Hoganas commissions new furnace, doubles capacity

06 July 1999

With the commissioning of its second annealing furnace, Hoganas India Ltd, subsidiary of Hoganas AB of Sweden, doubled its capacity to 18,000 tonnes per annum of iron powder at its Ahmednagar, Maharashtra, plant. Trial runs have begun, and full commercial runs are slated within a week. With this, the company has equipped itself to meet the demands of new sectors such as infrastructure.

Massive investments are being made in power, gas, pipelines, petroleum products, which will open up opportunities in the welding industry. The automobile industry is also looking up, with a million cars expected by 2002. Our new capacities are ready well in time to benefit from this growth, says V K Sud, managing director.

For the year ended March 1999, the company’s turnover rose 17 per cent Rs Rs 27.94 crore from Rs 23.98 crore. Net profit, which rose from Rs 2.76 crore to Rs 2.84 crore, might have been lower had it not been for the company recording a lower depreciation of Rs 1.08 crore (Rs 1.11 crore), interest Rs 0.35 crore (0.41 crore) and tax at Rs 1.17 crore (Rs 1.29 crore). Clearly, margins were squeezed.

Mr. Sud defends the lower margins. "The strategy of the company was to build on sales, and capture high volumes wherever possible. Not enough attention was paid to margins. That correction will come this year." For the same reason the company did not also pass on its increased costs to its customers. Power tariff, for example, went up, as did employee costs, but the company absorbed them so as to meet its targets on volumes growth.

The company also concentrated on exploring new application areas, and new product introductions. "We developed a new product suitable for the steel industry last year," says Sud.

Traditionally, iron powder is used in the component industry, primarily auto-components, to make sintered products. Auto components account for 55 per cent of its sales, while sintered products are also used in other products such as fans, coolers, air-conditioners, compressors, etc. Of recent, iron powder is being used for coating welding electrodes, in the aluminium industry as an alloy agent, and, more recently, in the chemical metallurgical industry.