By SHUBHAM RAI
Hyderabad, Telangana-based integrated steel manufacturer Radha Smelters Pvt Ltd is among the leading steel-making brands in India’s south-central region. In 2021, the company will be completing 55 years of its steel-making journey. Over this period, it has expanded its business operations across various regions in the country. In the last five decades, Radha TMT rebars have emerged as one of the leading brands in the region.
In an interview with Steel360, Suman Saraf, Managing Director, Radha Smelters Pvt Ltd, said that infrastructure projects must be front-loaded to further speed up economic growth and steel consumption.
He also briefly dwelt on the journey of the company, from starting out as a steel trading outfit to setting up and running Hyderabad’s largest high-speed rolling mill. He also shared how the company’s strong distribution network and relationship with corporate clients helped it tide over the economic slowdown and initial COVID-19 lockdown days.
Q. Please tell us about how the company started and its initial days.
Radha Smelters, headquartered in Hyderabad, was founded by the Late Radheshyam Saraf in 1966. The company, from its humble beginnings in steel trading, expanded its presence in manufacturing, by producing various steel product segments like longs, flats and rounds over the years. The company grew in leaps and bounds over the decades to consolidate its position as a market leader in steel manufacturing in the Telangana region.
Today, Radha Smelters is a leading brand in TMT bars and is synonymous with product excellence. The brand counts among India’s most reputed construction, realty and infrastructure giants as its clients.
Q. What are the key markets for the Radha Group?
The company has a strong presence in markets like Telangana, Andhra Pradesh and Karnataka. Today, Radha Smelters is known to drive product excellence in its pursuit to become better every day. Technology skills, domain expertise, process focus and a commitment to long-term client relationships are the key focus areas. Radha Smelters’ approach of embracing innovation and learning at each stage has led it to manufacture steel that ranks high in terms of quality and commitment.
Q. At present, how big is the company in terms of turnover? How do you see the topline increasing in the next 4-5 years?
The group has a turnover of INR 1,000 crore and aims to achieve a topline of INR 5,000 crore by 2025. The company is also on way to achieving its 1 million tonnes (MnT) sales target by financial year 2024-25 (FY25).
Q. Where are the plants located and what capacity are they operating at?
The group has a capacity to produce 30,000 tonnes of steel per annum. The manufacturing plant is located at Shankarampet, Chegunta village in Medak district, Telangana and has a sponge iron plant in Bellary, Karnataka.
The plant at Shankarampet is an integrated steel manufacturing unit with state-of-the-art induction furnaces, fully automated high-speed rolling mill, a continuous casting machine (CCM) and world-class quality testing facilities. The raw material comes from our sponge iron plant in Bellary.
Q. How do you see the demand for high strength long products, going forward?
Steel has a central role in India’s recovery. Infrastructure projects must be front-loaded to further speed up economic growth and steel consumption. I am sure, during the COVID-19 crisis, the government will provide the right environment for growth.
However, demand has been consistent since April 2020 for Radha TMT due to our strong dealer network and excellent relationship with our corporate clients. Given the quality of our product and strong distribution network with fast response and delivery time, we have been successful in sustaining and growing during the COVID crisis.
Q. What is the scenario like in terms of procurement of raw materials in Telangana? Is the cost of procurement high and does that concern you?
We have our own sponge iron plant in Bellary, Karnataka and, therefore, procurement of raw material has never been an issue. However, the cost of procurement is definitely going up due to rising cost of basic raw materials and transportation.
Q. To what extent has the COVID-19 outbreak and the nationwide lockdown affected your business?
So far, we have been able to sustain ourselves during this crisis. The first and second quarters of 2020-21 have been quite satisfying considering the pandemic, lockdown and slowdown in the economy. Since June, we are running at full capacity. Our strong distribution network and a great relationship with our corporate clients helped us in consistently selling our products across our prominent markets. Going forward, we are quite optimistic about the recovery of the current economic crisis as domestic demand is reviving with rural economy taking the lead.
Q. Do you still believe the target of 300 MnT by 2030 set by the government is a scorable goal amid this global pandemic?
The Indian steel ministry’s vision of 300 MnT of capacity by 2030 is achievable. We are currently at about 138 MnT. India is witnessing an increasing number of residential and infrastructure construction projects, which is likely to create significant demand for steel long products.
However, the pandemic has put additional pressure on this target and recent stimulus packages as well as monetary policy adjustments to improve liquidity and credit for MSMEs, reflect the seriousness of the challenge.
To overcome this current scenario, the Indian steel industry must become more competitive and enhance the overall exports ratio. The government must support by creating a level-playing field in the sector. Export incentives must be enhanced to make us more competitive in the international markets. Exports formed a significant portion of sales in Q1 and Q2 of FY21. However, exports to China will come down in the coming months. Right now, China is importing because of the price arbitrage.
Q. The Ministry of Steel is appealing to the steel industry to partner with the government in providing low-cost housing. How do you see this move?
This move of the government is very encouraging for the long steel manufacturers in India. However, I feel that real-time implementation of this idea might take some more time as a concrete framework of this idea must be worked out first. We are quite optimistic that the government will soon come out with the right policy and incentive plan on the same.
Q. How do you see steel demand in the remaining of 2020? What are your observations on recent trends in demand?
Long steel products, which go into construction and infrastructure sectors, are expected to see a faster recovery than the production of flat steel, where the demand is consumer-driven through end-user segments like automotive and domestic appliances. We are seeing demand for long products getting better each month and, therefore, prices will definitely take an upward trend in the coming months.
Q. Please elaborate on your “Thermex” technology of steel-making.
Thermex technology is basically a Quenching and Self-Tempering technology, also called QST which was developed by HSE Germany after years of research and field trials. With the help of this technology, low-cost but high strength steel bars are produced which fully meet the demands of real estate, construction and infrastructure industries. This patented technology is widely used in developed countries due to its simplicity and ease-of-operation and is available to rolling mills on a license basis.
Under this technology, the bars are toughened through the High Yield Quenched and Self Tempered (HYQST) technology to ensure uniform quality across the bar. On further cooling of the bar in atmosphere, a thermal exchange (THERMEX) occurs between the inner and cooled outside martensite surface whereby the resultant bar structure is a distinct tempered martensite at periphery and a fine-grained ferrite-pearlite structure in the central zone. This unique combination of ferrite, pearlite at the centre and martensite on the surface gives TMT steel bars a higher yield strength coupled with higher elongation and finer ductility.
Q. Do you have any further brand-building plans?
Brand building exercise in the steel and cement industries is an ongoing and continuous process. The purpose of this exercise is to stay relevant in the market, among your distributors, dealers, customers and clients. Also, a brand-building exercise not only helps to create awareness about your product and services among your target audience but also helps your customers to choose the right product relevant to their needs. Therefore, like any other steel or cement company, we would also continue with our marketing and branding activities based on our needs.
Q. Going forward, are you planning to expand your product portfolio and specialise in niche products?
We have already expanded our product portfolio in the last few years and our top priority now would be to reach newer markets and gain more market share. At present, our product portfolio includes Radha Fe 500D, Fe 550, Fe 550D and Fe 600 with sizes ranging from 6 mm-32 mm. We also offer MS flats, MS rounds, MS squares, binding wire, design squares and design flats to our customers in various sizes.