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.

Over the years, the company has succeeded in opening up new industry sectors and applications. "The applications keep increasing, and sintering is competing wherever metal forming technology is used," says Sud.

Another area where Hoganas India has made decisive inroads is exports. Not so much in terms of volumes, as in opening up new markets. This, despite the fact that its principal, Hoganas AB is a global player in iron powders, and leaves little scope for the Indian arm to venture into exports on its own.

"We focussed on opening up markets where Hoganas AB found it unattractive to enter. These were small pockets, with small volumes, or requiring niche products. These included the Middle East, Iran, Saudi Arabia, Eqypt, Dubai, which were being catered to by other players," explains Sud.

As a result, exports during 1998-99 grew to Rs 3.64 crore from Rs 2.3 crore earlier. "Our aim is to increase volumes in these markets. Jordan and Syria are next on the list, and Pakistan, if relations with the country turn favourable.

Hoganas India also carries coal to Newcastle. The Swedish principal buys back some special grades of pre-alloy powder from Hoganas India, which are required in small quantities. "Our plant is flexible, and allows manufacture of convenient quantities in different grades. So we can cater to niche applications," says Sud.

Hoganas India commands a 90 per cent share in the iron powder market in India, and with a 43 per cent duty on imports, continues to maintain its enviable position.

Hoganas has been making consistent progress since the commissioning of its 6,000 tpa plant in Ahmednagar in 1987. With re-modelling and addition of balancing equipment, the capacity was increased to 9,000 tpa. In 1997, the company undertook a backward integration project by acquiring an iron powder manufacturing unit from Mahindra Sintered, which was expanded from 2,000 tpa to 4,000 tpa. The company invested in a new arc furnace in 1994, and increased iron powder atomising capacity to 15,000 tpa.

Last year, the company installed a new mixing station to include pre-mixed iron powder into its product-line. Pre-mixes comprise of iron powder mixed with copper, graphite, lubricants, etc., in proportions specified by clients. "While it brings us value addition, pre-mixes save costs to the sintered product manufacturer. Also, we are able to supply uniform quality pre-mixes in large quantities. The demand for pre-mixes is steadily picking up," says Sud.

Now with the doubling of its annealing furnace capacity, the company is on a consolidation exercise. "We have to make an entry into new markets which are opening up, such as infrastructure, find newer uses for our products and step up capacity utilisation. Right now we have to consolidate all our investments," says Sud.