Sandipan Chakravortty , Managing Director, Tata Ryerson
Steel processor Tata Ryerson has opened its newest unit at Pantnagar to supply the Nano. We spoke to managing director Sandipan Chakravortty on the latest trends.
What was the rationale behind setting up the Pantnagar unit?
We set up our Pantnagar unit after our customers like Tata Motors, Bajaj Auto, Ashok Leyland, and Mahindra & Mahindra decided, in 2005-06, to set up their manufacturing units there. We immediately identified the opportunity for a world-class Steel Service Centre for these companies at this location. Tata Motors set up its plant to produce the Ace and Magic. Both models required high volume customised steel of specific sizes and grades to be supplied Just In Time and Just In Sequence to Tata Motors and its Tier 1 vendors .This was possible only through a state-of-the-art service centre located adjacent to the manufacturing base of the automobile companies. We partnered with Tata Motors and our promoter Tata Steel, to set up the Pantnagar facility. This centre acts as a reliable bridge between steel producers and the OEMs who set up their units in Pantnagar.
Tell us about your supplies to the Tata Nano?
We got involved with the Tata Nano through the Early Vendor Involvement (EVI) scheme. That was also the time when Tata Ryerson as a strategy wanted to enter State II and III processing with higher value addition. Thus we took up the challenge of developing a technologically difficult component through a process of roll forming and stretch bending of steel .We scouted around the world for the best technology and got it from the USA and Canada. Then we started the joint effort between ourselves and the Nano team as well as the equipment supplier. The Nano’s success depended on the relentless effort and commitment of its vendor teams, who braved adversities and raised the bar to develop superior quality components at low cost.We are the sole vendor for the six roll-formed, stretch-bent and fabricated components which are extremely critical and act as load-bearing members for the Nano. As far as I know, this is the first time a compact car has successfully deployed this unique technology and we are proud to be associated with the Nano.Tata Ryerson was one of the first vendors to have almost completed its plant at the Singur Vendor Park. At present we are setting up a unit in the vendor park adjacent to the Tata Motors Nano plant in Sanand. Supplies will be made in reusable pallets straight onto the assembly lines and the maximum distance for delivery will be less than a kilometre.
How do you see the trend in global steel prices and how will they move in India?
Steel prices in the last 30 years have gone through several ups and down. Between 1995 and 2008, they fell at least seven times. The sharpest and most unprecedented decline took place in August and September last year, when prices fell from over US$ 1,000 per tonne for hot rolled coils to US$ 400. Globally we have witnessed consolidation among steel makers, while metalics and raw material majors like iron ore and coking coal suppliers also gathered strength. In the past few years we have seen a win-win situation emerge for both. Thus steel mills and raw material suppliers are showing growth in their top and bottom lines.Due to the global economic downturn, there is a declining trend in steel production in the past few months caused by lower capacity utilisation and severe production cuts by steel mills. India is no exception to this pressure as we are increasingly integrated with the global economy. Negotiations for iron ore and coking coal, the two most important raw materials for making steel are about to start for the next financial year. The new prices are expected to be significantly lower than those of last year. Hence, there would not be any reason for steel mills to resort to price increases unless we witness a considerable increase in demand. According to my estimates, we have seen the bottom of the steel prices and there would be little correction upward before they remain stable for the rest of the next financial year.
What vehicle models are you supplying from your Pantnagar unit?
Currently we are supplying the Tata Ace and the Magic. Some of our steel goes to Bajaj Auto’s Platina motorcycle and Mahindra tractors. We have relocated our facility to Pantnagar from where we will supply initial lots to support Nano production. But we are there to support current and future programmes and models of all our customers.
What are your expansion plans for 2009?
We have gone in for multiple investments exceeding Rs 500 crore in the past few years. Now is the time to consolidate those operations; hence we are focusing on ramping up production volumes, increasing operational efficiency and consolidation. Apart from that, we do have several projects in the evaluation stage.
Can you explain the concept of ‘seamless supply chain’ that you are implementing in India?
The success of a Steel Service Centre lies in unlocking value in a traditional steel supply chain. We enable OEMs to concentrate on core competence while we carry on operations that are necessary to support uninterrupted production of parts or components. Our seamless supply chain activities include steel procurement of the right grade, size and cost, managing inventory, processing to final size and shape with minimum wastage, keeping adequate stocks of finished goods and replenishing the supply just in time and just in sequence following the Kanban model
Will Tata Ryerson be passing on the benefit of the recent 2 percent cut in excise duty to its customers?
Yes, certainly wherever it is applicable.
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