SME Times News Bureau | 19 May, 2012
Essar Steel's retail distribution division, Essar Hypermart, is expecting to sell one million tonnes of steel products through its network of sales points.
"We are targeting sales of one million tonnes this fiscal. Currently, we contribute nearly 30 percent of all revenues in Essar Steel," Ashok Bajpai, chief executive, Essar Hypermart, told IANS on the sidelines of opening of a new branch in Ghaziabad Friday.
The steel retail concept, which is similar to the general hypermarket retail, was started in 2006 by the company which now boasts of 82 hypermarts and 250 expressmarts.
"Our concept is simple, at hypermarts we sell in bulk to various types of orginal equipment manufacturers (OEMs) and to steel consuming industries," said Bajpai.
"Through expressmarts, we cater to the needs of end users like home builders who require lesser quantities of steel products in smaller cities and towns."
Sixty percent of the company's customers are end users and 40 percent OEMs.
According to Bajpai, the slowdown in manufacturing and other industrial activities had not adversely affected on sales.
"There is a seasonal variation, but the growth story is here to stay. Our sales are not affected anyhow and that we are bullish about the steel consumption in the country to go up."
Currently, the average per capita consumption of steel in India stands at 45 kg, way behind China where average per capita consumption is 200 kg.
"We see a great potential of growth in smaller upcoming towns which are witnessing a slew of construction activities and industrialisation."
The division did not reveal its turnover but said that it was operating on healthy margins and that it plans to open more such retail outlets.
The company has also started a contract production programme to cater to the demand of other steel products like TMT bars and steel pipes by contracting well-known producers of these products under the Essar brand with strict quality control.
"We currently have around 250 steel products (stock-keeping unit) which also includes several different combinations which are built by using these products."
Hypermart is currently the world's largest steel retail chain with a network of over 375 retail outlets across India, Indonesia, Nepal and the Middle East.
Essar Steel currently has 10 million tonnes steel production capacity in India and four million tonnes in its Canada based plant.
