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"Ferro Alloys Industry is passing through difficult phase"- Subhrakant Panda
In this interview with Steelworld, Mr Subhrakant Panda Director, IMFA and Joint Managing Director ICCL to dwells on the problems and prospects of the industry :
IMFA Group comprising Indian Metals & Ferro Alloys Ltd (IMFA) and Indian Charge Chrome Ltd (ICCL) is the largest producer of ferro alloys in India with 130 MVA installed furnace capacity backed up by a large 108 MW coal-based captive power plant and own chrome ore mines. All activities such as ferro alloys production, power generation, chrome ore mining and corporate functions (commercial & HR) are ISO 9002 certified making IMFA Group unique in terms of possessing comprehensive multi-product and multi-location certification.
IMFA Group is the largest producer of ferro silicon in India. It is also the largest producer and exporter of ferro chrome if looked at in terms of units under the same management. In fact, for two consecutive years (1999-00 & 2000-01) it's constituent ICCL has been conferred with the State Export Award for ferro chrome. Other products are high purity ferro silicon, ferro silicon magnesium and ferro silicon based inoculants.
Q: How is Indian ferro alloys industry doing at present?
A: Given the global economic slow-down in general and the excess capacity of the steel industry in particular the ferro alloys industry not just in India but indeed world-wide is going through a very difficult phase. Of course, there are some problems specific to India such as high power rates, infrastructure bottlenecks, etc. I anticipate the current low phase of the ferro alloys market to continue for some more time with a revival perhaps towards the last quarter of 2002.
Q: What are the major achievements of IMFA Group in last few years ?
A: With a portion of the captive chrome ore mines at Sukinda coming through in late 1999, we are today the only fully integrated ferro alloys producer in the country. Therefore, especially keeping in mind the present market conditions where only the fittest will survive, our focus at IMFA Group in the last few years has been to maximise operational efficiency and take fullest advantage of our unique positioning in the ferro alloys industry in India. In 2000-01 we set new records in all our areas of operations be it ferro chrome production & export, ferro silicon production or power generation. Following some major maintenance work in 2001-02 (relining of 48 MVA Charge Chrome Plant at ICCL in August-September 2001 which was completed in a record 41 days and similar relining of IMFA's 24 MVA furnace at Therubali which was recently completed in a record 19 days) we are now back in full operation and once again setting records. The CCP at ICCL recorded its highest ever production in December 2001 while the power plant achieved 95% PLF in January 2002.
We have also taken significant measures in the last few years to upgrade technology and equipment so as to squeeze out the maximum from our operations in terms of efficiency.
Q: How is IMFA Group doing on the export front ?
A: Ferro Chrome exports from ICCL which is a 100% EOU have been growing steadily and touched a new high of 52,867 mt in 2000-01. Although there will be a slight dip in 2001-02 on account of the furnace shut-down due to relining, we are looking to cross the 50,000 mt mark in 2002-03.
Q: In India, cost of power being quite high, ferro alloys manufacturing may not be viable. Please comment. How do you propose to reduce the power cost ?
A: It is my firm belief that in order to be competitive on a global scale it is imperative for an Indian ferro alloys producer to have access to viable captive power (coal-based or hydel). Although cost of power purchased from the grid can be cheaper than what it is if the element of cross-subsidy if removed, I doubt the economics of purchased power will be viable for ferro alloys production. Furthermore, I have always maintained that those units which have come up solely on the basis of subsidised power will find things difficult in the long run. As far as specifically IMFA Group is concerned, we already operate a 108 MW coal-based power plant which not only meets our own requirements but also supplies the surplus to the state grid.
Q: How much is the import threat to the ferro alloys industry ?
A: Frankly, in this day and age imports per se cannot be considered a threat because one has to compete globally instead of looking to survive in a protected market. However, there is no doubt a threat from unfair imports. For example, in ferro silicon we have seen dumping taking place from producers based in countries such as China, Russia, Ukraine, etc. In this connection anti-dumping duty has been imposed by the concerned authority. As long as unfair imports are not taking place the domestic ferro alloys industry will have to sink or swim based on its own strengths.
Q: How do you see the prospects of this industry ? Tell us something about future plans of IMFA Group. What are going to be the major thrust areas ?
A: In my opinion India cannot be ignored as a ferro alloys producer because of several reasons such as:
1) Geographical location leading to logistical advantage of supplying to the Far East market in particular
2) Stable democracy with a developed judicial system
3) Significant deposit of chrome ore (if looking at ferro chrome in particular)
However, as I mentioned earlier, there is no denying that there are several problem areas such as high power costs, infrastructure bottlenecks, etc. Having said this there are solutions viz. viable captive power, location close to a port so as to reduce internal transportation costs, etc. Besides, other issues such as high operating costs (telecom, interest rates, etc) are all being addressed slowly but surely as reforms gather pace. The Indian ferro alloys industry is going to focus more on ore-based alloys (ferro chrome, silico manganese, etc) while power intensive alloys such as ferro silicon will gradually be phased out.
At IMFA Group we are looking to consolidate our position. There are also firm expansion plans on the anvil by way of backward integration into coal mining and expansion of power generation capacity in order to take advantage of our location near the major load centre of Orissa. As far as ferro alloys capacity is concerned, we are already the largest in terms of installed furnace capacity but will consider further expansion at an appropriate time.
The major thrust areas are going to be ferro chrome, speciality alloys and power generation.