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.”