What could outrightly revolutinze the TMT bar industry, Mahalaxmi Vinimay, a Rs 500 crore, TMT bar and Ferro Alloys manufacturer is all set to launch for the first time ever in india, stainless TMT bar in various thickness and sizes in West bengal and Bihar. No company currently manufactures staineless steel steel TMT bars and the housing and construction sector relies entirely on TMT bars made of iron which is plagued by the problems of rust and breakage.
Says Gopal Agarwal, managing director of Mahalaxmi Vinimay, “Steel is the future. I anticipate that in the next five to ten years, TMT bars will no longer be made out of iron. We are pioneering the transition from iron based TMTs to steel bars for construction sector.” however Agarwal cautions, “The transition will not be easy. Acceptance will be slow. We, being the pioneer now in stainless steel TMT bar, will have to take the responsibility to communicate to the users about the benefits and advantages of stainless bars for building houses."
Mahalaxmi plans to keep the stainless bar prices close to the current iron TMT bars. With initial volumes expected to remain low, the company has to subsidise the product to a large extent. Says Gopal Agarwal “We have to keep the price parity between iron rods and the new stainless rods to make the product acceptable to the masses at large. For the interim period when the volumes are low, it will be a huge challenge to meet the manufacturing expenses of the stainless bar and still keep costs low. But, eventually, as the product acceptance grows and volumes pick up, stainless steel bars even at the cost of iron rods would be a profitable product for us."
Now theres an interesting catch in how Mahalaxmi strategies to offset the intial loss. One of the major components of TMT bars consumer pricing is freight. The product being exceptionally heavy, freight charges plays an significant role in the daily price fluctuation of TMT bars. According to Gopal Agarwal, the stainless bars shall be 40% less in weight than current iron bars and also consumes lesser space thereby directly reducing the freight cost. But even when the stainless bars are low weight it has the same strength of iron bars.
Mahalaxmi’s product communication will be built around the USP that iron bar manufacturers are misleading the consumers by saying that they are rust proof, hence breakage proof and also earthquake proof. “Any iron, will eventually succumb to rust and thus cannot be earthquake resistant. Steel, in contrast, is intrinsically rust proof metal. Steel bars are the best earthquake resistants. Once consumers understand the vital difference between iron and steel, the market will switch rapidly towards steel bars.” Says Gopal Agarwal.
Mahalaxmi has all set to invest an additional Rs 50 crore to upgrade its facility to manufacture the new generation stainless bars. The company shall plough back half the investment from internal reserves and source the rest of the fund from financial institutions.
