Growth in infra, realty driving demand for tmt bars in india

Indian steel sector is a very heavy competitive industry. Both local and national players had come down with heavy price cuts after unlockdown announcements. Since, there was a hungry market after a complete halt in activities; everyone wants to have a share of the sudden demand surge. Thanks to the surge in the industrial, infrastructure and housing sectors, the demand of finished iron products used in construction is high and will hopefully continue to remain buoyant for the next couple of years. The industries having customer focus, lean cost structure and organized supply chain will garner the maximum benefit of this surge in demand, at least that's what Ritesh Rathi, Managing Director, Bengal Super TMT Bar, an arm of Shristi Group of Companies, feels. Speaking to Bizz Buzz exclusively, Rathi delves at length on the Indian TMT Bar industry and the way ahead

How cost competitive is Indian steel sector in these challenging times?

India is one of the fastest growing economy in the world and government is trying its level best to achieve the $5 trillion GDP mark by 2025. To achieve and sustain the $5 trillion GDP, the government has taken lot of policy initiatives to encourage industrial growth and has also initiated number of infrastructure projects to facilitate smooth supply chain of goods within India and outside India that will be manufactured by the industries across the country.

While these policies and availability of young skilled labour force makes Indian industry cost competitive when compared with other countries in the world but lack of innovation, high cost of capital and complex taxation structure does impact the overall efficiency and competitiveness of Indian Industry. It would be pertinent to mention that the ease of doing business has improved in the last few years but there is a significant room for improvement.

Covid-19 did cause operational and financial disruption across industries but after the unlock business is getting back to normal and things are looking good for the long run.

With Covid-19 pandemic, an unprecedented toll had taken on the construction industry. The nationwide lockdown had not only put brakes on the ongoing real estate and infrastructure projects, but the allied TMT Steel industry had also suffered a setback. With the easing of the situations, are the stalled projects both in construction and infrastructure along with capital expenditure plans coming back on track and is demand for steel items recovering lost ground?

Due to lockdown, there was a demand compression and the industries were facing working capital crunch as lot of capital was stuck in inventory and debtors. After unlock, the industry did announce price cuts to liquidate their inventory in order to release their working capital and redeploy them to streamline operations but that price cut did not sustain and the market again moved up due to rise in prices of raw materials like iron ore, coal, etc.

Could you please throw some light on how Bengal Super is tweaking its plans and strategies to cope up with the new situation and grow even in these challenging times?

Bengal Super is a brand owned by Shristi Group of companies which has been manufacturing building materials like cement, construction steel and structural steel since last 20 years. In the last two decades, the group has seen lot of disruptions like 9/11, 2008 financial crisis, demonetization etc. and has successfully come out them by staying close to market and customers and taking appropriate decisions to minimize the impact of the disruption. Out of all, the disruptions caused Covid-19 was the most long lasting and brutal as it led to loss of lives.

The entire team of management, employees, dealers and service providers of Shristi Group supported each other in this unprecedented crisis and ensured that the business got restored to pre lockdown levels after unlock at a rapid pace. The lockdown period gave us the opportunity to think and rework on the brand strategy and fine tune the execution plan. Once the lockdown was being eased, in September 2021 we relaunched our Bengal Super brand in the markets of West Bengal, Tripura and Barak Valley with greater energy and have started seeing some good results.

The difference between the conversion cost and cost of steel production, inverted duty structure resulting in 'royalty on royalty,' the cost burden on the minerals sector and cess on domestic coal are some of the issues that the industry is grappling with. What is your take on this?

Over the years, the government has worked towards improving the ease of doing business in the country. Implementation of GST is one of the key initiatives which converted the entire nation into one market with same rate of taxes. Well begun is half done!

Over the years, GST process is more or less streamlined and the government has seen improvement in collection to GST since month on month. Now the Central and the State governments should start working on rationalizing the GST rates to avoid inverted duty structures and also do away with cess and royalty that is being charged on commodities as it is a 'cost.' It is fact that every cost increase cannot be absorbed by the manufacturer and the same is passed on to the end user. Additional cost due double taxation do not help in making the Indian industries competitive at a global level and there is always a risk of local demand being satisfied through imports as they would be cheaper.

How is the overall TMT Bar market doing in India and how do you see the market growing over the next one year? Where does Bengal Super stand vis-a-vis other industry players?

TMT Bars are essential for any construction. With the growth in the infrastructure and housing sectors there is good demand of TMT Bars across India especially in Tier 2/3/4 towns. The demand in housing sector expected to be strong for the next 2-3 years at least.

Demand in the infrastructure sector will depend on government projects getting funds on timely basis. While Central Government projects are getting funded on time, there are certain state projects where we are hearing delay in releasing the funds by the state government which is causing a deferment in demand which in turn is impacting sales growth.

Bengal Super is focussed and committed on providing premium quality TMT at affordable prices to end users in Tier 2/3/4 towns and villages across east and north east India. Our focus is to serve the needs of individual house builders who are constructing their dream home. Bengal Super is committed to provide premium quality products at affordable prices so that the people can build their dream home within their budgets.

What is your current capacity? Where do you have your manufacturing facility/facilities? Do you have any capacity ramp up plans in near future? Then how and where?

We have our TMT manufacturing plant in Bankura District of West Bengal and our current capacity is around 1,00,000 MT per annum and we plan to double it in next one year in the same manufacturing facility.

We also manufacture structure steel products in our plant located in Jamuria, West Bengal. The current capacity is around 60,000 MT per annum and currently we are in process of capacity expansion and our production capacity will reach 1,20,000 MT per annum.

At present which are the markets your products are available in? What are your pan India expansion plans?

Today our products are available in the state of West Bengal, Tripura and some parts of Assam. We are planning to expand our operations in Assam and launch our products in Sikkim, Meghalaya and Arunachal soon. For the next couple of years, we intend to remain focussed on improving our market share in East and North East India only.

How are you going to position your brand in the market?

Bengal Super positioning is very clear….Premium quality products at affordable prices. Our bulls eye customer is individual house builder who is either expanding their existing home or are constructing a new home.

We are proud of our quality and we make all efforts to keep it consistent. To ensure that our cost to the end user is affordable, our marketing efforts are more towards creating awareness of our brand through local/regional television, hoardings in periphery of the town and by conducting meetings with engineers and masons on regular basis.

To keep our prices affordable, we do not have and do not plan to spend on celebrity endorsements as we believe this is a non value added marketing activity for the consumer as the huge cost of such endorsements is ultimately passed on to the end consumer by the brands.