Tata Steel will tailor products for the small and medium enterprises (SMEs) segment next fiscal to generate additional revenue of about Rs 5,000 crore.
Speaking to Business Line, T.V. Narendran, Vice President (Flat Products), Tata Steel, said a recent study conducted by the company found that the local SME segment is under-serviced and largely untapped.
“We recently launched Tata Astrum, a hot rolled product, which will cater largely to the SME segment. We intend to sell one million tonnes next fiscal under the Astrum brand which will give us revenue of Rs 4,000 to Rs 5,000 crore,” he said.
The company will soon commission 1.6 million tonnes of additional capacity at Jamshedpur in West Bengal.
The size of the domestic market for hot rolled products in the SME segment is pegged at six million tonnes a year. Tata Steel intends to capture 18 per cent of this market by next fiscal. Hot rolled coils are used extensively in the automobile and white goods sector.
Tata Steel has appointed 42 authorised distributors who will tie up with the company-authorised service centre. The material will be processed at the service centre according to customer requirements.
The distributors are from different sectors including beverages, paint and cement, he said. The Astrum product range will find application in the automotive, earth moving equipment, railways, fabrication, construction and industrial machinery segments.
Tata Steel plans to woo SMEs with ready-to-use high quality hot rolled products. Small companies currently source their steel from traders and others in the unorganised sector as large steel companies focus only on established players with large orders.
“SMEs are mostly dependent on traders and local producers as their order sizes are small and not consistent. With the launch of Astrum, we want to assure them of quality products within optimal time (periods). We want to sell about two million tonnes in next two fiscals,” he said.
Tata Steel is confident that the SME sector will bear the premium that will be charged for its products.
The use of branded raw material will not only reduce the risk on customers but will also cut their cost by 30-40 per cent in the long run, said Narendran.
The company charges a premium ranging from 3 to 20 per cent depending on the brand and quantity. Tiscon, the company’s TMT brand, enjoys the highest premium of 20 per cent.
Some of Tata Steel brands include Tata Tiscon (rebars), Tata Shaktee (roofing sheets), Tata Steelium (cold rolled sheets), Tata Galvano (galvanized sheets), Tata Structura (hollow sections), Tata Bearings (bearings) and Tata Agrico (agricultural implements).
“The worst may be over for the steel industry as far as demand is concerned. We expect it to revive with the RBI cutting key bank rates leading to improvement in liquidity. Traditionally, January to June is considered a busy season for the steel industry,” said Narendran.
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