-Nitin Kumar Gupta,
Managing Director, NLMK India
NLMK is the world's foremost suppliers of slabs and transformer
steel with more than 15 million tonnes of capacity for flat and
long steel products. In 2011, NLMK acquired Parekh Grouppromoted
National Lamination Industries, enhancing NLMK’s
presence and reach in India. In this exclusive exchange,
Nitin Kumar Gupta tells us more on NLMK’s operations and goals
in India. Gupta is confident of a huge business opportunity
given the country’s power sector ambitions. An interview by
Venugopal Pillai.
At the outset, please take us through the NLMK group in brief,
explaining the various steel grades manufactured and also the
group’s global footprint.
With more than 15 million tonnes of steel making capability,
NLMK Group is vertically integrated and is one of the world’s
foremost suppliers of slabs and transformer steel. We also
manufacture other high value-added products including prepainted,
galvanized electrical steel and a wide range of plates
as well as a variety of long steel products. With our state-ofthe-
art production facilities we are at the cutting edge of
modern steel production. Our business is highly diversified
across a range of sales markets with product deliveries to
more than 70 countries worldwide.
From our facilities in India, we offer a complete range of
Grain Oriented Steel (brands: NLMK and VIZ STAL) in mother
coils, slit coils, laminations and packaged cores as per
customers’ requirement.
When did NLMK enter India and what are the main
products/services offered in the subcontinent?
NLMK has been one of the most significant players in India’s
CRGO market for a long time. In line with our global ambitions
we opened a representative office in India focused on
acquisitions in 2010. Since then we have completed acquisition
of a CRGO service centre that is fully operational now. We
continue to selectively look at other acquisitions in the subcontinent.
In addition NLMK has also started stocking and
distribution business of other niche steel products.
Tell us about the acquisition of National Lamination Industries
last year. How do you see this shaping up your business
objectives in India?
As a philosophy we believe to collaborate with our end
customers and directly offer products and services wherever
possible. In line with that philosophy and maturing CRGO
(transformer steel) landscape in India we decided to start the
service center operations. Since acquisitions are part of the
NLMK DNA, we acquired one of the most prestigious brand
names in laminations and continue to take the legacy forward.
With this acquisition we now have both distribution and direct sales options that we can offer to our customers. Also,
we intend to use these operations to introduce newer grades
and technology in which NLMK has invested heavily in the last
five years.
Apart from transformers, which other segments does NLMK
cater to in India?
NLMK caters various niche industries in India. Apart from
transformers, we cater to special application plates that are
used in various heavy applications, slabs and dynamo steel.
We understand that cold-rolled grain oriented (CRGO) steel is
produced by only a handful of manufacturers worldwide. Why
has technology generally not spread around the world?
CRGO is not only a complex technology but also highly capital
intensive, thus keeping the barriers to entry high. NLMK has
invested over a $1 billion in the last few years as a part of the
upgradation programme for its CRGO portfolio.
Tell us in general terms the role played by a good lamination in
the working of a transformer. Can efficiency of the transformer
be improved directly through better laminations?
Lamination is the core to the functionality of any transformer. A
well-processed lamination can make significant difference in
the transformer efficiency. That is the main reason why NLMK
uses only fully automated computerized machines to process
the laminations.
Referring to the perception that the failure rate of Indian
distribution transformers is amongst the highest in the world,
do you feel that better laminations can improve the quality?
India is a huge country and there are a lot of areas for
improvement in the distribution infrastructure. The same is
being heeded to and we think that the market is moving in the
right direction. Good quality laminations are going to form the
backbone of this improvement.
India has had a very difficult time with good quality CRGO steel.
It is alleged that a large quantum of substandard or scrap
CRGO steel is dumped into the country and this finds its way in
distribution transformers. What is your view?
Indian market is continually graduating from a substandard
user to that of being a very quality-conscious one. Government
is also working with the same agenda and initiatives like BIS
certification, higher import duties on sub-standard material etc
are going to supplement the efforts. Direct presence of CRGO
itself as part of the distribution infrastructure is also going to
help the customers and the market.
India is in the process of allowing the use of only BIS-certified
electrical steel (including CRGO steel). What is your reaction?
We welcome this move by the government. In the short term
there might be some logistical difficulties but as a country India
only stands to gain from such a move. An efficient energy
infrastructure is going to be a huge gain for an energy-deficient
country like India.
Do you see the Indian distribution transformer market and how
is it distinct from those in other emerging economies?
India is one of the most competitive distribution markets in the
world and majority of the distribution infrastructure is owned
and run by the state. It is also highly fragmented both in terms
of supply and demand pockets. Another differentiating
parameter is that procurement of most distribution
transformers is done directly by government distribution
companies (or discoms).
India has planned to add significant power transformation
capacity in the coming years. In light of this, how do you rate
the demand for electrical steel/laminates from the power
sector?
We are excited about the prospects of new capacity that is
going to come online in the coming years. India is one of the
largest markets of CRGO already and would continue to grow
for another decade.
In the coming years, do you think India has the potential to
make a significant contribution to NLMK’s business
worldwide?
India is a focus market for NLMK. We continue to explore
exciting opportunities in India and are willing to deploy
resources as and when suitable.