Interview

Prakash Steelage : the Name Synonymous with Steel

Posted on 25 January, 2010 | Tags:

When the steel industry in India was in its nascent stages, Prakash Kanugo, Chairman and Managing Director, Prakash Steelage envisioned Stainless Steel (SS) emerge as the material of millennium and set his foot into the business in 1976. He glances at the yesteryears of his journey from a trader to India's leading SS pipe manufacturers in an exclusive interview with Chemical Engineering World

 
Prakash Kanugo,
Chairman and Managing Director, Prakash Steelage envisioned Stainless Steel

"Stainless steel is recognized as the material of the millennium, which is not an exaggeration," comments Prakash Kanugo, sitting comfortably in his swish office. He is a great visionary who envisaged the idea of getting into the business of steel trading when Indian industry was emerging and started off a company Prakash Steel in 1976. "We ventured into the business of trading of stainless steel coils, plates and strips that were sourced material from leading Indian manufacturers and also imported to supply in the domestic sector," he states. From the initial years, Prakash Kanugo has spearheaded the company's growth and has diversified its operations and has emerged as one of the leading manufacturers and suppliers of stainless steel pipes, pipes and tubes.
Having gained significant experience in the field of supplying products in the domestic market, the group set up its first facility in Silvasa in Gujarat to manufacture seamless and welded pipes and tubes.  "Strategically this place suited us for its close proximity to Mumbai, easy access to the steel markets and industry friendly environment Gujarat offers," states Kanugo. "However, primary years were challenging," he reminisces.  "This was the time of globalization, there was an increase in demand and imports were flowing into the country," he points out. "It was very important for us to maintain the competitive edge as the industry was the end user," he adds. The unit is well equipped with the most modern technology to manufacture welded and seamless tubes and pipes as per the stringent quality standards. Having consolidating the position in domestic sector, Prakash Kanugo set his eyes to establish the brand in the international market. The company commenced its export operations in the year 2000 and in a short span of time the group gained immense success in selling products across multitude of industries including oil and gas, power, pharmaceuticals, petrochemical, sugar, dairy, automobile and desalination etc.
" Considering the ever-growing popularity of steel, we identified an opportunity to grow in Indian and global markets and set up our new state of the art facility to manufacture latest in seamless tubings two years back in Umbergaon," he speaks. The Umbergaon facility has an excellent layout, modern equipments and automated handling system. To ensure premium product quality, the company has set up ultra modern facility for destructive and non-destructive testing.  All the manufactured products undergo strict quality checks to ensure superior quality. Prakash Steelage has received the necessary certifications, such as ISO 9001:2008 for quality management systems, ISO 14001:2004 for environmental management systems and internationally recognized assessment BS OHSAS 18001: 2007 specification for occupational health and safety management systems. Prakash Steelage is also Pressure Equipment Directive  (PED) certified, which applies to any pressure equipment that is sold in European market. Company exports products to more than forty countries including Australia, Brazil, Middle East, South Africa, European countries, USA, UK, Canada, New Zealand, East Africa, South East Asia and Latin America.

Globalization Blues
As Indian market became more receptive to the new players, new opportunities emerged across various industries. In a bid to explore the untapped potential in developing countries, many international companies set their foot in the country, as India was presumed to show promising growth in the future. On one hand this was a good sign of industrial growth, higher competition and on the flipside an indicator of the risk to lose skilled workforce to the lucrative MNC culture and threat to the domestic manufacturers.
Per capita steel consumption in India is 1.5kg, whereas China consumes 5 to 15 kg per capita of steel. Western countries are facing various policy related issues in other Asian countries, however the case is not the same with other countries. Being a user-friendly material, SS exhibits excellent anticorrosive properties and off late the trend to use steel for industrial applications and infrastructure is increasing. "Though the demand was lean during the period of recession, but it has picked up significantly over the past six months," observes Kanugo.  Although, there was a lull in the business activities of the group during the same time, the annual turnover for the current fiscal stands at Rs 375 crores for Prakash Steelage Ltd and Rs 200 crores for the trading arm.
As of now no antidumping duty is imposed on imports of cold rolled steel, however there is a duty of 10 percent on steel imports, which the Government is reducing gradually as a part of global commitment. Government has offered several benefits such as duty free licenses under Duty Entitlement Pass Book, (DEPB) but these are also going to be reduced. Kanugo opines, "Government must take adequate measures such as impose antidumping duty on the imports, provide subsidies and facilitate exports to safeguard the domestic steel industry."

Future Plans
A strong business acumen and habit to take lower risks helped Kanugo sense the pulse of the new business climate and understand the dynamics of the new industry climate. He realized the significance to maintain the growth along with the competitive edge to uphold its position. Though time and again, the group has faced the challenges in terms of availability of raw material, pricing issues that rise out of fluctuating nickel price. But having established itself as reliable suppliers and vendors has helped the company maneuver through the testing times.
  The group has the expertise to manufacture U-Tubes and Bright annealed U tubes, are very much in demand in the power sector. The company has been supplying these to  companies like L&T and BHEL.
Company has maintained a record of stability ever since it started its operations in 1976. " We are on our way to become steel makers the world looks up to," says Kanugo. Ashok M Seth, Executive Director, responsible for overall operations and his four sons Hemant, Vimal, Kamal and Kirti are the pillars of strength, which have stood by him all through the journey of company's growth.
Kanugo anticipates a strong increase in the demand of steel in the years to come, especially in the infrastructure. In a bid to diversify its business interests the group has entered into construction activity considering the future growth in infrastructure. Further expansions are in the pipeline to offer customized products in special grades such as Duplex Steel for industrial applications. There is an increase in demand of special grades, which is now getting recognition in India and the company sources the raw material supplies from Outokumpu.
Customer satisfaction, open communication, and stringent quality standards all top the priority list of the work culture at Prakash Steelage. Kanugo has chalked out the business plan for the coming years and plans to launch the IPO around March this year. He has set his target high now and aims to increase the turnover to Rs 750 crore during the next three years and Rs 1000 crores in the next five years. " I think it is achievable as the future is stainless steel and Prakash Steelage is synonymous with it," he concludes.