Calcutta, July 23: Tinplate Company of India - which is set to turn 100 in two years - plans to come out of the shadows of parent Tata Steel and embark on a new phase of growth to raise its profile in the market and expand its business.
The leading tinplate maker in the country is going to shed the tag of a mere converter for Tata Steel and eke out an independent journey.
The shareholders of Tinplate have been asked to vote in favour of an arrangement at the company's 98th annual general meeting on Tuesday where the company will only buy the raw material from the parent but sell the finished product through its own network.
This will put end to a system that has been continuing from 1998. Under the existing scheme, Tinplate converts hot rolled coils of Tata Steel into electrolytic tinplate (ETP) and also assists Tata Steel in selling the same to the end-customer.
Moreover, Tinplate buys ETP from Tata Steel to earn export incentives and meet obligations under the foreign trade policy.
However, this arrangement will change henceforth. Tinplate will buy hot rolled coils - the raw material for electrolytic tinplates - from Tata Steel or other steel makers. It will convert the hot rolled coils into electrolytic tinplate, used to make packaging material for food products, and sell directly to the end-consumer.
"Given the company's performance over the years, the company is now in a position to independently procure its raw materials from multiple sources. Accordingly, the company is proposing a transition from existing the conversion agreement with Tata Steel. This will put in place a greater focus on operations management and supply chain efficiency in the coming years," Koushik Chatterjee, chairman of Tinplate, said in his address to the shareholders in the latest annual report. Chatterjee is also the executive director (finance, corporate and Europe) of Tata Steel Group.
The new arrangement will increase the independent profile of TCIL, apart from turnover. Moreover, introduction of the goods and services tax regime will usher in a simpler tax structure.
Tata Steel, which holds a 74.96 per cent stake in TCIL, helped the company to earn Rs 519.49 crore in 2016-17 compared with Rs 602.46 crore a year ago. TCIL bought ETP worth Rs 270.15 crore in the last fiscal compared with Rs 212.66 crore in 2015-16.
Industry structure
Tinplate, established in 1920, has an installed capacity of 379,000 tonnes and a market share of 43 per cent in India. The total apparent domestic consumption of tinplate in the country is around 600,000 tonnes, 45 per cent of which are met by import.
Consumption of tinplate grew 5 per cent but import outpaced it at 7 per cent in 2016-17. Even though the government imposed safeguards and anti dumping duty on various steel items, including HRC, tinplate was not on the list. This affected the profitability of domestic players. Moreover, after India signed free trade pacts with Japan and Korea, import of good quality prime tinplate attracts zero duty.
Stellar first quarter
TCIL reported strong numbers in the first quarter with total income from operations rising to Rs 241 crore compared with Rs 164.54 crore in the same period last fiscal, a growth of 46.4 per cent.