Editorial October 2018

In 2017, Indian economy was shadowed by demonetization in the first half and the implementation of much awaited GST.As mentioned in my last piece, one may debate on the long term utility of these measures but on a short term basis the economy did get a big jolt. Organised part of metals industry did not get much affected by demonetization and infact it gained a little bit from GST implementation. Now in 2018, Indian economy seems to have recovered from these tremors and is cruising forward. The GDP growth rates of the first two quarters of 2018 (7.5 % and 8.2 % respectively) are quite encouraging for the economy as well as for the metals industry. A good GDP growth rate always encourages the industry and in turn helps the metal demand to rise.

If one looks at the user industry sectors of metals, there too a positive sentiment is prevailing. Auto industry is growing at a decent speed and creating a good demand for metals and auto parts. This is a great news for foundry sector and as we look around, most of the foundries are doing exceedingly well breaking their previous production and sales records. Many of them are in expansion mode and one can visualize a far more robust and growing foundry sector in coming years. Experts do feel concerned about the auto parts demand on a long term basis when electric vehicles will be popular. In any case, today all seems to be well.

As regards construction, one may develop a feeling that it is stagnated in big metros. Yes, it may be the case but look at tier II and Tier III cities. They are growing at amazing speed and eating lot of metal in the process. Today, one of the major concerns of the industry is rising oil prices. It makes the transport more costlier and affects all the products, industrial as well as household. As we all know, for producing a tone of metal, three tones of raw materials are required. Thus in totality, four tones are transported. With these facts in mind, one can imagine the impact oil price rise is going to have on metals industry.

If the industry has to progress, technology should provide the push and the direction for this transition. For the last few years, we have been talking about automation, robotics in metals sector. Now the concept of ‘Smart Manufacturing’ or  ‘Industry 4.0’ is getting popular. With implementation of this, one can not only monitor but also effectively and efficiently manage his factory by using an app on his mobile phone. I feel now is the time Indian metals industry should look for technological and digital upgradation so as to improve on quality, productivity and overall efficiency of the plant.



Editorial September 2018

The metals sector in India seems to be slowly gaining momentum. Metals consumption and demand are growing steadily which is reflecting positively on capacity utilization of manufacturing and processing plants. The price curve too is showing a gradual increase which means the conversion margin at every stage is reasonable.

Though metals user sectors such as infra, construction, auto, engineering are putting up impressive performance month after month and are providing support to the demand curve, in my opinion, this is not enough to have a sustainable growth. The real and biggest trigger for metal and metal components demand comes from mega infra projects undertaken by the centre or state government and this has not yet picked up as expected.

The foundry sector, which forms an important part of metallurgical industry and which is the backbone for the auto, engineering and mining industry, is doing exceedingly well. Today, India produces around 10 million tones of castings in comparison of China producing more than 40 million tones. We all know that Indian economy is now gearing up for its fastest growth period. The GDP growth rates of last two quarters were 7.5 % and 8.2 % and one would not be wrong to expect a similar growth for the future. It is also expected that along with the expansion of the economy, the demand for non-ferrous metals and castings will also rise. Today most of the foundries are working in full swing and also looking forward to expand their capacities.

We all know that in the last few years, the dependence of Indian foundries on exports has reduced to some extent. Infact, the stagnation of Eurozone and the slow progress of the US economy has compelled Indian castings producers to look for alternate markets. Now, African region, SE Asia are emerging as potential export destinations but the main trigger for the castings production is provided by the boom in domestic markets.

Experts predict that the castings production may triple by the end of the next decade, i.e. by 2030. Well, if the Indian economy continues to expand at a near double digit rate for this period, there is a strong possibility that the castings demand will rise substantially. Even if one considers advent of electric cars by that time which are expected to consume lesser number of castings, the argument in favour of foundry sector is that the other emerging user sectors such as defense, aerospace, power etc. will more than compensate this loss. Of course, when the industry aspires to triple its production, it must pay attention to a lot of parameters. Raw material availability, supply of power and finance at reasonable cost and most importantly, the availability of technical manpower. Even today, it is very difficult to get such qualified manpower for metallurgical and especially foundry industry. There are very few technical institutes having relevant courses and even the new generation is least interested in working for a metallurgical enterprise dirtying their hands.

The road seems difficult if not impossible !

Editorial August 2018

Today, India is the fastest growing economy attracting many international companies, financial institutions etc. It is natural that these companies would want to participate in the growing Indian economy. The fiscal 2017-18 was shadowed by currency ban first and then implementation of much awaited GST. One may debate the long-term necessity of these measures but its tremors felt immediately by the economy. Thus last fiscal performance of Indian economy was somewhat depressed. But now the industry and the economy seems to have recovered from the jolt and look, last quarter growth of Indian economy was 7.5 %. Further, it is expected that GDP growth for the next quarter will be better than this. This is surely a very encouraging signal for the economy as well as for the industry. It also ensures a positive industry sentiment and an attractive environment for overseas companies and capital.

Here is a catch. A good GDP growth is welcome but not enough for a healthy growing economy. Let me explain this. GDP only tells you how much the economy has earned but it does not tell you who contributed to this earnings. Thus a handful big companies doing superlative performance may boost the GDP while rest of the economy may still be struggling. I think the Indian growth story is somewhat similar to this. (Here, one may recall an old comment about Indian economy – Islands of prosperity surrounded by oceans of poverty !)  Few mega companies are doing extremely well while most of the other companies, especially from MSME sector are fighting for survival. We all know that MSME sector is the backbone of any economy. It rolls the maximum capital and it generates the maximum employment. Unfortunately this very sector is struggling for its existence. Stagnated markets, no access to soft capital, severe competition especially from China. This is the reason why Indian GDP growth is not accompanied by a similar growth in the employment index. Many years back, when overseas automakers wanted to set up their manufacturing hub in India, it was made mandatory for them to source components from Indian manufacturers. This policy provided a big trigger to Indian auto component industry.

Let’s have a look at the structure of Indian metals sector. Apart from very few primary producers, most of the downstream companies are quite small in size. Auto component sector, rolling mills, extrusion companies, foundries, all these typically fall in SME sector and face most of the problems mentioned above. Further these companies are sandwiched between big primary producers at one end and big OEMs (such as automakers) at the other. Needless to mention that these companies are squeezed from both the ends.

One may argue that in today’s liberalized and globalised economy, what role can government play apart from making policies? How can they support SMEs? They can support this sector by starting common R & D centres and inspection labs, organising overseas events to facilitate exports, extending soft loans, the list can be very long. There has to be a strong will and clear understanding of the industry !


Editorial July 2018

Last year was quite eventful one for the Indian metals sector, full of ups and downs and filled with enormous uncertainties. Let’s have a look.

Though the availability of vital raw materials has improved over past 2/3 years, depressed oil prices and overall subdued environment on a global level has to have its effect on every country’s economy. In today’s networked world, no country can progress in isolation. India too was affected by the global slowdown which has now been referred to as ‘New Normal’.

Nevertheless, India’s auto sector has been putting up an impressive performance for the last few years and continues its upward path this year too. The monsoon is also good this year which means the tractor demand will surge. Good news for foundry sector indeed ! The non ferrous metals demand depends on many consumer industries but is mainly linked with infra and construction sector.  Their fortune is firmly tied up with these sectors. Building of roads, bridges, ports, airports, metro projects, dams etc. will consume huge amount of metals and thus will give a boost to metals demand in the country. For India, most period in the last year was under the influence of demonetization and implementation of newly framed Goods & Services Tax (GST). Though one can argue on the long term benefits of these steps, they naturally affected the performance of atleast first three quarters of the fiscal 2017-18. The industry somewhat recovered and stabilized by the end of 2017 and thus the Indian economy grew at the rate of 7.5 % during Jan-Mar 2018.

Now that the Indian metals sector has crossed most of these hurdles in the growth path, one can be little more optimistic for the coming period. Also, the central government’s focus on MSMEs should put the Indian metal producers and processors in a position to cater to the growing demand in the country. As such India is seen as one of the few growing economies in the world and a lot of overseas companies are wanting to enter into this growing market. I feel that India is in the right place at the right time. Only time will tell how much benefit it can extract out of this situation !


Editorial June 2018

It is said that as the GDP of any society grows, its consumption of non ferrous metals also starts increasing. In India, we are witnessing this transition for the last two decades, or more specifically from 1993 when India adopted liberal model of the economy and facilitated globalization.

Aluminium and copper are rightly called as ‘Metals of 21stCentury’. As we can see, the downstream processes like rolling, casting, extrusion, forging can produce different components / products from the primary metal and serve a variety of applications in the industry or otherwise.

Today, unfortunately industry is projected as some sort of enemy of environment and common man by the media for the reasons best known to them. It is said to be damaging the environment including the land water and air. There are so called environmentalists, NGOs shouting how ‘industry’ is bad for the society. The common man too believes these allegations as they are hammered hard and repeatedly and secondly, there is no industry forum supporting the industry’s cause and bringing the actual facts on the table. Today, every factory has to follow very strict environmental regulations and they are being monitored and checked on a regular basis. I know many companies which actually improve the environment. Their manufacturing units are in fact greener than outside land. They plant trees, improve water table, employ the latest technology to prevent emission of hazardous gases. Mind well, this is apart from the regular CSR activities being carried out. Needless to mention about their tremendous contribution to national economy by creating jobs and helping to improve the GDP.

Its time now to tell our society loud and clear that we industry professionals do understand the importance of environment and try our best to protect and nurture it. At the same time, we have the responsibility to provide livelihood to our society and we try to achieve this by doing minimum or no harm to the environment.


Editorial May 2018

Indian economy has witnessed two tremors in the last one or two years. One was demonetization and the other was introduction of GST, Goods & Services Tax. While demonetization was intended to nullify the fake currency and to curb cash economy, GST’s purpose was to bring the whole nation under one tax regime, avoid double taxation and collect the tax at the point of sale. The thought behind these two moves was said to be making Indian economy more straight and more attractive for overseas investment. While one can debate the extent of fulfillment of these objectives, it is really creditable on the part of Indian economy which successfully withstood these tremors. Its growth rate for the fiscal 2017-18 was around 6.5 % and it is predicted by the international agencies that Indian economy will grow by around 7.5 % in the fiscal 2018-19.

We all know that the metals consumption is directly related to GDP growth rate and thus the consumption grew decently in 2017-18. Now if Indian economy speeds up in coming months, the consumption curve is also going to shoot. Infrastructure and construction are the two foremost important consumers of non ferrous metals and they seem to be doing well. Another important customer is auto industry. It is undoubtedly doing well for the past few quarters. As we all know, the fortune of foundry sector is strongly linked with that of auto sector. All these factors do make us believe that Indian metals industry will be doing better, quarter after quarter. The raider in this thinking is that the consumption is sure to grow. If Indian producers are unable to take advantage of this situation for their own (financial or management related)  reasons, then the country may turn into a long term importer.

Here, we should differentiate between the large integrated metal business houses and medium scale processing plants. The financial and ownership restructuring problems are faced by these large business houses while the medium scale plants are in a perfect position to exploit this situation. I am personally quite bullish on Indian economy and today it is the only one in the world where one can bait his money !


Editorial – April 2018

Generally, the Indian metals industry seems to be going well.


Due to increase in infrastructure projects, the demand for non-ferrous metals is increasing steadily. A lot of new applications for the industry sectors like extrusion, copper are being developed which are sure to give support to the demand curve. The most important factor is auto industry. Huge amount of castings go into a vehicle and to say so, foundry sector growth is largely associated with the performance of auto industry. Now auto sector fortune depends on sale which is influenced by road condition, bank interest rate as well as growth of economy in general. Considering all these factors, auto sector seems to be doing well these days and foundries can surely look forward to a bright future.


Although the metals industry is doing well, this does not mean that it is free of problems and issues. The first and foremost is lack of technological upgradation. Barring few top companies, most of the processing companies (like extrusion, drawing, casting etc.) still use outdated technologies and processes. If one wants to compete in global marketplace, the products have to be made using latest technologies and processes. A substandard product has no place at international level.


The second important problem is the lack of technical manpower. This is a real irony as on one hand we say that India has huge unemployment and on the other hand, we complain of not getting technical manpower to run metallurgical factories. This simply means that we should have more sector specific and specialized courses producing executives and technical people specifically trained to perform in that particular sector. Associations and other trade bodies should look into the possibility of opening and running such training centres. I am sure these will tremendously benefit the industry !


The third issue is market growth. This is more general in nature and is dependent on national economy in general. Most of the international agencies are bullish about Indian economy and have predicted a growth rate of around 7.5 % for the fiscal 2018-19. If we go by these predictions the Indian economy as well as the metals industry will do well in this fiscal !


Generally, the Indian metals industry seems to be going well.Due to increase in infrastructure projects, the demand for non-ferrous metals is increasing steadily. A lot of new applications for the industry sectors like extrusion, copper are being developed which are sure to give support to the demand curve. The most important factor is auto industry. Huge amount of castings go into a vehicle and to say so, foundry sector growth is largely associated with the performance of auto industry. Now auto sector fortune depends on sale which is influenced by road condition, bank interest rate as well as growth of economy in general. Considering all these factors, auto sector seems to be doing well these days and foundries can surely look forward to a bright future.



Editorial – March 2018

Dear Readers,
Today, Indian metals industry is on crossroads. A lot of opportunities are emerging and at the same time, it is surrounded by numerous problems. Last few quarters have seen a steady increase in metals demand, thanks to mega infra projects being implemented by the central as well as many state governments. A sustained increase in demand can transform the industry sentiment and encourages business houses to plan for the future, think of capacity expansion and so on. It also improves the bottomline and influences the price curve in a positive way. Presently, most of the commodities in the metal process chain have somewhat regained the comfort in pricing which can ensure smooth running of the enterprise and expect some growth in the future. The customer industries like infrastructure, automobile are putting up impressive growth figures and this will surely translate into higher demand in coming months. Recently presented union budget for the fiscal 2018-19, apart from its provisions for the farming sector, emphasizes on infrastructure development in the form of railways, airports, sea ports, metro projects etc. which certainly promises bright future for our industry. It also estimates that Indian economy will grow by 7.2 to 7.5 % in this fiscal. I am sure if the economy really grows at this rate, all the industries including ours will tremendously gain. It can attract huge capital not only from India but from every corner of the world. In my opinion, the technology one employs, the processes he uses, these things are going to be the key parameters in business. Further, the level of automation, using IT based solutions like Industry 4.0 in manufacturing, are going to play a very crucial role in the future. The success of any enterprise depends on how quickly it adapts itself to this new environment. To say so, the future seems bright but the journey is corrugated. Lets see how the things unfold !

Editorial February 2018

Since last few years, MENA region has been identified as one of the most growing economies of the world. This growth story started around turn of the century and had a smooth run till 2008 global economic meltdown. Many economies in the developed world suffered a big jolt and since the economies of many countries in MENA region are closely associated with western world, they also felt huge tremors. Infrastructure creation was at the core of this economic growth and due to crunch in liquidity, many infra projects were halted. The metal demand suddenly dived down and many enterprises associated with this industry witnessed a huge setback, few had to even down their shutters. Many jobs were lost.

All of us know that the collapses are sudden where as the growth is always gradual. The region also started gaining back the lost ground. Slowly the infra projects re started and the metals demand started recovering. Oil price crash happened around 3 years back and it had a similar impact on infra projects and metals demand. Now the oil prices are somewhat better which has improved liquidity situation to some extent. Naturally, the steel industry and the economy in general are on recovery path.

Another factor which has been impacting the economic activity is political instability. The region has been unfortunate on this count and few countries in MENA are going through political instability which is adversely affecting the economy and the industry.

With all these ups and downs, MENA region still offers great opportunities for metals business houses around the globe especially in aluminium sector. It consumes substantial quantity of aluminium mainly for its infrastructure development needs. Thus steel raw material suppliers have a sustained interest in this region. Apart from the primary aluminum producers, there are numerous extrusion units, rolling mills which cater to the growing needs of the industry. Infact, the whole MENA region can also be called as a big aluminium hub. In spite of the tremors of slowdown this industry sector has been growing continuously for the last so many years.

Overall, I feel that MENA region offers a tremendous opportunity for metals industry and I look forward to a vibrant, growing and sustainable industry in coming time !


Editorial January 2018

The last few years had been extremely corrugated for the metals industry. Slow down in the developed world, oil price crash, unstable political situations in many countries and regions, these and similar issues have arrested the economic growth and has adversely impacted the metals demand. On the other hand it is also a fact that metals demand is continuously rising, may be not as expected, but rising. This proves the point that in metals sector, one has to be a really long term player to be able to sustain and grow. Short term outlook of any nature will poison the industry sentiment and kill your own enterprise.

India too witnessed fluctuations in metals demand in the past few years but on year on year basis, the demand seems to be growing. Last few years saw an added emphasis on infrastructure projects and construction sector which are the biggest customer industries for metals. The metro rail projects in many cities, modernization of airports at various locations, massive road building drive also provided the required impetus to the metals industry. New opportunities in modernization of railways and opening up of defence sector will further strengthen this sector. All this improved the numbers as well as the industry sentiment to a large extent. Now most of the metal producers in the country have embarked upon sizable expansion projects. This only shows their confidence in the economy’s future.

The future of foundry sector largely depends on automobile and engineering industry. Both these industries are doing fairly well in past few quarters and are expected to keep a similar pace in the future. This can give a good amount of confidence to foundries and encourage them to invest further in the business. In this situation, Indian metals industry seems to be more interested to cater domestic requirement rather than running after unsure exports markets.

Even if the business prospects are good, Indian metal producers and processors have to upgrade themselves to get the full advantage of this upward economic movement. Most of the processors fall in SME sector and operate with outdated technologies and processes. Naturally this reflects in the final product quality and compromise the business prospects too. Even the big and main producers have to adopt concepts like Industry 4.0 which can substantially enhance the efficiency and induce the much required transparency in the whole system.

I have been always a firm believer of ‘Indian Growth Story’ and strongly feels that the year 2018 will be a much better year than 2017 for metals sector !