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In conversation with N M Kumbhar, General Manager, Bhushan Steel Ltd.

1. Can you give us a brief on your company?

We are basically a primary steel manufacturing company. We manufacture primary steel as well as secondary steel. Primary steel is known as HR Steel which is the basic raw material for all secondary steel. The secondary products are finished products like colour coating coils, colour coating sheets, corrugated sheets, GP coils etc. We are one the largest producers of both primary and secondary steel throughout PAN India. We export from PAN India basis and the region wise export per month on an average is as following:

Gulf – 31%
Africa – 40%
Europe – 10%
Far East – 3%
Latin America – 13%

In export we have two major categories, the break-bulk category and the other is containerized cargo. One of our major products i.e., API pipes which is produced in the Khopoli plant, Mumbai is exported in break-bulk from the Bombay port. HR (hot Rolled) coils which is produced in the Meramandali plant, Orissa is also exported in break-bulk from the Paradip port.

2. Do you have any sister concern or have you diversified into a whole new vertical?

Only STEEL, STEEL and STEEL!!!! We anticipate the steel market to be growing since there is a lot of demand in the market. We are however planning to enter into the Energy sector for which we have already set up Bhushan energy which is solely for self-consumption of our established plants.

Otherwise we are not looking into diversifying into any other commodity.

3. You’ve been associated with the Logistics industry for about 36 years now, was there a turning point/ high point in your career that you always recollect and cherish?

Initially when the company was set up, for the first few years we were exporting our products only through 20 ft containers. I then explored and suggested that the same commodity can be exported through break-bulk which will work out to be more cost effective. So we started with exporting to China and Antwerp.

Currently we are exporting through containers as well as break bulk. The drawback involved with break-bulk is the Inventory cost. We have to keep a minimum of 10,000 MT of cargo in stock which calls for high inventory cost in comparison with the freight that is being offered to us today and the rejection rate is moderately high for break bulk cargo. Customers tend to reject about 10% of the commodity on account of unsatisfactory quality or damages etc. So we try to keep a balance between break-bulk and the containerized cargo.
There was also a turning point of exporting HR coil from the “dead port” called Paradip port. About 3 years back we have started exporting HR coils from the Paradip port where we were interviewed for being the first steel exporter from Paradip.

4. How do you ensure you meet the requirements of your customer? Do you have a dedicated R&D team in place?

Ours is a tailor-made product. We produce the coils or the finished products based on the specifications provided by our customers like the thickness, colour coating, size design etc.

On an average, we export about 24000 containers annually on a PAN India basis where a major chunk is exported from the Khopoli plant.

5. What percentage of your customers would you rate as loyal customers?

The steel industry as whole is cyclical due to numerous factors that are beyond our control, including general domestic and international economic conditions, labour costs, competition costs, levels of inventory etc., and it becomes difficult to on-pass the cost to the customers as the market is very price sensitive.

There are too many commission agents and sales agents and the maximum sales goes via commission agents. But in our case we have a 50:50 ratio. 50% of our customers are direct customers e.g., In Europe and gulf sector we have direct customers.

6. We are aware that you are well spread out across the globe; however are there any specific regions/ countries that you are looking to foray into?

As Bhushan corporate we are looking at establishing our own distribution Centre at Nigeria which will later be converted into a plant. We already have our own distribution Centre at UAE & Djibouti.

7. What is your idea of an Ideal logistics company? Rank the below parameters based on what you value the most – Rates/Freight, Free Days, Credit Terms, Long Term Relationship.

An ideal logistics company is one that provides consistency in its services and provides competitive prices.
1. Rates/Freight
2. Long Term Relationship
3. Free Days
4. Credit Terms

8. What is the single most important benefit that you get from our service and how do you suggest we get/ maintain our fair share of attention from your company?

For a long time now we have and continue to share a very good relationship with Goodrich. As far as the service and competitive freight is concerned we have always been getting priority. The multiple locations, wherever we require our services, Goodrich has always provided. For e.g., very recently some cargo has been delivered to Vizag & Kolkata.

9. Can you give us your insight on the current market trends particularly pertaining to your industry?

As far as the steel industry is concerned, the steel consumption is less in India as compared to other countries so there is a vast scope of increasing the production capacity domestically and internationally. The present scenario is such that, there are volumes but the margins are very low and because of the low margins people are reluctant to produce and export.

10. How do you differentiate Bhushan Steel from other steel manufacturers?

Bhushan Steels Management policy is to only work on LC basis whereas other steel manufacturers work on advance basis. The moment the LC is open, we process the goods. Our delivery period is 33 days. Within 33 days we deliver the commodity irrespective of the quantity. Most of the steel manufacturers take orders in 1000’s, we even take orders for 25 MT. Our aim is to satisfy the needs of our customer.

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