The refractories business has been sluggish due to poor demand from cement and steel industries and poor availability of raw materials, such as bauxite.
Dalmia Bharat Refractories, which imports about 60 per cent of its raw material from China, is, therefore, looking to acquire mines in China and Vietnam.
“If our acquisition comes through, we will have raw material supplies for next 30 years,” said C.N Maheshwari, CEO, Dalmia Bharat Refractories, part of the NSE-listed Shri Nataraj Ceramic.
Refractories are ceramics that are capable of withstanding high temperature. Refractory materials are used as heat insulators in furnaces, jet and rocket engines.
Maheshwari said the NSE-listed company would invest Rs 350 crore in the next five years for brownfield expansion and to fund its acquisitions in the domestic and international markets.
The company said it had started the business as a captive unit for its cement plants, but currently the in-house consumption was only about five per cent.
“We sell the balance to steel and cement firms. Since the refractories business is directly linked to infrastructure growth, we are witnessing a slowdown in demand,” he added.
The company, which had reported a turnover of Rs 600 crore, expected its profits to dip due to the current macro-economic conditions and slow demand. It has three manufacturing plants -- at Dalmiapuram (Tamil Nadu), Khambalia (Gujarat) and Katni (Madhya Pradesh).
Maheshwari said the refractories market in India is estimated at Rs 5,500 crore. The total installed capacity is about two million tonnes a year. “We have a 12 per cent market share in the organised market. The market itself is witnessing competition with a slew of international players entering the fray.”
The steel sector uses about 75 per cent of the domestic production of refractories. The other major users are cement, aluminium, fertilisers and petrochemical industries.