Notes from the FY23 AR:
- December 2022 Phase IV VISO plant expansion of the Kolkata plant completed | augmented our VISO capacity by 40% | Inaugurated in February 2023
- March 2023 Phase I expansion of the precast plant at Vizag completed | increased our precast plant capacity by 50% | Inaugurated in April 2023
- March 2023 Construction of the Basic Monolithic and Mould Flux plants commenced at the Visakha Industrial Complex: scheduled to be commissioned later this year: with capacity of 130,000 tons
- November 2023 Construction of the AlSi (Alumina Silicate) Monolithic plant commenced at Visakha Industrial Complex: ~ Rs. 88 Crores has been allocated, capacity of 120,000 tons: | anticipate operations by the fourth quarter of 2024.
- India’s steel capacity has crossed 161 million tons comprising 67 MT by blast furnace-basic oxygen furnace (BF-BoF) route, 36 MT by electric arc furnace (EAF) and 58 MT by induction furnace (IF) route. As per the National Steel Policy, India has set the targets of achieving the total crude steel capacity of 300 MTPA and total crude steel demand/ production of 255 MTPA by 2030-31
Notes for the India business from the Full Year 2023 Parents (Vesuvius plc) Earnings Call [Source: https://www.vesuvius.com/content/dam/vesuvius/corporate/investors/results-reports-and-presentations/results/2024/full-year-results-2023-transcript-240229.pdf.downloadasset.pdf] on FEBRUARY 29, 2024:
- In this overall difficult steel environment, our flow control business units performed well and continue to gain market share in volumes in most regions. This was particularly the case in India.
- Sensors and probes after several difficult years is now firmly in the black and should continue to progress in the coming year. The year was more difficult for our advanced refractories business unit due not only to the general market weakness, but also due to market share losses in India and in the Americas, where we gave priority to pricing over volumes. The advanced refractories business unit, however, continued to progress and gain market share in Asia in 2023 and in particular in India
- Several of our robotic solutions were adopted by important customers in North America and for the first time in India. These robotic solutions present important safety advantages for our customers as they allow them to remove workers from some of the most dangerous areas in the steel plant.
- Can you expand a little bit on India?. You’re adding additional capacity. What is the risk that this is the only growth market in the world in steel this year and we attract more competition, more pricing pressure. Are you guys confident that you can offset any of that?… we anticipate a strong growth of the steel markets outside of China in the coming few years. And yes, it’s clear that India is represents a majority of this growth……… it’s clear that in 2024, probably for the second year in a row, India will be – will represent the majority of the growth in the global steel market. Our position in India is strong and I would say reinforcing itself progressively……………… I believe we have the good strategy, the right strategy in India. We are investing in state of the art new greenfield operation, especially new sites in Vizag in a south eastern coast of India, where we made an acquisition of industrial land a few years ago and we are now progressively investing in this platform which will progressively become in the next 5 to 10 years, not only our biggest plant in Asia, but maybe some of our – among our biggest plants in the world……………… And we invest there with best-in-class technology, best-in-class equipment. We select ourself the people that we are hiring. We take top people, both at the management level and in terms of blue-collar and this create a very competitive platform to capture the growth in India. And we believe that it is the right strategy in a market which may be doubling in size in the next 10 years.
- We are specializing in products where there is some barrier to entry, not too much in the commoditized part of the business. And this is what allows us – what has allowed us in ’23 for the second year in a row to outperform the market.
- And interestingly, not only in flow control. We say flow control, it is usual. We’ve done it before, and we’ll continue to do it. But also in advanced refractories because of these choices where we are progressing very well. India is an area of strong growth and profitable growth. I insist on that. Strong and profitable growth of advanced refractories business unit.
- Through our two listed subsidiaries, Vesuvius India and Foseco India, which we have been preparing for years for this hockey-stick. We have been waiting for the hockey-stick for quite some time. Now it’s happening, and we are now in a very good position because we have a very strong balance sheet also these two Indian subsidiaries…… We have the cash and we are ready to go and seize the opportunity proactively and rapidly.
- On the strategic expansion, the CapEx you spend there, what are your assumptions around utilization overhead recovery over the course of next couple of years and how that might impact margin?We – our ambition is to fill our new capacity by – I hope 2027, somewhere between ’26 and ’28. And there are some geographies, my gut feeling is that in India, for example, it will be more ’26 than ’28. So in other geographies, it could be a bit longer. But our objective is to fill them rapidly.
- Capacity utilization of advanced refractory …………at places like India, we are already we are already at full capacity. So we are really running at full capacity as our teams in India are eagerly waiting for the new capacity under construction to come onstream
Latest Update to the exchange: Capex commitment doubled to ~1000Cr. Mold Flux plant inaugurated. Note that it was expected to be commissioned by Mid-Yr in the FY23 AR.
Disc: Invested today(19-Apr-2024).
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