Dalmia OCL, the refractory manufacturing arm of cement and sugar major Dalmia group, plans to invest Rs 100 crore over the next five years in a bid to step up indigenous production in India and bring down dependance on imports, especially from China.

Refractories are used in furnaces and kilns primarily in the steel and cement industry. At present, around 40 per cent of India’s requirement is met through imports.

In a bid to de-risk and localise, Dalmia OCL on Monday announced the opening up of a 1.08-lakh-tonne brownfield capacity at Rajgangpur in Odisha to manufacture magnesia carbon refractory bricks. Phase 1 of the plant with a capacity of 36,000 tonnes has come up at an investment of Rs 20 crore. Two more phases would be added over the coming years.

“Current investment has been Rs 20 crore and we will be investing Rs 100 crore over the next 3-5 years to expand refractory manufacturing,” said Sameer Nagpal, CEO, Dalmia OCL.

The investment decision comes on the back of demand from the steel industry to localise the production of refractories in India amid rising geopolitical tension. Steel constitutes around 70 per cent of the refractory demand followed by cement at around 10-12 per cent and glass, non-ferrous metals and petrochemicals among the other sectors.

The primary reason for import has been the incremental cost of manufacturing which is 5-7 per cent lower in China mainly due to their cost competitiveness. But with adequate handholding from the domestic industry and government, Dalmia OCL expects the cost in India can be brought down over the next 6-12 months.

"It is important to do the initial hand holding by the customers. Some of them are demanding supply from India. Because of the momentum we have accelerated the setting up of capacity in India. We are also in discussion with the government on how to make domestic manufacturing more competitive,” Nagpal said. Tax benefits, production linked incentives, import duty changes and thrust on mining and exploration could speed up capacity expansion, he added.

The company has 5 plants in India in Odisha, Tamil Nadu, Gujarat, Madhya Pradesh, Chattisgarh besides one plant each in Germany and China. Nagpal said that the company has spent more than Rs 100 crore in acquiring a German firm that will give access to crucial technology in the sector.