Economy

Refractory industry banks on revival of infra projects for demand pick-up

Shobha Roy Kolkata | Updated on January 09, 2018 Published on November 23, 2017

Sameer Nagpal, head of advocacy, Indian Refractory Makers Association   -  Debasish Bhaduri

Having seen a near flat growth in the last couple of years, the ₹6,000-crore refractory industry is hoping for a 7-8 per cent pick-up in demand “in the coming years”.

According to Sameer Nagpal, head of advocacy, Indian Refractory Makers Association (IRMA), the growth will be supported by a pick up in infrastructure projects translating to increased production of steel and cement.

Steel industry growth

The steel industry is one of the biggest consumers of refractory products accounting for nearly 60-70 per cent of their total production. Refractory products are vital in all high-temperature processes in the making of metals, cement, glass and ceramics.

“Growth has been flat in the last couple of years. In fact, it also dipped a little when steel production went down. But production of steel is going up, as the government was able to reduce dumping from China. This translated into a pick up in refractory segment,” Nagpal told BusinessLine.

The National Steel Policy 2017 envisages steel production to increase to 300 million tonnes per annum by 2030, up from the present 90 million tonnes.

This kind of “aggressive” steel growth target may be difficult to achieve unless the refractory industry is well equipped. Though there has been no major jump in projects, steel production has gone up.

Indian refractory industry is currently dependant on China for the supply of raw material, particularly magnesite. To encourage players to set up plants in India, government should focus on supporting the refractory industry with a better mining policy, and allocate funds for research and development of raw material in India.

“Magnesite can be produced from sea water. There are also some Indian mines which have low quality magnesite deposits. With R&D support we can improve the quality of the magnesite for use of the industry,” he said.

The refractory industry, Nagpal said, is stuck with dues amounting to more than half of their profits with a number of steel firms facing insolvency process under National Company Law Tribunal (NCLT).

The capital-intensive steel industry has been one of the major contributors to the non-performing assets (NPAs) of banks, which stood at close to ₹8 lakh crore as on March 31, 2017.

‘Keep off NCLT purview’

According to him, the refractory industry may have to take haircuts to the tune of ₹400 crore. This would be a death knell for the industry whose profit generation is to the tune of ₹600 crore.

“Given the size of the refractory industry, our ability to take haircut is very small and some players may simply vanish,” he pointed out.

Refractory, which is a critical raw material for the steel industry should therefore be kept out of the purview of NCLT.

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Published on November 23, 2017
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