Monday, 5 October 2009

Strategic materials producer, Midhani, on high growth curve










By Ajai Shukla
Midhani, Hyderabad
Business Standard, 5th Oct 09

American, Japanese and European non-proliferation officials are keenly aware that Hyderabad based company, Mishra Dhatu Nigam (Midhani), supplies key materials for India’s nuclear, space and missile programmes. Midhani figures on all these countries’ “Entity Lists”, which have legally blocked supplies of materials, know-how and equipment.

But this international blockade has been in vain, I learn, during an exclusive visit to this most secretive of defence PSUs. “Despite the sanctions”, says Chairman and Managing Director (CMD), K Narayana Rao, “Midhani today manufactures the world’s best maraging steel, a critical component in nuclear reactors, fuel enrichment centrifuges, missiles and space rockets. The Indian Space Research Organisation’s GSLV rockets are clad in Midhani’s maraging steel.”

Such breakthroughs in strategic materials have placed Midhani in an unusual position. With international sanctions still in place, Midhani has joined one of the world’s most challenging, futuristic and expensive projects: The International Thermonuclear Experimental Reactor, or ITER, a $10 billion, multinational project that aims to generate electricity through nuclear fusion by 2018. India joined the project in 2005.

“We have produced a material called Low Activation Ferretic Martinsitic Steel, which the ITER project urgently needs”, explains a Midhani scientist. “This steel must have very low activation, allowing it to be placed in a highly radioactive environment (e.g. inside a reactor) without becoming highly radioactive itself. The ITER authorities are presently evaluating it at the Institute of Plasma Research in Gandhinagar.”

This foray into ITER is a one-time thing. Midhani remains a boutique manufacturer, focused exclusively on high performance materials for India’s space, nuclear and defence programmes to save them from being hostage to a supplier abroad. This is production at the cutting edge, groping in the dark, mixing and matching elements to develop materials that users have defined only as a set of properties.

“We experiment, we play with Molly”, explains Narayana Rao, describing the search for special alloys. Noting my startled look, he elaborates, “Molly is short for Molybdenum, an element that gives special properties to steel.”

Midhani works in close partnership with the Defence Materials Research Laboratory (DMRL), located next door. DMRL, focusing on fundamental research, develops new alloys and materials; Midhani scales up DMRL’s laboratory production into industrial production.

Set up in 1972, Midhani’s mandate was to indigenously produce materials for India’s strategic programmes, without regard to cost or profitability. Today, Midhani delivers not only critical materials but hefty profits as well. Midhani is now a Mini Ratna, Category-1 company; its profits have gone up six-fold in the last four years to Rs 40 crores in 2008-09.

With Midhani’s regular customers ramping up operations, that bottom line is poised to grow. From an average of 4-5 launches a year, ISRO is stepping up to 8 launches per year. And since nuclear power generation is a growth sector, the demand for reactor materials is likely to rise sharply. “BHEL and L&T have got a steam generator order for the Indian 700 MW Pressurised Heavy Water Reactor (PHWR)”, says Narayana Rao. “I need to be ready with my equipment and materials.”

The older Indian reactors, such as those at Kalpakkam, are also replacing critical components. Only Midhani supplies the metals needed for this.

Midhani has begun a Rs 200 crores expansion plan, with Rs 100 crores from its internal accruals supplemented by Rs 100 crores of equity participation by the MoD. It is adding a high-tech, 10-tonne vacuum arc refining (VAR) furnace, in which molten metal is purified by dripping it, drop-by-drop, through vacuum. The impurities, which become into gas at those temperatures, are sucked away by the vacuum.

Also being procured is a 6000-tonne forge press, to press steel into sheets as thin as 4 millimetres, needed for India’s rocket programme.

“Today I’m running 2000 tonnes of products per year”, says Midhani’s CMD. “When the expansion plan is completed by 2010-2011, our output will double to 4000 tonnes. Turnover will go from Rs 300 crores to Rs 500 crores.”

10 comments:

Anonymous said...

Midhani has been identified as the prime reason of Kaveri's repeated delays.This was stated by Prasun, in his blogs. Midhani failed to develop the single crystal blades required for jet engines.

There are several such stories, which abound.

Although we appreciate MIdhani's achievements, it will be more better for you to give a balanced picture, giving shortcomings, & the manner it will address the same.

This looks like a PR handout from them, glossing over all failures / delays, which are the root cause, reflected in delayed / canceled indigenous programs.

Broadsword said...

Anonymous, it's a good thing that you post under anonymous.

Not knowing anything is forgivable. But not being able to read is not. The article clearly states that DMRL does the fundamental research, Midhani scales it up to industrial levels of production.

Single crystal blades (which, incidentally, is only one reason for the Kaveri delay) are developed by DMRL, not by Midhani.

Hope you'll understand that; do tell Prasun as well. Do let us know what are the other shortcomings of Midhani??

Anonymous said...

Ajayji

Just when we are hurting inside because of the perceived failures such as - India not having a credible Fusion Deterrent, LCA program forever getting delayed, Arjun competitive trials being delayed - your post on the success of Midhani has kept the flame that is our hope - burning. Yet - somehow one gets the feeling that our defence industry is still not efficient as it could (or should) be. Why dont we form a blog to identify and advice the private sector on emerging needs and opportunities in the defence sector - which can eventually create an enterpreneurship movement in this area alike Israel ?

AA said...

Midani's inherent profitability (product success - eg. ITER, serves a few dependable sectors, only-India-vendor) shows up in "hefty profits". It could almost set its own price!!

That's good, but why does MOD have to provide 50% equity funding? One supposes debt is not an option (or the article has forgotten to mention it). Also, who is providing the furnance and forge presses (as these are "procured")? Does it require critical technologies?

Net proft margins (assuming after DMRL develop. costs) is 13% (40/300). The average unit price after expansion will be down by 17% (300/2000 -> 500/4000), suggesting unit costs will be brought down somehow - probably by removing a share of development costs). This lower price is very encouraging, as it will stimulate buyer demand & result in lower priced final products, ie. make Midani even more "competitive".

Investment period is 2 years & is leading demand (Great!!); but demand is set to rise even more ("sharply"), on the back of nuclear business. MOD better get ready for more funds!!

Anonymous said...

Those non-proliferation ayatollahs restrict legitimate tech to India but keeps their eyes closed when NPT members like China transfer Nuclear weapons and ballistic missiles. That's not proliferation of WMD's for them.

Anonymous said...

What are the implications of the move toward composite components in missiles, launchers?

Anonymous said...

Anon@12:40, you are a complete ignoramus, for you cite Prasun as a source. He routinely makes comments up about various issues and you guys lap it up without any cross verification of your own. Why do you think you dont see any first hand interviews on his blod as you can see on Ajais - ever guessed why? Why dont you and your ilk do what Ajai does, ie actually talk to the developers or when people like him make the effort, try to understand what he says. For your kind information, the issue with Kaveri has not been single crystal blades or the like, it has simply been that the damn engine would not work! That was because stresses were tearing the core apart. This problem was licked some 2 years back after a lot of painstaking research and trial and error. To incorporate single crystal blades, the entire core will have to be redesigned and there simply is not enough time given the LCA MK2 timeline. The fact they have a functional engine running, which can generate 80 odd KN is itself a miracle, given funding issues and how many challenges they have faced & it will lay a good groundwork for a variety of engines required for other aircraft and vehicles. Secondly, single crystal blades are just ONE of the things that the entire engine hot section will require as an upgrade, so as to handle higher TET, Turbine Entry Temperatures. These are basic things which any guy who knew anything about the Kaveri would know, but you dont. Do us a favour, and go to Hyderabad yourself, or even Bangalore and spend time at the GTRE campus- speak to the DPRO S Pal, he'll help. And you'll know the real story not what Prasun states on his blog and you come and repeat without the slighest idea of what the reality is. And lastly, Midhani is still under sanctions, so is DMRL, so is GTRE. For your kind information, what this means is that a range of critical domain specific items available from international OEMs in the US and elsewhere are denied to GTRE, while its peers in Europe, Japan and elsewhere get these without murmur. You cant instrument, you cant test, you cant validate and you cant even manufacture - thats the aim of these sanctions, try to understand what Midhani is fighting against, and why it was created.

Anonymous said...

" mixing and matching elements to develop materials that users have defined only as a set of properties."

AFAIK this is known as "Ab-initio materials"

Daanish said...

Ajay Ji
amazing article fun and informative keep it up

Welding Technologist said...

As a person who interacted with MIDHANI from early 1970' to late 1995's as a buyer of their titanium and titanium alloy products and also as a person who undertook contract research project for developing welding technology for some of the materials developed by MIDHANI I have very high opinion of their top technical experts. The company was fighting against all odds.The other problem was that the company used to receive orders running into few kilogrammes when the capacity of furnaces ran in to few tonnes. They had to wait for consolidation of orders so that they can run the furnace to full capacity. This naturally delayed delivery schedules giving the company in the initial stages a bad name. I remember their marketing executives always ready to travel to any place to pick orders for titanium. The order may be as low as few kilos.The Private sector never placed any order and even if the private sector placed an order it was for very small quantities with very tight delivery schedules. Hence MIDHANI had to depend on Public Sectors,Space,Defence and Atomic Energy. Since no private sector was equipped to produce special alloys MIDHANI stepped in. Every organisation will have have failures.It is only the failures of Public Sector gets highlighted in press. Hence we should accept that MIDHANI developed materials which was needed without looking for obscene profits.No doubt that MIDHANI depended on DMRL, scaling up from laboratory to factory scale is always difficult and MIDHANI has done this very efficiently. As one commented that failure of Kavaeri engine has many reasons. Putting the blame on MIDHANI is totally unfair.I for one will always wonder at the developments of MIDHANI inspite of various constraints.