Ashwani Gupta, Director, Vividh Metaltech shares his thoughts on the plight of the stainless steel industry in India, and why some Indian exporters are compelled to relocate their facilities abroad.
TPCI: How did you come up with the idea of starting a business in the area of stainless steel wires?
Mr. Ashwani Gupta (AG): Basically, we have been in the steel business for about 40 years. This stainless steel wire plant, which we have recently started is a kind of backward integration for us. This was a natural move for us, considering the fact that it is a raw material for our existing factories. Also, most of the existing stainless steel plants in the country are a bit old and we felt that we could do something better. Hence, we decided to set up a modern stainless steel wires plant in India.
TPCI: Which markets did you tap for your product and why? What market penetration/promotion strategy did you follow?
AG: Currently, most of our domestic market is concentrated in North & West India. Our exports are mainly focused on Russia & South Asia as of now. We’re also doing a trade show in Brazil and Dusseldorf in the near future. Bombay’s Nhava Sheva port is a major export hub for the same. In the short-term, our target is to shift about 30-40% of our production towards exports, considering there is a higher value addition available.
The penetration strategy that we are looking at is that of a ‘pull marketing strategy’, as opposed to pushing the products onto the customer. Our marketing strengths are quite minimal and since day 1, the idea has been to produce a quality product through which we attract customers. The pricing is very rigid in steel. So, the idea is to give out the best quality product so the customers come to us through the word of mouth. This also pushes the other players in the industry to produce a better product and gives us a competitive edge.
TPCI: Who are your key competitor countries, and what unique competitive advantages have helped you establish your business presence?
AG: The key competitive country for stainless wire products is China. India is a dominant player internationally in this field. Everything is internationally certified to meet the needs of the buyers.
The unique advantage that we have is that we have a good established industry and a good quality product. We’re at par with China, if not better. The only thing that it comes down to is some special relationships with customers & the capacities and the orders. So, there might be cases where China is a step ahead of us. But otherwise, it’s quite likely that a major competitor for us would be a fellow Indian company than any foreign competitor.
TPCI: What are the major tariff/non-tariff barriers that you have experienced in the international markets? What should be the roadmap to overcome these challenges?
AG: A big challenge for exports is the anti-dumping duties that are currently being levied in some European countries and the US. In fact, I know a couple of Indian companies that have set up a plant abroad so that they can overcome those hurdles because a lot of these exports get hampered once these anti-dumping limits are crossed. The roadmap is that if the government is able to work out a deal with some of these countries, it will help Indian companies to overcome these hurdles. I don’t know how feasible that will be because these countries will want to protect the interests of their domestic industry as well.
TPCI: What are the expansion opportunities you envision for yourself in the global market at present? How do you plan to tap them further?
AG: As of now, we are already doing a capacity expansion in our plant. We’re doubling up our production. In the medium term, we plan to set up another unit, specializing in bright bars, which are in great demand in the European market. US, Europe and Russia are three of our major markets in the next 3-5 years. The only thing is that we need to offer a quality product; as long as we’re doing that, we’re at par with international standards.
TPCI: What is your view on the general competitiveness of Indian exporters in this sector? How can it be further enhanced?
AG: I feel that Indian exporters are quite organized and competitive. There are several Indian companies in the sector that are exporting their products to other countries. The market is growing year-on-year. In India, one big drawback that we have is that the economy (per capita) is not at par with the other developed nations. Steel consumption in India is one-third of the global average. So, there is a good potential for growth in the Indian market as well.
In terms of value, Indian exports are growing year-on-year. So, if we’re given greater access to global markets and have a way to deal with the restrictions in the other countries, we can enhance our exports by 10-20%, because the manufacturing capacity is already in place and the material would definitely be shipped abroad. Also, if the government is able to set up some drawbacks and some more incentives for the exporters, it will draw further investments in the industry and encourage them to do better. Also, if the government comes up with a green energy incentive for the industry, it will encourage the players to invest in their company. So, it will be good for India as well as the exporters.
Ashwani Gupta is the Director of Vividh Metaltech. Vividh Wires Limited is the Stainless Steel wire division of the diversified Vividh Group. This ultramodern stainless steel wire company is based in Greater Noida, with an installed production capacity of 6,000 MT per annum.
