Dalmia-OCL, which recently announced the merger of its entire refractory business into a single entity called Dalmia Bharat Refractories Ltd (DBRL), is expecting 20-25 per cent growth in business in FY23 backed by a steady demand from Indian steel and cement sectors and also from international customers looking for alternatives to China in terms of supply chain.
According to Sameer Nagpal, MD and CEO, DBRL, the company has grown around 20-25 per cent over the pre-pandemic levels and is likely to close the current fiscal with a turnover of around ₹1,200 crore. It is hopeful of doubling the turnover by 2025.
“The refractory industry is still going through uncertainty and turbulence. The situation in China continues to be volatile and there is the issue of the rise in ocean freights. In Europe, the situation is playing out a little longer and there is huge rise in energy cost and reduction in steel production. But India is going to be growth driver for steel and cement production and so we are in a comfortable position. We are already 20-25 per cent over the pre-pandemic levels and expecting similar growth in FY23,” Nagpal told BusinessLine.
Dalmia Bharat Group consolidates India refractory businesses under a single legal entityConsolidation is aimed at strengthening DBRL’s financial standing, increasing its investment capabilities
Refractory products are vital in all high-temperature processes in the making of metals, cement, glass and ceramics. The steel industry is one of the biggest consumers of refractory products, accounting for nearly 60-70 per cent of the total production.
The Indian refractory industry is heavily dependent on China for supply of raw materials such as magnesite and bauxite. The company has been able to diversify its source base and has also created a stock pile of raw materials to be able to meet the growing demand.
“We will be able to build on the two mega trend, which includes the growth in Indian market and rejigging of supply chain away from China,” he said.
Consolidation of refractory business
Dalmia-OCL, the refractory business of the Dalmia Bharat Group, recently announced merger of all its domestic businesses into a single consolidated entity. Post merger, the three entities — Dalmia Refractories Ltd, Dalmia Cement Bharat Ltd - Refractory Unit and GSB India – will transition into DBRL.
The consolidation is aimed at strengthening DBRL’s financial standing, increasing its investment capabilities, expanding its talent base, and positioning the new entity as a trustworthy and long-term partner for its customers in steel, cement and other industries having high temperature processes. Post consolidation, DBRL will be able to accelerate capex, allocate larger resources to R&D and quicken its digital transformation to serve its growing customer base.
“Our refractory business was divided into different companies which resulted in division of our financial, managerial and technical resources. This consolidation will lead into a more centralised, efficient and a robust management system with stronger resource base for future. The formation of DBRL will allow us to offer a wider portfolio of products and services and, deeper client relationships. Besides this, it will enable us to become an alternative supply source to China for steel, cement and non-ferrous manufacturers in international markets,” he said.
The company plans to list itself on BSE during the coming fiscal. It is also exploring inorganic growth possibility in Europe which has a large steel producing capacity.