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The Rs 1,100-crore Himadri Chemicals and Industries Ltd has decided to carve out its carbon black division into a separate company.
The new entity – Himadri e-Carbon – would be a wholly owned subsidiary of Himadri Chemicals.
According to Anurag Choudhary, Chief Executive Officer, the idea of forming a separate subsidiary was primarily to bring a sharper focus on the division and help it expand. Carbon black accounts for nearly 40 per cent of the company’s turnover.
Plans are afoot to expand the carbon black manufacturing capacity by over 60 per cent in two to three years. The company has earmarked an investment of nearly Rs 400 crore for its expansion programme.
“We want to move the carbon black division into a separate company so we have formed a fully owned subsidiary under the name of Himadri e-Carbon. We are waiting for the requisite approvals to hive off this unit,” Choudhary told Business Line .
In 2011-12, Himadri had more than doubled the manufacturing capacity of its carbon black unit at Singur in the Hooghly district of West Bengal, from 50,000 tonnes to 1.2 lakh tonnes a year.
The company plans to scale it up further to 2 lt in the next two to three years. “We are conducting a feasibility study to set up a carbon black manufacturing unit in countries like China, Eastern Europe or Africa,” he said.
Explaining the logic behind setting up a carbon black manufacturing unit overseas, Choudhary said, “Globally carbon black business is not doing that well. A number of capacities in the Europe and the US have closed down. So if we can set up a capacity near these markets then we can get good prices.”
Erosion in Margins
There has been erosion in margins as the user industries have not been doing too well. “Carbon black finds its use in the manufacturing of tyres. The economic downturn has led to a slowdown in the sale of vehicles, thereby impacting the demand for tyres,” he added.
The raw material costs have gone up by 10-15 per cent, while the company has been able to pass on only a portion of it to its customers. “This has put a pressure on margins and this is likely to continue for the next one year,” he said.
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