V Subramanian, Director, V.V Mineral, began his professional career in the family’s mining business, joining the management team in April 2002. Mr Subramanian’s achievements include the takeover of Kilburn Chemicals in 2011 and establishing VV Charitable Trust.
VV Mineral India (VVM) is India’s largest miner, manufacturer and exporter of heavy minerals like Garnet, Ilmenite, Zircon and Rutile significant market share in Europe, the Middle East, East Asia, Australia and USA
Following is V Subramanian’s detailed interaction with Anil Mascarenhas of IIFL.
What are the trends seen in Garnet and Ilmenite. A very small percentage finds utility in India. Does it work to your advantage exporting it mainly?
With private companies like us, India has a dominating share in world garnet market as Garnet is an eco-friendly abrasive widely being preferred worldwide. The demand will continue to be going strong. But both these minerals find little use in India. The demand for Ilmenite is very lower in India. Mineral producers are left with no choice other than to export.
You were active in the takeover of Kilburn Chemicals (now V.V. Titanium Pigments) in 2011. To what extent has it benefitted VV Mineral?
By acquiring Kilburn Chemicals, we became the first private mineral producer in India to have a downstream integration of Tio2 production. Now we are a Pigment producer too, fetching higher value for our mineral, providing employment, earning higher foreign exchange, and marking an Indian presence in Tio2 market.
Give us a brief overview of the heavy minerals market? What is the size of the market and where do they find utility?
Our domestic market is very young and has a tremendous potential. Current Indian consumption of pigment is only 1.5kg / person, whereas developed countries typically use 4kg / person. The same trend applies for other minerals like Zircon and Rutile as well.
As for utility, Garnet is widely used as an abrasive in oil producing companies for corrosion control. Ilmenite and Rutile are Titanium feedstock used mainly for producing Tio2 pigment and small quantities in production of welding electrodes. Zircon is used in ceramic tiles as an opacifier and in Refractory for insulation.
What is the infrastructure that you have in place?
V.V. Mineral has about 8 Mineral Separation plants, each having their own pre-concentration plants near the mine site. We also own a huge fleet of trucks, earth moving equipment, 12 warehouses with a whopping storage capacity of 600,000 tonnes and a full-fledged R&D department, transport department, exploration team with drill rig, centralised laboratory, ship loader (which can load 21,000 tonnes/ day), unmatched by any other mineral producer in India.
How is the pricing determined? To what extent can Indian companies influence the prices?
Pricing is determined by supply and demand but is very influenced by western companies as they hold a major market share. There are various bottle necks which prohibits Indian companies to play any significant role in this market.
What is your annual output of heavy minerals each year? What would the approximate value be?
We export close to 7,00,000 tonnes of heavy minerals each year and to the value of 800 crores approximately.
Who are your close competitors?
We have few fellow mineral producers in India, namely Indian Rare Earth (Government of India), Trimex, Indian Ocean Garnet Sands, and few other small companies. At a global level, Rio Tinto, Iluka, Tronox and Kenmare are our competitors.
What are some of the essentials for being in this business? What would be the entry barriers here?
A sound and abundant free deposit of Heavy Minerals, essential infrastructure, access to lot of labours, access to water, cheaper power, are essentials for this business.
Entry barriers are simply the time taken for grant of mining lease, tough rules in MOEF and CRZ, lack of natural gas, higher power cost.
Comment on your wet plants and dry plants.
Mined raw material is fed to wet plants, eliminating the unwanted silica and beach sand. Then the mineral concentrate from wet plant is fed to dry plant for individual mineral separation. Dry and wet just represents the state of the processed mineral.
What kind of quality check do you do? Is it as per the international standards?
We are an IMS certified company (ISO 9001, 14001, 18001). Virtually every product is tested in at least 3-4 locations before it is being sent to the customer. All our testing methods are from ISO standards and our product confirm with ISO 11126:10.
What are your marketing initiatives?
For some of our products like Garnet, we have dealers who represent us in each country. For Ilmenite, we work directly with end users. For other minerals, we have our sales personnel who will use dealers, traders and work with end users, depending on location and quantity requirement.
What are your CAPEX plans? How would they be funded?
For huge fund requirements like new acquisitions, we seek the help of our bankers. For smaller expansions, family fund is used.
Do you have any international tie-ups? What is the revenue sharing here?
We have tie ups for marketing our product and are actively speaking to technology tie up for production of pigment. Revenue sharing agreements are not a part of the deal for both.
In the past there have been allegations against the company (including V Sundaram, IAS). What do you think is triggering such outlash?
One small mineral producer went through legal action from Government for unfair and illegal mining practices in Tamil Nadu and is actively spreading rumours and trying to bring down all the mining producers. Beach Mineral Producers Association revealed a video showing the fellow producer working with guys like Sundaram IAS, training them to make false accusations against all the other beach mineral producers. State and Central government has inspected all the companies including us, many times, as a routine and based on these false complaints also and have cleared us right. So, as long as we are transparent, we have nothing to worry.