Murugappa Group's Carborundum Universal Limited (CUMI) has decided to shut down two plants -- Bubble plant and Thukela Refractories --- in South Africa, and shift the equipments to India. The company to spend around Rs 50-60 crore to relocate the factories.
M M Murugappan, vice chairman of the Murugappa Corporate Board said that Foskor Zirconia has stopped producing Bubble Zirconia at South Africa and the company started moving the refractory to its Kerala factory.
K Srinivasan, managing director of CUMI told investors that there was a technical difficulty in the Bubble Zirconia manufacture, which was brought from a Canadian company.
The company had technical difficulty in stabilising the production and it was decided to move it to Cochin into the SEZ zone, where Bubble Zirconia will be made.
Around 200-odd tonnes were produced and sold it to the main users, but the plant itself is not being run stably in South Africa, he said. In the next six months, the company hopes to move the plant.
On Thukela Refractories, he said, it was producing alumina or light alumina etc. There historically it has always been a case of the premium products like the Zirmul and others.
More From This Section
“We have supply contracts which are not being committed and maintained plus we could not stabilise any new product out of these plants. Consequently we decided to close this operation,” said Srinivasan.
The two furnaces are being shifted to India and they are on their way. They will be used here to make a product, which CUMI feels got good opportunities and already it scaled up a product called the semi-friable, which is also exported.
The facility that comes will be used to make another type of product that is also alumina, but that is more of a semi-friable alumina and not the Zirmul, which company was trying to make in Thukela. So this will be used to making higher volume of semi-friable product out of India, said company officials.
The company hopes, by 2016-2017 both Thukela and Bubble plants will be relocated into India and would start operations. CUMI lined up capex to the tune of Rs 175 crore, of which around Rs 90 crore would be for relocation.
Murugappan said around $4 million was the loss due to these factories.
The products from Zirconia plant has been used in a variety of applications including ceramic colours, abrasives, chemicals and refractory products for the glass and steel industries.
A HDFC Securities in December 2014 said Foskor Zirconia has 5,000 tpa conventional Zirconia capacity has been utilised optimally, but the comparitively new 5,000 tpa bubble Zirconia facility has not been able to ramp up utilisation.
The report quoted management saying labour, cultural and local leadership issues in South Africa.
The Thukela Refractories, which has a fusion capacity of 22,000 tpa was acquired in 2012, during when firm commitments of business were made by the minority partner RHI. The report said that RHI, which is world’s second largest refractory manufacturer, has not been able to maintain its commitments due to its reduced requirement and consequently Thukela has been incurring losses.