Mahindra Intertrade, part of the $17-billion Mahindra Group, aims to become the largest steel process in the country. The company already has seven service centres, including the one in Sharjah. It caters to automotive, home appliance and power and sees opportunity to grow exponentially in each of the verticals as they remain largely untapped.
“Just like they use to once say Intel Inside, we would like to be known as Mahindra Integrated inside in power transformers used in India,” said Harsh Kumar, Managing Director, Mahindra Intertrade. Excerpts:
How does processing steel fit into the larger scheme of Mahindra Group?
Steel processing is one of the oldest businesses within the Mahindra Group. In fact, the first commercial invoice of Mahindra Group was steel import from Japan way back in 1945.
The first Iron and Steel Controller of India was Jagdish Chandra Mahindra.
The company was sourcing steel consistently from Metal One Corporation of Japan for long and this relationship was converted into a joint venture in India in 1993. Our vision is to become the largest steel services company in India.
Why should auto makers consider Mahindra as they already have tie-up for sourcing products?
It will save them the cost. When we source steel for say four or five auto companies together we would always end up in a better bargain than an individual company buying on its own. We will play the role of an aggregator and pass on some benefit to the customers. This apart, we can also process the steel as per their specification and deliver it just-in-time for use.
How is your steel processing centre different from the one set up by JSW Steel and Essar Steel in Pune?
If you see, in Japan or Korea none of the primary steel producers are into processing steel. It is surprising that it is the reverse in India.
We believe processing steel should be handled by specialists in the field.
Large steel companies will process only steel produced by them, but we are open to procure as per the customers’ preference and process it as per their specification.
We sensed huge opportunity in merchant steel processing way back in 1993.
Being closer to user industry is an added advantage.
It is only a matter of time when steel makers would stop doing this and focus on their core competence.
How do you see the recent safeguard duty imposed on steel?
Not a happy situation. It will push up cost for end-users though it is a temporary measure. However, most of the countries have imposed safeguard duty to protect their domestic steel companies from China, which accounts for half the global production capacity and looking for markets across the globe.
We have to wait-and-watch for its full impact.
What will be the impact of volatile rupee on your business?
It is going to be tough. Considering that we import steel worth $6-7 million a month, managing the risk has become difficult.
However, we do not take the currency risk on all contracts we sign with our customers. It depends on their preference.
If they are willing to take the currency risk, the fee we charge will be adjusted. In cases where we take the currency risk, we hedge our open positions.