Tata Metaliks share price up on Value Added Product

Tata Metaliks share price surged over 5 per cent on the NSE today. The counter of Tata Metaliks has been constantly buzzing for quite some time after it has increased capacity for value-added product ductile pipes to grab 11-12 % market share. Tata Metaliks share price was trading 3.52 per cent higher on NSE towards the time of market closing.In an interview to the media, Managing Director of Tata Metaliks, Sanjiv Paul, said that the move in the wake of growing urbanization and the need for a basic infrastructure of water and waste water. He warned, however, that a sharp spurt in metallurgical coal prices from 120-130 dollars per ton to 200 dollars will crimp margins.Paul further continued that the company had recently added around 60-65 tons of capacity. This would take their capacity from 100,000 ton of ductile iron pipe 2 years ago to 200,000 ton that would further take the market share to around 11-12%. Thus, he added, that they were looking to ramp up the value added product and also increase its percentage.

Competitive Intensity in this Space:On being asked by a reporter about the kind of competitive intensity in this space and whether there was a strong demand for it, Paul replied that there was a reasonable demand. There were 7-8 players in the ductile iron pipe market. As urbanization would grow in the society, the requirement of ductile iron pipe would increase because it was one of the basic infrastructures of water and waste water, he added.

Plan on Debt Reduction:A reporter asked him about the company’s plan around debt reduction. He answered that in the last 3-4 years they had significantly reduced debt and also continued to grow. He added that the aim of getting into more value added products was to reduce debt faster.On being questioned about the outlook on Tata Metaliks for the rest of FY17 as well as going forward he replied that the market was so volatile on raw materials that it was futile to make any projection. In merely one month, metallurgical coal prices had gone up from 120-130 dollars per ton to 200 dollars plus. He explained that the company was worried whether it would be able to pass it on to the consumers or the next customer in the vale chain. So they had to play smart, Paul added.

MoU for Skill Development:The managing director was further darted with questions from the media like "Would pricing for select products come under pressure?" and "Tata Metaliks had signed a MoU for skill development. What was the skill development centre all about?"To which Paul replied that pricing would surely be under pressure as the sharp soar in such basic raw material was unprecedented. He added that earlier, coke prices were going up in the same manner. Now, it was metallurgical coal prices. This would definitely have an impact on margins, he said.To the last question Paul replied that the skill development centre was part of their Corporate Social Responsibility (CSR) activities. They had decided to impart skill to the youth as their CSR activity. He added that the West Bengal government had agreed to handover one of its buildings in ITI Midnapore and they had this MoU signing in the presence of CM Mamata Banerjee on 15th September. He concluded that they would start with around 600 youth this year and train in around 5 courses. For more on Tata Metaliks, please visit Tata Metaliks share price history.