Tata Metaliks entered into a JV with Kubota Corporation in March this year. What does this JV mean for the company and what role will it play in TML's future plans?
TML wanted to implement one of its value-added products, Ductile Iron (DI) pipe manufacturing, with world leaders and so we picked Kubota Corporation of Japan. The other JV partner we picked is another Japanese company called Metal One that specialises in trading of iron and steel products. The JV will be a subsidiary of Tata Metaliks with TML's equity holding of 51 per cent, Kubota's 44 per cent and Metal One's 5 per cent. Besides equity contribution, Kubota will also bring in the latest technology and best operating practices for DI pipe manufacturing. The JV will install a DI pipe plant of 110,000 tonne per annum (tpa) capacity within the existing premises of TML's pig iron plant at Kharagpur.

The plant will go on stream by the end of financial year 2008-09, and at 100 per cent capacity utilisation, the JV is expected to have a turnover of about Rs350 crore. While the pipes will be mainly for the domestic market, a part of the production will also be exported to Kubota's international markets.

DI pipe, as a product for water transportation, has a very high potential in the Indian market due to high investment in infrastructure development in the country and it also has a significantly longer life compared to other kinds of pipes. It has several other advantages like lower energy cost for water transmission, lower chances of water contamination, etc.

Besides going ahead with the DI pipe manufacturing plans, is TML looking at anything else in terms of other value-added projects?
The other two value-added projects which Tata Metaliks is considering are castings and steel. TML has already started supplying ferrous engineering and auto castings in the market to some reputed customers based on the outsourced model of partnership with foundries. Once this model is established, TML may venture into manufacturing of castings at its own foundry (greenfield on its own or in JV, or through an acquired foundry). With regard to steel, we are in the process of acquiring over 300 acres of land adjacent to our pig iron plant at Kharagpur. Once the land is acquired and given to us by the government, we will firm up our plans for manufacturing steel in a mini steel plant.

Tata Metaliks is said to be actively looking at mergers and acquisitions as part of its growth strategy. Are there any specific regions in India that you are looking at?
We have a strong presence in the pig iron markets in eastern, western and northern India. We may consider further acquisition in south India so that we can minimise cost on logistics, both for in-bound as well as out-bound materials.

Is the company looking at organic growth in the near future?
Right now the supply of foundry-grade pig iron is more than the demand in the country because of the short-term presence of some manufacturers who are graduating into steelmaking. Once this phase is over within the next few years, TML could consider further organic growth which could be in foundry pig iron or in basic-grade pig iron for which there is significant demand in the international market. Organic growth may happen at Kharagpur with the addition of a third blast furnace or at any other location in south India in a state where iron ore is available.

Tata Metaliks has a strong presence in south east Asia, South Korea and other niche markets. Can you tell us more about this?
Tata Metaliks exports about 10 per cent of its products to several countries. The major markets are freight-friendly areas of south east Asia including countries like Taiwan, Thailand, South Korea, Malaysia, Vietnam, etc, and the neighbouring Bangladesh. TML's pig iron is regarded as the best in the international market in terms of physical and chemical quality. Most of our products in the international markets are customised grades meeting specific end-use requirements of the customers.

Can you share some of the company's future plans with us?
The outlook for the company appears to be bright with focus on growth with value-addition. It is already one of the largest foundry-grade pig iron manufacturers in the world. We have the largest market share in the country in pig iron and intend to diversify into other products like DI pipes and castings and ultimately achieve the same status in these products as we have done in pig iron. Tata Metaliks is also looking at several cost-saving initiatives like sinter plant, coal injection plant, obtaining lease for mining of iron ore and coal, substitution of coke by carbon alloys, etc, which are at various stages of evaluation and consideration.