By Jyotsna Bhatnagar

Corporatisation of the Indian salt industry is a relatively new phenomenon. In the past, salt production was concentrated among the small and medium manufacturers. For that matter, even today, the number of recognised corporates in the fray can be counted on the fingertips.

Barring the Tatas, the Thapar group (Ballarpur), the Birlas and a few others, others have shied away from the sector largely on account of the limited markets for what is essentially viewed as a low cost commodity.

And even in case of the bigwigs, the foray into salt production is more by default since salt is a major by-product for them. And for those who are in the business of producing salt, very often it is largely for captive consumption than for production and definitely with an eye for the markets.

Even where salt is a major by-product -- as in the case of Tata Chemicals, Mithapur or now Bilt which is expected to produce 8 lakh tonnes of salt once its bromine-derivatives value-addition projects in Khavda goes on stream -- the focus is on the export markets. This, given the stiff resistance from the small and medium manufacturers as also the virtually plateauing off of domestic demand, at least for the time being.

In view of this slump in demand for industrial grade salt, several large manufacturers have gradually started diversifying into value-added products which would have takers both in the domestic and international markets while the others produce just enough industrial salt to meet their own captive requirements. That apart, attempts are also being made to improve the quality and purity of industrial salt to compete globally.

Some of the large manufacturers who are restricting themselves to in-house captive consumption are Tata Chemicals, which has the largest salt refinery in the country at Mithapur off Jamnagar. This plant offloads a small offering of 3 lakh tonnes of vacuum iodised salt -- produced as a by-product -- into the domestic edible salt market. The company, however, does not sell industrial salt in the domestic market and prefers to export around a lakh tonnes.

Other captive units include Birla Salt and Chemicals in Jamnagar, Birla-owned Saurashtra Chemicals, Gujarat Heavy Chemicals and Dhrangdhra Chemical Works (all in Gujarat). Outside Gujarat some of the other notable captive units include Tuticorin Alkalies and Chemicals and Chemplast Sanamar.

Diversifying to add value
Foremost among those actively diversifying into value-added products in a bid to boost exports is Bilt's Khavda-based Bromine Works. The company will soon commence production of industrial grade salt --as a by-product in the process of manufacturing bromine from brine--once it acquires an additional 30,000 acres of land in the Rann of Kutch as part of its expansion spree.

It is already committed to export all of the eight lakh tonnes of industrial salt produced at this plant. And for this salt to be of international standards, the company has plans on the drawing board to install salt washeries.

Even in the bromine market where BILT is the undisputed leader, the company recently commissioned a state-of-the art hydrobomic acid unit --a value-addition to its main product. An import substitute, hydrobomic acid is used in the pharmaceutical industry and is also in great demand as a catalyst in the manufacture of synthetic yarn (PTA).

BILT has also decided to diversify into the production of flame retardant -- another bromine derivative. Though not so much in demand in the domestic market, flame retardant is very much in demand abroad where the rapidly growing 2-2.5 lakh tonne per annum market is valued at a whopping $950 million. BILT proposes to make a modest initial entry in this arena with 10,000 tonnes.

But while big corporates like Bilt have the resources and the wherewithal to diversify into other lucrative businesses, it is the medium and small manufacturers and the large unorganised sector, which have been worst affected by the demand slump.

Entry of the MNCs
An interesting development in the domestic salt industry of late has been the entry of multinational companies like HLL and International Best Foods of the US in the edible salts sector. The modus operandi of these "sharks" is they simply tie up with the local manufacturers for buying their salt and selling it under their brand name with attractive consumer freebies thrown in to boost sales. Almost all salt manufacturers cite HLL's Annapurna brand of salt, which was being aggressively promoted by offering a shampoo sachets with each packet to set the cash registers jingling.

"While it makes no dent in the bottomlines of Lever which produces shampoos as well, it is impossible for the small manufacturers to compete with such corporate giants with unlimited funds at their disposal," rued an affected victim of such unfair competition.

"In one clean sweep they have captured most of the urban market with their media blitzkrieg and sachet scheme without having invested a single rupee in either setting up a refinery of their own or investing in the development of the salt sector," conceded an official of the salt department. Interestingly, this is despite the fact that the salt sold by these corporate bigwigs is priced as high as Rs 5 to Rs 6 per kg while the smaller manufacturers sell at Rs 1.50 to Rs 2 per kg even at distant places.

Similarly, DCW Home Foods, probably the first company which introduced refined salt in India the popular Captain Cook brand, beat a hasty retreat pressured by the aggressive tactics of the MNCs. It has now moved out of the edible salts market totally after selling out lock, stock and barrel to the Gandhidham-based International Best Foods.