Midhani has two units, one in Hyderabad and the other at Rohtak in Haryana. Rohtak which was set up around five years ago, meets the armouring requirements of the armed forces. Besides, it has a plant at Nellore for producing high strength and low weight aluminium alloys. These facilities have various types of furnaces including electric arc and vacuum and electron beaming furnaces with refining capacities.

It was amongst the first in the country to have vacuum-based refining and melting capacity It has melting shops, besides ring rolling mills and in FY21 it produced high temperature alloys for the Kaveri Dry Engine programme for unmanned combat aerial vehicles. Ultra-high-strength steel products were used for the Gaganyaan mission. 

As part of its growth strategy Midhani is planning to tap other industries outside defence. In particular railways, oil and gas pipelines, chemicals and fertilisers, mining and the power sector. This move is expected to yield good results going forward as otherwise its fortunes will forever be linked largely to the procurement orders of a government company. Towards this end it is setting up a new plant at Nellore in Andhra Pradesh. This JV with National Aluminium Ltd (NALCO) called Utkarsha Aluminium Dhatu Nigam, will entail production of high-end aluminium alloys.

The company is also in the process of modernising its plant in UP. As a part of its focus on R&D it is seeking collaboration for getting new technologies for moving up the value chain to expand its product range. During FY21 the company received two patents and has filed 35 IPRs. Its 15-officer-strong R&D team has in depth knowledge of special engineering and metals. 

R&D is one of the key areas which can give the company an edge over others in advanced materials. There is no denying the capabilities and expertise of this government PSU. The company has 761 employees with the productivity of each employee being Rs1.04 crore. The current CMD, Sanjay Kumar Jha, 57, is a qualified engineer from Nit Jamshedpur and has a PhD in Engineering Sciences from the Homi Bhabha National Institute, BARC. The knowledge pool is deep within the company. What is required is a process whereby the creativity of employees is allowed to be unleashed. 

One way could be better incentive planning. Employee participation in its new projects will help in driving creativity. The entire Silicon Valley success was more to do with enhanced employee participation than anything else. Equitable opportunity for talent to grow is required. A PSU set-up may not really be the way forward. Instead of having payment and incentives in grades and bracketing persons in particular grade may not be a sufficient incentive for the employees to do their best.

Nothing short of a cultural revolution would be required to put Midhani on par with the top, advanced material producing companies in the world. For one, the company requires to be given full freedom in deciding the prices of the product and should be encouraged to produce end products in cases where it has the capabilities rather than merely being looked upon as an input supplier of critical raw material alone. 

The company certainly holds promises. And this is one of the reasons that, of the 26 per cent held by the non-promoters, HDFC MF holds 9 per cent and Invesco Contra funds another 1.75 per cent while insurance companies, including New India Assurance, hold 1.39 per cent per cent. There are more than 40 FIIs which have also invested in the company. However, their combined holding as on 30 September was less than 1 per cent. 

These funds are not betting on the company’s current operations. Not that this is bad. For FY21, during the Covid period, the company managed to put its best foot forward. It earned a PAT of Rs167 crore on a total income of Rs833 crore. This was the best performance till date. In the first half of FY23, however, the company reported a lower PAT of Rs52 crore on total income of Rs302 crore.

However, with the country’s focus on Atma Nirbhar and decision of PM Narendra Modi to produce defence goods indigenously, Midhani is better placed to provide import substitute advanced material. This will help in the short term till it has a better handle on the finished goods manufactured.