Date:19/05/2005 URL: http://www.thehindubusinessline.com/2005/05/19/stories/2005051902590200.htm

Back Texmaco's new steel foundry unit may begin operations in mid-2006

Nilanjan Dey

Kolkata , May 18

TEXMACO Ltd will bank heavily on its steel foundry business in the days ahead, beginning with a new unit that is expected to commence operations in mid-2006.

The company, which expects the proposed facility to boost production by a critical margin, has already placed orders for major equipments with Kunkel Wagner Prozess Technologie, a German manufacturer.

The new unit will enable Texmaco to rank among the most up-to-date foundries for Railway castings, claimed Mr Saroj Kumar Poddar, Vice-Chairman, adding that the steel foundry division has created a new record of sorts with production and despatch figures standing at an all-time high of 11,254 tonnes and 11,305 tonnes respectively.

The division registered a turnover of Rs 82 crore (Rs 49 crore) in 2004-05. However, foundry operations witnessed a significant cost escalation as well - a result of a major increase in prices of steel scrap, alloys and components.

After commissioning, the new unit will also enable Texmaco to improve export performance. Contracts with international buyers are being established to penetrate foreign markets.

The company has further planned to broadbase some of its other operations in order to realise the full potential of the infrastructure that it already has. This includes the facilities available with its heavy engineering division, which is currently seeking to reinforce strengths through upgraded technology.

Texmaco's rolling stock division too has ambitious plans, it is pointed out. The division, incidentally, managed to record a total order of over 5,500 wagons from Indian Railways - the highest in recent years.

The company, which otherwise derives a key portion of its income from large-scale contracts for wagons, could have actually registered higher production figures but for a "constraint" in the availability of wheelsets, a free supply item, Mr Poddar noted.

This constraint materialised because of a shutdown (for overhauling and expansion) in the rail wheel factory in Bangalore during the December 2004-March 2005 period. Production had to be regulated as directed by the Railway Board. It is hoped that the introduction of a `wagon investment scheme' in the Railway budget for the year should accelerate the flow of orders.

Real estate interests

TEXMACO will firm up development plans for its property in Delhi, subject to clarification in respect of certain legal issues concerning Birla Mill land, Mr Poddar indicated, adding that the issuance of such clarification is expected shortly. Its application (seeking clarification) has been pending with the Supreme Court.

A special leave petition filed by Shree Sita Ram Bhandar Trust against acquisition by the Delhi Development Authority of a property (in which the company had `bhoomidar' rights) is also pending with the court. A decision on it may be expected during the current year, it is felt.

It may be mentioned here that in 2003-04 Texmaco had recorded an extraordinary net income of about Rs 13 crore earned from a development agreement in respect of its property in Worli, Mumbai.