Steel bar manufacturer and seller Kamdhenu Ltd aims to sell nearly 5 lakh tonnes of steel in the second quarter of the financial year 2017-2018.

“There has been a volume growth of 12 per cent to 4.54 lakh tonnes during the first quarter of the current financial year. There has also been a firming of steel prices that have improved by around ₹3,000-4,000 per tonne,” Chairman and Managing Director, Satish Kumar Agarwal, told BusinessLine . The company has reported a ₹2.76-crore profit after tax during the first quarter of the financial year 2017-2018. This was 45 per cent higher than the PAT reported in the corresponding quarter of the financial year 2016-2017.

Agarwal projects an industry growth of 4-5 per cent in the near term. “We (Kamdhenu) expect an increase in sales of around 20 per cent for us through our channel partners,” he said, adding that he also expects steel prices to firm up by ₹1,000 per tonne in the second quarter of the financial year 2017-2018.

The Kamdhenu Group claims to be the market leader in branded TMT bars in the country. A company statement said, “Kamdhenu TMT Bar is the largest selling TMT Bar in India with brand sales turnover of around ₹7,000 crore.”

Franchisee model

Kamdhenu follows the franchisee business model and has over 10,500 dealers and distributors. “We have more than 70 franchisees in India making Kamdhenu products. We provide them the technology, marketing support, distribution and dealer network,” Agarwal said.

“Despite recession in the steel market during the first quarter, the overall brand sales in terms on tonnage has increased by 12 per cent. But just because of price increase during this period, the overall growth in income is at 23 per cent,” he added.

Agarwal said that there has been a 33 per cent increase in royalty income during the first quarter of the financial year 2017-2018 compared to the corresponding quarter in the last financial year.

The company’s manufacturing capacity is just 72,000 tonne per annum. This is aided by the channel partners after which the company’s manufacturing capacity goes up to 25 lakh tonnes per annum. During the first quarter of the current financial year, the company sold just 4,637 tonnes from its own manufacturing units. This is marginally higher than the 4,250 tonnes sold in the corresponding quarter of the last financial year. “The main source of income is from royalty. We work on an asset light model,” Agarwal adds.

A company statement said, “With normalisation of operations post implementation of GST and onset of festival season, we expect to see strong recovery in demand for our products from the real estate and infrastructure sector.”

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