Coal India's new policy may hit explosives market

The explosives market in India is expected to undergo a radical change with Coal India Limited, the purchaser and consumer of about 80 per cent of the Rs 700-crore Indian explosives market, bringing in new purchase policy.

The new policy, which came into force from this calendar year, is likely to affect smaller players in the explosives industry. Currently, there are about 20 major players in the bulk explosive segment and about 35 in the cartridged explosive segment in the country.

Speaking to Business Standard, Amar N Gupta, vice-chairman and managing director, Premier Explosives Limited, said, "In the previous purchase policy, all those who participated in the notice inviting tender (NIT) and qualified on the vendor rating system (VRS), based on their capacity, quality and blasting design services amongst others, received the order. The new policy is based on the chief vigilance commissioner (CVC) guidelines, which says that the order should be given to the one who quotes the lowest price." Changes have also been made to the VRS, Gupta added.

Expressing concern that the smaller players might be affected, Gupta said that they had made a representation to Coal India through the Explosive Manufactures Association of India. The new policy was brought about two months back. "We will survive the change as we are one of the major players. The diversification being made by Premier should also help," he said.

Premier's new bulk explosive unit at Chandrapur in Maharashtra commenced operations in January while a propellant igniter systems unit was added to its existing detonator and fuse detonator unit at Nalgonda in Andhra Pradesh in November 2005.

Premier's sales and other income in the last fiscal was about Rs 60 crore of which about Rs 10 crore was garnered through exports. The Hyderabad-based company plans to expand its domestic market share from the existing Rs 50 crore to Rs 60 crore, said Gupta.

Premier earned a net profit of Rs 2.5 crore in the last fiscal and made Rs 1.5 crore in the three-quarters ended December 2005 this fiscal.