IFGL commits Rs 160 crore to expansion amid global headwinds

Leading refractories solution provider, IFGL Refractories Ltd, remained upbeat about demand in India and the export market amid headwinds, and lined up a capex of Rs 160 crore by FY'24 to ramp up its capacity and debottlenecking of its plants, a senior official said on Tuesday.

The official of the Kolkata-based company that mostly caters to the steel sector said that margins will remain under pressure for a few more quarters owing to commodity inflation, but said this is a short-term phenomenon.

"Despite short-term hiccups, we anticipate strong domestic demand, thanks to the government-led infrastructure spending. On the export front, the slowdown in Europe and the USA will only have a short-term impact," IFGL director & CEO Kamal Sarda told PTI in an interview.

Since global companies are replacing some of their China sourcing with some from other countries, such as India, demand will jump significantly in near future, Sarda said.

"We are upbeat about demand in the long term and that is why we have embarked on one of our largest capex plans of Rs 160 crore across our plants to augment capacity and debottlenecking. IFGL is well positioned to capitalise on this growth," he said.

The expansion will be funded by a mix of internal accruals and bank loans.

The company has three refractory manufacturing plants in India and facilities in Europe and the USA.

Refractories multinational RHI Magnesita recently made a Rs 1,708 crore acquisition of the refractory business of Dalmia Bharat Refractories Limited (DBRL) in India, reiterating growth opportunities in the country.

The SK Bajoria group company will invest Rs 50 crore in its Odisha plant including the Research & Technology Centre at Kalunga, at an estimated cost of Rs 20 crore. The R&D centre will help develop new products for steel and other sectors.

The Kandla plant will attract a capex of Rs 44-45 crore and Rs 65 crore in the Vizag facility.

"The investment will be till March 2024 to complete the projects and we expect annual peak additional revenue of 3.5x of our capex," Sarda said.

"Besides capacity ramping, we are also introducing new products to cater to new segments. The Kandla plant capacity is doubling in the isostatic refractories, also known as alumina graphite (AG) refractories to 40,000 pieces. The Vizag plant will have a capacity of 7400 tonnes from 4000 tonnes now by FY'24," Sarda said.

Speaking about Japanese technical and financial partner Krosaki Harima Corp in IFGL, the official said that both of its directors have resigned and currently it is only an investor in the company.

"There has been no technology transfer in the last decade and its exit will not impact us in terms of new product innovation," Sarda said.

Krosaki Harima holds about 15.5 per cent stake in IFGL Refractories.