CUMI to invest $50-mn in Russia

Chennai: Carborandum Universal (CUMI), part of Rs 9,582-crore Murugappa Group, entered in to an agreement with Volgograd region administration in Russia to set up 100,000-tonne silicon carbide fusion plant.

With this CUMI will become one of the largest producers of silicon carbide and bonded abrasives in the world.

For CUMI, the new plant will eventually become a major manufacturing hub for silicon carbide abrasives made out of fusion process. At present, one of its plants in India makes similar products in small quantities.

At a press conference, the Chairman of Murugappa Group, Mr M.M. Murugappan, said the group would invest $50 million in the proposed plant, though its subsidiary Volzhsky Abrasive Works, which is about 10 km away from the proposed facility.

Volgograd region would support the new project by arranging power supply, raw material supply and land, he said.

Asked if the company is getting some sops, Mr Murugappan said the Russian Government does not offer any incentives. However, the availability of quality raw material and uninterrupted power made CUMI to zero in on Volgograd. Besides, more benefit is expected from the Russian government’s announcement to reduce corporate tax from 24 to 20 per cent effective January 2009, he said.

The Managing Director of CUMI, Mr K. Srinivasan, said the company acquired the 40-year old Volzhsky Abrasive Works last year for a consideration of $43 million.

Last year Volzhsky Abrasive reported sales of $60 million. It expects a 50 per cent growth in the current year. Asked about the impact due to global economic slowdown, he said, the current scenario gives opportunity for the company as maintenance schedules for the non-operating plants drive demand for consumables like abrasives and such things. “We have natural hedging,” he said.