RHI Magnesita plans to make India hub for R&D activity, production

The company is also working to reduce dependence on China for raw materials. The Vienna-headquartered company will invest Rs 100 crore in the next one year for its expansion programmes in India, which includes first phase of setting up of the R&D centre at Bhiwadi in Rajasthan, attached to one of its four Indian manufacturing facilities, and doubling of carbon magnesia bricks production capacity at its plant at Cuttack, in Odisha.

RHI Magnesita, a leading player in global refractory industry, is planning to make India a hub for manufacturing, R&D, and supply chain for South Asia, West Asia and African markets, according to a senior company official. The company is also working to reduce dependence on China for raw materials.

The Vienna-headquartered company will invest Rs 100 crore in the next one year for its expansion programmes in India, which includes first phase of setting up of the R&D centre at Bhiwadi in Rajasthan, attached to one of its four Indian manufacturing facilities, and doubling of carbon magnesia bricks production capacity at its plant at Cuttack, in Odisha. "The global management has decided to decentralise. So, they have created four regions. They wanted the regions to be self-sufficient and take P&L responsibility and create their own opportunity for growth.

"India, West Asia and Africa is one such region and we have plans to make India hub for technical excellence, R&D activity and production for the region," RHI Magnesita President, India, West Asia and Africa Parmod Sagar told PTI. Under the organisational restructuring, West Asia and Africa operations of the global company have been clubbed together with India to create a single business unit with regional headquarters at Gurugram.

The region contributes roughly about 530 million Euro to the global revenue currently. Explaining the rationale behind the move, Sagar said, "in India we have much better availability of manpower at competitive costs and we wanted to be closer to our customers." He further said, "in the short term, I would say within a year's time or by the end of next calendar year, we will be setting up an R&D centre. Already initial construction work has started. I believe it should be operational by the end of next year." The company has also created management structures for commercial execution, supply chain, marketing intelligence and is in the process of creating teams, he added.

Sagar further said, "we acquired one company near Cuttack. We have started making carbon magnesia bricks there. We have plans to double that capacity in the next six to nine months to 36,000 metric tonnes." When asked if the Cuttack plant would substitute the company's imports from China, he said, "I would not say full substitution of China but in general terms, yes. We wanted to have a footprint in India. Following this government initiative of 'Atmanirbhar Bharat' that is one step towards that." He further said, "still there will be a lot of imports from China but if the government says we won't allow Chinese products to come to India, we are probably the only company (in the sector) having backward integration." He said the group has mines in Brazil, Turkey and Europe and it can bring raw materials from there for its Cuttack plant and other factories in India. "Today competitors are importing 40-45 per cent raw materials from China and we are importing about 20-25 per cent," Sagar added.

RHI Magnesita has four manufacturing facilities in India - refractory products plants at Vizag in Andhra Pradesh, Bhiwadi, Cuttack and a refractory equipment and mechanics development factory in Mumbai. Commenting on the company's growth plans, Sagar said, "we are looking at expanding our product portfolio. We wanted to concentrate on non-steel areas, which is not very strong (for us). We want to increase our share in the cement area, glass, aluminium etc. We want to go all out in the iron making area, with products which we are not having in our portfolio in India at present." He further said, "we are having some arrangements with our European and North American plants to have technical know-how transfers to India so that we can make these products in India also. Mostly it will be a brownfield type of expansion. We have spare lands in all our facilities to add new products." When asked what sort of investments have been earmarked for the purpose, Sagar said, "these are short term (plans). For these, there will be investment of around Rs 100 crore. Then it is a long-drawn process and then we keep on adding things and investments will keep on coming. Probably this type of investment will happen every two years or so." On the export front, he said, "as of now about 25 per cent is exported already from India. We think it is very much possible to take it up to 30-35 per cent in the next two-three years." RHI Magnesita currently exports to 63 countries from India directly or through group firms. These are in Europe, South East Asia, Africa, Middle East.

He said while export volumes will definitely pick up to the existing countries, the company will also add some countries going forward. At present, the India business of RHI Magnesita is about Rs 2,000 crore, which is almost 20 per cent of refractory market size in India, according to the company.