The Hindu Business Line : Zenith Birla setting up pipe-making plant

Greenfield project
The plant is scheduled to go on stream in 2009; funds for which will be raised in the form of debt and equity.
The plant will be located on the West Coast close to a port; company looking for land in Maharashtra, Gujarat.

Amit Mitra

Mumbai, Dec. 13 With increasing activity in the oil and gas sector throwing up a huge demand for pipelines, Zenith Birla, the flagship company of the Yash Birla group, plans to set up a new pipe making facility with an investment of Rs 250-300 crore.

The plant, which is scheduled to go on stream in 2009, will be manufacturing SAW pipeline with diameter up to 24 inches. Such pipes are mainly used for oil and gas distribution through cross-country pipelines. Currently, companies such as Surya Roshni and Gujarat Wellspun manufacture pipes of maximum 16-inch diameter, while MSL produces larger pipes of 20-inch diameter.

“The current trend for oil and gas distribution is towards pipeline transportation, as against rail or road movement, with more than 30 cross-country pipeline projects coming up in the country. We see a huge demand coming up for large diameter SAW pipes. And this is why we have decided to set up a greenfield plant,” Mr M.S. Arora, Executive Director and CEO of Zenith Birla, told Business Line.

Funding

The company plans to raise the proposed investment in the form of debt and equity; the precise mix is not yet finalised. The plant, which will have a capacity to produce two lakh tonnes of pipes annually, will be located on the west coast, close to a port, as the company also plans to tap the international market for the products.

“We are looking for land in Maharashtra and Gujarat. We require about 30-40 acres. In our estimate, construction work will be launched within six months,” he said. The company has already started negotiations with equipment suppliers.

The company, currently, produces 1.2 lakh tonnes of pipes from its existing plant at Khopoli, about 80 km from Mumbai, which has two lines of production.

Zenith already has some presence in the global market, chiefly in the US and West Asia , with about 60 per cent of its turnover coming from exports.

With the new plant, the company plans to enter the European market.

The company feels that the export market for Indian pipe makers will open up as China, which is India’s biggest competitor in this space, has been slapped with an anti-dumping duty in the US and Europe.

With the company sharpening its focus on pipe making, Zenith has decided to hive off its cutting tools division, Indian Tool Manufacturers. ITM, incorporated in 1937, produces HSS tools, including centre drills, masonry drills, milling cutters, reamers, tapes, jobbers and tool bits.

Mr Arora said the tools division would be hived off and merged with the other companies of the Yash Birla Group — Birla Perruchanni, Dagger Frost and Birla Kennametal.

All these companies are in the tool and auto component manufacturing space. The plan is to merge all the four companies into a single entity to create the right synergy.

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