D.K JainAgrawal Metal Works INDIA

1

Indian History

Till the 1980-1990 India was not a major manufacturingNation.

Indian had nothing much to export as manufacturedgoods, except natural resources coal, iron ore andtextiles etc.

India was not even self sufficient in growing food forour people and used to import food grains fromoverseas.

Similarly we were quiet deficient in production of crudeoil and had to depend highly on imports.

2

Overview of Copper Industries in India

Primary Producers Till late 1990’s due to regulated economy M/s.

Hindustan Copper Ltd., an Indian Govt. Unit was thesole producer of Primary Copper, from the oresavailable at their captive mines located at Khetri –Rajasthan & Malanjkhand M.P.

The capacity of production of Cathode was nearly 8,400MT per annum till mid 1960’s.

HCL had a Brass Slab Casting and Hot Rolling Unit atGhatshila to produce Brass Sheets in sizes of 1200 x1200 mm.

3

Secondary / Fabricating Industries

Just after Independence in 1947, Copper fabricatingindustries were in small scale setup, started catering tothe needs of the Indian consumers and industriesmanufacturing Utensils, Handicraft, Petromax andRadiator Tanks etc.

The Rolled Product was mainly Hot Rolled.

The growth of the industries were quite slow andsluggish till 1970’s.

4

Impediments for the development of Manufacturing Industries

1) Government was encouraging the substitution ofCopper with Aluminium in certain electrical usesthrough statutory directives, as India was selfsufficient in Production of Aluminium and Copperwas scarce.

2) Restriction on direct import of copper by levying highcustom duties to the tune of 150%.

3) No assistance was available from the government interms of financing infrastructure

4) No fiscal concessions were available.

5

Impediments for the development of Manufacturing Industries

5. Banks were even not very optimistic to extend funds tonew Companies, as interest rates were very exorbitant tothe extent of 16 to 18 % per annum.

6. Stringent license requirements created the majorhindrance for the following:

a) Starting up of new copper and Copper Alloyfabricating industries

b) Expansion of the existing fabricating units

6

Economic Crisis

The beginning of 1990’s constitute an importantlandmark in the history of economic growth of India.

This period experienced a serious foreign exchangecrisis, acute balance of payments and severe industrialrecessions.

Certain stringent measures were taken by theGovernment to tide over the crisis. This wasaccompanied by certain bold steps, towards decontroland liberalisation, making radical departure from thepolicies, followed over the previous four and a halfdecades.

7

De-Regulation of Indian Economy

In the year 1994, the then Finance Minister a renownedeconomist, presently Indian Prime MinisterDr. Manmohan Singh, took some very tough and bolddecisions to de-regulate the economy, inviting ForeignDirect Investment which, of course brought manychallenges as well relief to the Indian Industries.

The De Regulation spurted growth in Primary CopperProduction in the Country.

The only Primary producer, Hindustan Copper increasedits Cathode Production from 8,400 MT per Year to49,500 MT per Year.

8

De-Regulation of Indian Economy

Also indigenous production of CopperCathodes started from Concentrates importedfrom overseas by the Private sector namelySterlite Copper and Birla Copper each withan installed capacity of 100,000 MT Per Year.

Presently, both the above units haveincreased their production to 950,000 tonnesper year, and have plans to increase it further.

Both of them have established manufacturingcapacity of CC Copper Rod of size 8 mm to19.6 mm to cater the demand of IndianCopper wire drawing Industries. 9

After Effects of De regulation

Restrictions on production capacities were removed.

Control on imports of Capital Goods was relaxed.

Imports of copper cathodes by the actual user industrieswere allowed thus easing the availability of the copper tothe downstream fabricating industry like Rolling andExtrusion.

Custom duty were reduced on Copper and other alloyingelements like Zinc, Tin & Lead etc.

With the result, Copper fabricating industries also startedadopting newer manufacturing technologies.

10

Growth of Manufacturing Sector -New Millennium

The real growth to India coincided with the New Millenniumdue to the boom in the Information Technology Sector.

India started earning good amount of foreign exchange fromthe IT-service sector due to handsome value addition.

With the inflow of the foreign exchange, the IndianGovernment started to invest in infrastructure like

Power Generation and transmission Development of Road , Rail , Air Networks & Housings etc.

Growth in infrastructure became a catalyst for hugemanufacturing growth in the country.

11

Growth of Metal Industry

Primary Copper & Zinc producing units. The Augmentation of capacities by the primary producers of

Copper has today made the country self sufficient for therequirement of copper Cathodes and also catering to therequirements of other Asian countries.

India is Self sufficient in meeting its demand’s of Zinc as analloying element for the Copper and Copper Alloysmanufacturers. Hindustan Zinc Limited is the sole producersof Zinc ingots at Udaipur – Rajasthan.

Downstream secondary fabrication industry Downstream secondary fabrication industry have benefited

from the domestic availability of primary Copper and Zincthus spurting in the growth of manufacturing sector of thecountry.

12

Indian Fabricating Industries are capable ofmanufacturing conventional alloys like Copper, Brass,Phosphor Bronze, Nickel Silver and Cupro-Nickel, etc.

However High Performance alloys are not beingdeveloped so far as we did not foresee much demandin the country, however are willing to developwhenever volume picks up.

Today Indian fabricating industry is rolling Copper Foilsupto thickness of 0.030 mm and brass foils uptothickness of 0.05 mm conveniently and has build upthe production capacity of around 10,000 MT perannum so far.

Current Scenario of Indian Fabricating Industry

13

Current Scenario of Indian Fabricating Industry

Presently Indian copper and copper alloy fabricatingindustries have installed sufficient productioncapacities to meet the indigenous demand and havestarted to export to South East Asia.

Rough Estimate of Indian Copper Industry Rolled Product :- 1,00,000 MT Extruded Product :- 1,50,000 MT

Indian fabricating industry have invested good amountin adopting newer technology and modernization oftheir manufacturing facilities.

14

Adoption of newer and latest production Technologies / Equipments.

Horizontal Continuous Casting Lines for Brass and Phos.Bronze strips.

Direct Chill Vertical Slab Caster. Continuous casting of Rods through CCR and Up Level

Casting. Continuous extrusion/Conform technology etc. Newer Generation Rolling mills with Hydraulic AGC &

Mass Flow Control. Continuous Degreasing Annealing Pickling (DAP) lines. Tension as well as Stretch Bend Leveling Lines. Laboratory testing equipments viz. OES (Optical

Emission Spectrometer), Oxygen Analyzers, Micro OhmMeters ,direct reading conductivity meters & Microscopeetc.

15

Extruded Products

Conforming machines in India have brought a sort ofrevolution in the extrusion industry as far as copperRods ,Bus bars and Flats & heavy sections areconcerned.

In the last 5 to 6 years more than 50 to 60 machineshave been imported from China which has created asevere competition thus losing the advantage in termsof lower cost of production v/s conventional extrudedproduct which involved higher capital investmentlonger operation of casting billets , Reheating and Hotextrusion followed by Cold Drawing.

16

Opportunity to Indian Fabricating Industry

Annual per Capita demand for copper in India isincreasing and this trend is likely to continue due toIndia’s very low per capita copper consumption ofabout 0.6 kg as against world average of about 2.7kg.

Thus there is a good market prospects for copperbased semis in India – which enlarges scope offurther growth of the fabrication industry.

17

Constraints Lack of Manufacturer of Capital Goods & Machinery in

India & mainly dependent on Import.

Higher Payback Periods for Investments in CapitalGoods.

Lack of Support from Banking Sector and Government.

Substitution by cheaper alternative metal like Aluminiumand Plastics.

Lower Volume & uneconomical order Quantity.

Transportation and Logistics.

18

Lack of Manufacturer of Capital Goods and Dependence on Import

After De-Regulation of the economy, Indian fabricatingindustries have started augmenting their productioncapacities by substantial investment in Capital goods.

For Copper and Copper Alloy fabricating industriesspecial purpose machine are required for which IndianCapital Goods manufacturers were not geared up at thattime since they were also at their infancy stage and werenot exposed to the newer technology being followed indeveloped countries.

So few enterprising fabricators ventured to import somemachinery from developed countries.

19

Substitution

High and fluctuating price of copper has led to substitutionby cheaper alternatives which is a big threat. Substitution of copper with aluminium in radiators of

automobile sector has hit Indian fabrication industries offlat rolled products like sheets, strip etc. very hard.

So as the replacement of conventional copper alloy heatexchanger tubes in critical and supercritical thermalpower plants by alternate materials.

High cost of copper has also hit the Indian handicraftand artware manufacturing industry, - which has beentraditionally a major foreign exchange earner for India.

Electronic Keys in Car and Builder Hardware are a threatto traditional brass Semis.

CCA ( Copper Clad Aluminium Wire is another threatlooming over the Copper Conductor Industry.

20

Low Economies of Scales causing Longer Payback period on Investment in

machineries The machineries for fabrication of Copper and

Copper Alloy being special purpose machine aremostly meant for high production capacity as well asvery costly.

Whereas the volume of the indigenous production ismuch lower than the production capacity of themachines.

Thus do not justify the high investment for lowVolume of Copper Production, resulting intoincrease payback period on Investment.

21

Lower Volume & uneconomical order Quantity

1. Since Indian per capita copper consumption is verylow, the demand of consuming industries are quitelow with small order quantities which falls muchbelow the minimum economical production.

2. In addition, each consuming industry has differentmake and model of machines for the same product,due to which their requirement of semis also variesin terms of width, thickness, temper, core innerdiameter, weight restrictions, hardness etc. whichagain make it cumbersome to the fabricatingindustries to serve their requirement.

22

Lower Volume & uneconomical order Quantity

3. Indian fabricating industries are compelled to setup a complete integrated facility right from melting,casting, Hot Rolling / extrusion and furtherprocessing till its final shape and sizes.

4. This is unlike other countries where mother coilsare being manufactured and sold, and the rest istaken care by rendering Services like slitting, cutto length etc. by appointing service centres.

23

Transportation and Logistics India is geographically a very large country dependant solely on

Road transportation as the rail transport is not well developedand there is negligible water transportation.

In India I am sorry to admit that Road Transportation andlogistics have not developed as per the expectation andrequirement of the industry.

Transporting small consignments is a real issue and these smallconsignments are being transhipped oftenly before reaching theirdestination. Lack of handling infrastructure at transhipmentlocations increase mechanical damages as well as tarnishing tothe delicate finish products like Copper and Copper Alloys.

24

Thank You for

your patient Listening

D.K JainAgrawal Metal Works INDIA

25