The Hindu Business Line : IBP to tap new areas to sustain industrial explosive business

WITH a view to tackling competition and ensuring the sustained viability of its industrial explosives business, IBP Co Ltd, an Indian Oil group company, has decided to focus on sectors other than coal such as power, cement and infrastructure. Talks in this regard have already been initiated with prospective clients in these sectors.

Stating this during an interface with visiting newspersons here, Mr Arun Jyoti, Managing Director of IBP Ltd, said there was no level-playing field in the industrial explosives business as licences for large players were regulated while for those in the small-scale sector had been deregulated. Besides, being a public sector company, IBP Co Ltd had to adhere to strict procedural norms and quality standards, an obligation which impaired its ability to emerge as the lowest bidder (L1) in tendering processes.

To overcome the problem veering round L1, talks were being held with Coal India Ltd - which accounts for more than 65 per cent of the explosives consumption in the country - for offering application-specific products. IBP Co manufactures a range of cartridge and bulk industrial explosives in 14 plants, including three satellite plants, located across the country.

The company's share of the industrial explosives business in India is stated to be about 17 per cent. New products being introduced include heat-resistant explosives for use in coal mines that are on fire and seismic explosives that are used in oil exploration.

Besides, the company has exported explosives technology to Jordan. Explosives have been exported to Myanmar, Syria and Ethopia. Technology would now be exported to Malaysia followed by Egypt.

Mr Jyoti said the industrial explosives market in India was buyer-dominated with the industry's installed capacity at 795,000 tpa being much higher than the domestic annual demand of around 353,309 tonnes. The market was now moving away from cartridge explosives to bulk explosives.

Reacting to reports of IBP Co's plans to hive off its explosives business in view of the market situation, he said that was "one of the propositions under consideration" but expressed the hope that talks with Coal India and prospective clients in the non-mining sector would yield results and the explosives business would become viable. Earnings from the explosives business in 2003-04 have been pegged at Rs 105 crore up from Rs 99 crore recorded in 2002-03.

According to him, IBP Co Ltd was confident of attaining a turnover of Rs 10,000 crore during the year ending March 31. In 2002-03, the company's net sales income stood at Rs 8,753.09 crore. With petroleum products accounting for 98 per cent of the company's revenue, the focus was on augmenting the product range and expanding the bazaar trade. About 500 new retail petroleum products outlets would be added in 2004-05. The investment required towards this end would be Rs 350-400 crore annually which would be raised from internal accruals.

The IBP Managing Director informed that the company had commenced exports of lubes to Bhutan and consignments would be sent to Bangladesh and Nepal soon. In fact, with a view to expanding its portfolio of lubes offerings, the company has bid for the acquisition of Tide Water Oil.