On July 28, 2018, the Renukoot plant of Birla Carbon India turned 30. The plant which marked the Aditya Birla Group’s first foray into carbon black manufacturing in India, is symbolic, a beginning of a long journey towards innovation, sustainability and ultimately leadership in the carbon black industry in India.
Speaking about this journey is Mr Shyam Rathi, Regional President, South Asia and Middle East, Birla Carbon. Mr Rathi has been a part of this journey since the beginning. From 1991 until today, he played an important role at the Renukoot plant, spending 13 years of his leadership career at Renukoot.
Here is the story of the Renukoot plant, as shared by Mr Rathi.
Excerpts; When the Aditya Birla Group planned its entry into the carbon black business in India, it was the period of license raj. We had to apply for the requisite licenses with the government, who provided them along with a specific location. We purchased land in Renukoot to set up our first carbon black plant in India.
At that time, setting up the plant at Renukoot had two immediate benefits. Indigenous raw material was available in close proximity, about 400 kms away. With carbon black feedstock (CBFS) import not allowed in OGL, the indigenous material was best suited for operations in the late 1980’s.
The other benefit was the availability of tail gases at the plant. The government did not allow privatized electricity production at the time. The steam produced by the plant was sold to Hindalco.
The Renukoot plant was commissioned in 1988, with an annual capacity of 20,000 kMT.
In 1991, the Indian economy opened its doors to the world, and with it came the option to import CBFS. With competitive prices and far better output compared to indigenous feedstock, production at Renukoot increased to 30,000 kMT without any investment. The only drawback, CBFS was imported through the Haldia port, about 850 kms from Renukoot.
The plant doubled its capacity in 1993, through expansion and debottlenecking initiatives which took its capacity to 74,000 kMT.
In the liberalized economy, the Renukoot plant lost its viability and competiveness due to its:
- Location disadvantage – Long distance from the nearest port causing high logistics costs on CBFS
- Selling steam – To Hindalco at 25% of the price of power
- State government tax on CBFS – With imposition of 5% State Entry Tax on CBFS by the Uttar Pradesh government
Renukoot was not ready to give up. Just as it was the first ABG carbon black plant in India, it now began writing its own comeback script. Some of the strategic initiatives undertaken to make Renukoot a more viable plant are described below.
Birla Carbon purchased land and built a terminal at Haldia port in 1997. While the rest of the industry rented terminals, Birla Carbon had its own. The leadership team also managed to get a railway line to the terminal. This significantly reduced logistics costs as a major portion of CBFS was moved via rail road. Once the material reached Renukoot, it was unloaded at Hindalco’s railway siding. Further, a pipeline was built between Hindalco and the Birla Carbon plant to transfer CBFS.
The government allowed the sale of power which led to the setting up of a cogen facility in 2010. Sale of power to the local grid made the plant even more viable.
The leadership team decided to challenge the entry tax on CBFS imposed in 2004. The court case received a favorable judgement in 2012 resulting in the government having to refund the amount it had collected. The tax clause was reworded in 2011 and reduced to 2%. Today, the tax is absorbed as part of the Goods and Services Tax applicable to all material uniformly across the country.
Finally, with new tire plants coming up in the region, outward logistics costs were reduced significantly as most material is now consumed within the region.
Renukoot is now as competitive as any other carbon black manufacturing plant in the world. The plant, even today, is well maintained and looks like a new plant, having won World Class Manufacturing awards at ABG. What made the difference is its people, their passion and commitment and their culture.
Eighty employees received long service awards earlier this year. Employees of Renukoot have held senior positions in Gummidipoondi, Patalganga, Thailand and Egypt. In fact, the setting up of both Gummidipoondi and Patalganga plants were done with the knowledge, manpower and leadership from Renukoot.
Renukoot has had a tough past having to prove its worth every time, and yet this is the plant on which this region was built.
On June 28, 2018, the Birla Carbon Purpose was shared with employees at Renukoot. There would be no better or more significant a time at Renukoot to celebrate its 30th anniversary. After the Purpose launch, led by the presence of Mr Rathi and Tim Fedrigon, Chief Human Resources Officer, Birla Carbon employees and their families gathered for a cultural evening celebration. The event marked a true reflection of Birla Carbon’s Purpose – ‘Share the Strength’, whether it is the Renukoot plant or the people that led its success.