The Indian economy could still be shivering from COVID-19 aftershocks, but cutting-edge manufacturers have got back on track after easing of lockdown restrictions such as the largest TMT selling brand in India in the retail segment with more than 75 franchisee units – the Kamdhenu Group.
The company – with more than 11,500 dealers and distributors out of which 7,500 are exclusive for steel business – has a dominant presence in the construction segment. The overall inflated sentiment in the building and construction segment, majorly triggered by government support, could boost long steel prices in the short-term, barring temporary glitches, as SteelMint discovers during an exclusive interaction with Sunil Agarwal, Managing Director, Kamdhenu Group.
Excerpts from the interview:
What is the total installed TMT capacity of Kamdhenu (including franchises)? What are the plans to expand capacity? By how much and by when?
The total installed TMT capacity of Kamdhenu (including franchises) was around 36 lakh MT as of June 2020. As you are aware that the last quarter had been a challenging one for the steel industry as a whole. COVID-19 had caused operations to come to a grinding halt which impacted our business quite a lot. With the subsequent easing of the lockdown guidelines, our company has slowing started getting back to normalcy in our operations and we are currently operating at over 85% of our installed capacity across the country. We are continuously ramping up operations on a daily basis. We are hopeful that the business environment improves in the second quarter and we get back to normalcy in the second half of the year.
What was total annual production in FY20? What is the production outlook for FY21?
The total annual production was around 28 lakh MT for FY20 including franchises. With the ongoing pandemic challenge and economy slowdown, we are expecting the same production outlook for this fiscal.
How did the company manage to restart operations after the lockdown? What is the current capacity utilization?
During the lockdown, as the construction sites were closed, various logistical and labour problems cropped up. We, as manufacturers of construction materials, were also facing the same problems. Despite the challenges, we have restored our production to about 85% of the pre-lockdown production level, and very soon we expect to achieve a 100% return to the pre-pandemic levels in the manufacturing of construction materials.
What has been the production volume in Apr-Jun’20? Will production increase in the second quarter?
The production volume was around 0.4 mnt in the first quarter of the current fiscal. With initiation of phase 3 of unlocking in India, we are expecting gradual recovery of the economy in the coming months. We are expecting the production volume will grow to 0.6 mn t in the second quarter of this fiscal.
Kamdhenu has recently launched power alloy steel TMTs. What are the characteristics and advantages of the product for the construction industry?
Kamdhenu believes in innovating products, and with this belief, during FY20 Kamdhenu launched one of its own type of steel – Power Alloy Steel (PAS 10000) – in the country. PAS 10000 is capable of giving unmatched strength and safety to construction.
Its unique design gives 360 degree locking with the concrete, which gives strength of up to 10,000 psi with the concrete. We have done research in the field of rebar and have presented rebar in ultimate capability. The research of the company will take the steel industry to the next level. Steel alloy gives a better rust-proof quality and gives this rebar capability to bear 28% more weight. This apart, it gives double earthquake prevention to the building.
What is the demand scenario in general after the pandemic and lockdown? What is the near-term outlook for the domestic construction sector?
The situation is unpredictable and continues to be difficult due to regional lockdowns which may impact demand in general. However, we are hopeful that the business environment improves going ahead. We expect to get back to normalcy in the second half of the year. The steel sector in India has started showing signs of improvement as finished steel production improved month on month in the last three months. Many steel majors have increased prices of steel counting on the strong recovery in domestic demand. With subsequent phases of unlocking of the economy, construction activities will also return to previous levels and new projects will be undertaken.
~Inputs by Nirmalya Deb
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