the human resource re-engineering front, apart from downsizing, TRL is also looking at increasing efficiency and productivity through reorientation and retraining. TRL employs around 1,700 people, whereas a comparable international competitor usually employs only about 300 employees.

According to Mr Kamath, though the domestic refractory industry is in bad shape, it has a strong potential in silica refractories.

"India's dolomite and clay deposits are, perhaps, the best in the world. One needs to utilise the full potential of these assets,'' he felt.

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