The Murugappa Group's Carborundum Universal will shut down two plants in South Africa and cart them to India at a cost of Rs 50-60 crore.
M M Murugappan, vice-chairman of the Murugappa corporate board said that Foskor Zirconia had stopped producing bubble zirconia in South Africa and the company had started shifting the plant to Kerala. He added the losses due to these factories were around $4 million.
K Srinivasan, managing director of Carborundum Universal, told investors there was a technical difficulty in bubble zirconia manufacture, and it was decided to move the plant to Cochin. Around 200-odd tonnes of bubble zirconia were produced, but the plant was not being run stably in South Africa, he said.
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Foskor Zirconia
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On the Thukela refractory, Srinivasan said, it was producing light alumina but “we have supply contracts that are not being committed and maintained. Plus we could not stabilise any new product. Consequently, we decided to close this operation.”
The two furnaces are on their way to India. They will be used here to make semi-friable alumina and not zirmul, which the company was trying to manufacture in Thukela. The products from the zirconia plant are used in ceramic colours, abrasives, chemicals and refractory products for the glass and steel industries.
The company hopes by 2016-2017 both plants will be relocated and start operations. Carborundum Universal has lined up capital expenditure of Rs 175 crore, of which Rs 90 crore will be for the relocation.
HDFC Securities in December 2014 said Foskor Zirconia had 5,000 tonnes of conventional zirconia capacity that had been utilised optimally, but the new 5,000 tonne bubble zirconia facility had not been able to ramp up utilisation. The report quoted the management blaming labour, cultural and local leadership issues in South Africa.
The Thukela refractory, which has a fusion capacity of 22,000 tonnes, was acquired in 2012 and firm commitments of business were made by the minority partner RHI. The HDFC Securities report said RHI, the world’s second largest refractory manufacturer, had not been able to meet its commitments and the refractory was incurring losses.
