ET Now: Has your branding strategy for the steel category yielded the results that you were hoping for?
Peeyush Gupta: The journey started about 20 years back. With branding, the company has to convey to the consumer what s/he is buying. The company’s name must feature of the product, or else customers can’t trust the authenticity of the product. We started doing that 20 years ago. Customers took a liking to it, and our rival companies soon followed suit.
The second issue is about where you buy it from. Consumers want to be sure they are buying products from an authorised place. And that is the second thing we did.
This is an ongoing journey as we are still expanding and getting more and more customers. We now also offer solutions and applications in steel, which I think is the next frontier for branding.
ET Now: You are now going big on value-added products. How have sales been under the branded category and what is the potential for growth that you see?
Peeyush Gupta: In the beginning, branded products accounted for just 5% our sales. Today, about 40% of our sales is branded products.
Value-added products can be divided in two aspects — (i) superior, better products made in superior, better mills; and (ii) solutions, which means the customer buys steel from us and gets us to do the processing & fabrication as well, because have a footprint in both.
Take Tata Pravesh Doors, for example. It offers steel products, and also offers a solution for doors. Another example would be the products and solutions we provide for the construction sector.
ET Now: Branding is about pricing power, but steel is all about the vagaries of the commodity cycle. How do you reconcile the two?
Peeyush Gupta: Let me break your question in two parts. Typically, anything that’s got a brand name on it and is sold to a retail consumer, will have less volatility. A customer wants the best product for, say, the home she is building, and won’t skimp on spending on what she deems is best.
B2B is the second realm; it’s there that you’d see the volatility. Buyers here compare prices and then go for the best option at the cheapest price. One of the foremost reasons behind our branding strategy was to put a curb on such volatility.
ET Now: After February’s dip, steel prices are up again. Is it because of rising demand from China after Lunar Year reopening?
Peeyush Gupta: International steel prices have been quite stable. Consumers are also getting used to the new normal, which is a bit on the upper side. Raw material and commodity price spreads have also been in a stable zone.
Prices have for some time been on the higher side, and we expect this to continue. Domestic demand across the world including India is strong. Consequently, there is lesser trade happening.
ET Now: There are complaints of shortages as well as increasing prices. How much of it is due to global factors vis-à-vis raw material prices?
Peeyush Gupta: As a responsible business, we would like to keep supplying the market with as much steel as possible. During Covid did we raise exports because there wasn’t much local demand, but now we are back to supplying more to the domestic market.
As for trade, India has proven it can compete in the international market. India is now a net exporter of steel again, something that’s likely to continue in the coming year as well.
ET Now: Demand in India is expected to rise. What is the current picture on the supply side — inventory levels etc?
Peeyush Gupta: In the pre-pandemic period we were consuming a little over 100 million tonnes. After Covid hit in Q1, user consumption came down by about 12% to 13%.
Things have now stated turning for the better. Most of the industries — whether it is automotive, construction, appliances or even capital goods — have indicated double digit growth. If that were to translate into GDP-plus growth, we will again see consumption at over 100 million tonnes in the coming year.
So we have lost one year in the cycle, but we believe that the coming year or may be the coming 3-4 years will be very good from the demand point of view. You have to build India, you have to put India first, and steel is what is required for that to be done.
