India's largest coal handling agency - Mjunction

Cover StoryThe company has been one of the pioneers in manufacturingsteep angle belt conveyor, which is an effective bulk handlingequipment based on bucket belt type technology. This issuitable for handling a variety of materials, as these beltconveyors consist of tail pulley, head pulley, press rolls andsnub pulley. This apart from being economical and practicalis effective for lifting bulk material. It is applicable for shortdistance to a height of 100 meters. The maximum inclinationof 90 degrees is possible without any spillage. The availablewidth is 400 mm to 1500 mm with a capacity of 5 ton per hourto 1500 ton per hour with a speed of 5 metres per second.Yet another major expansion comes from the stable ofInternational Conveyors Ltd (ICL). It is one of the marketleaders in the Indian PVC mine conveyor belt industry witharound 45 percent market share. The company is currentlymaking efforts to establish itself as a global Indian company.ICL is a supplier of underground PVC belting for carryingcoal and potash, and presently supplies over 150 km of PVCbelts of various widths and strengths to underground coalmines in India. With increasing focus on the undergroundmining by the domestic players, ICL is set to bag a sizeableshare of the underground PVC belting business.With a considerably good performance in 2009-10, thecompany is optimistic about the future growth. The company’stopline grew 25.62 percent from `71.84 crore in2008-09 to `90.24 crore in 2009-10. The bottomline wasup 369 percent from `2.76 crore in 2008-09 to `12.96 crore.Managing director of ICL, R. K. Dabriwala, describedthis performance as creditable as the international marketcontinued to be in a state of slowdown, affecting the capitalexpenditures of industries addressed by ICL.“If there is a single message that can be deduced from thisperformance, it is that the company has finally establisheditself as a global Indian company. The evidence is in thenumbers. There was a gradual correction in an excessiveIndia-centric presence that we created over the last decade,”Dabriwala pointed out. The company’s exports increased at aCAGR of 202 percent from 2001-02 to 2009-10. Of this, around63.77 percent of the revenue comprised exports in 2009-10. Itwill be interesting to note here that of this about 80 percentwas made to First World countries where only multinationalcorporations enjoyed a monopoly until now.According to Dabriwala, this presence was establishedowing to globally competitive costs, technologicallybenchmarked with the best in the world, and the managerialbandwidth to recognise global trends and compete with largercompanies.The company expanded annual installed capacity from5,75,000 metres in 2008-09 to 7,00,800 metres. Thus, increasedproduction from 2,70,802 metres in 2008-09 to 3,49,330 metrestranslated into increased revenue. ICL believes that the futureof competitive manufacturers lies in value addition beyondthe commodity segment, Dabriwala informed.ICL evolved its product mix through the increasingmanufacture of value-added products like 8000 lb per squareinch (lb/sq. inch) and 10,000 lb/sq. inch products and mirrorfinishPVC beltings. “As a forward-looking manufacturer, webegan to manufacture Type 8 to 10 in 2006-07, a space occupiedby only few manufacturers in the world, and reinforced ourposition in this space in 2009-10, strengthening our brandin peer and customer communities. This had a number ofbenefits: our counter competition positioning strengthenedand our average realisation increased,” Dabriwala said.This strengthened the company’s average realisation from`2411.30 per metre in 2008-09 to `2473.50 per metre.Meanwhile, the company leveraged its in-houseengineering excellence to use an optimum amount of rawmaterial while completely matching customer specifications.In addition to this, the company also shifted from Europebasedraw material providers to Korean and Chinese supplierswith corresponding cost advantages without compromisingon quality.Keeping in mind the volatility in commodity prices, thecompany derisked itself against the increasing cost of pastegrade PVC – a key input material – by booking bulk quantitythrough forward contracts. ICL also engaged in valueengineeringin its existing plant and machinery to reduceconversion costs, Dabriwala mentioned.Referring to its geographic positioning, Dabriwalaadded that the growth of ICL was derived out of an activepresence in only three countries and it expects to enter Chinaand Australia in 2010-11. Normally, only large companiespossess competencies in Type 6-plus products. ICL derivesover 50 percent of its revenues from Type 6-and-aboveproducts.In the Indian market, the Type 6 segment accounts for amere 60 km of the market as the mining practices carried outin India are not fully mechanised as most mineral reserves areextracted from as close to the surface as possible. As surfacereserves are progressively depleting, the country will needto mine deeper, and engage in longwall and continuousminers, which in turn will warrant a growing investment in ahigher type of product mix. Until this happens, ICL will focuson the developed global market like the US, Australia andChina, where the deep nature of mining and correspondingmechanisation has translated into a sustainable offtake forICL’s products.Thus, ICL intends to modernise its unit with an investmentof `400 lakh, to help produce larger volumes within the existinginfrastructure. ICL also intends to widen its geographicalpresence from three to five countries. “We expect the fullimpact of our doubled capacity to be felt in 2011-12. For now,we hope to report two years of straight growth. Our principalobjective in 2010-11 is to enhance our capacity utilisation andcapture additional market share which may require us to becontent with more modest realisations, margins and profits forthe moment,” Dabriwala said.COAL INSIGHTS 14 November 2010