“In the recent past, we have further added 32,000 MT of capacity more predominantly in the high carbon spring steel wire segment to cater to the various demands of the automobile sector.”
Excerpts of the interview with Mr. Dilip Dev, Chairman & Managing Director, HD Wires Private Limited:
Challenges to reckon with:
Undoubtedly, almost the FY 2019-20 and initial 7-8 months of FY 2020-21 have been a challenging period for almost all the businesses across the globe. Accordingly, annual global GDP growth is projected to drop to 2.4% in 2020 as a whole, from an already weak 2.9% in 2019. The Indian economy was put in a deep freezer for almost two months during the lockdown, approx. 71.31% of the businesses units had to deal with reduced cash, leading to an unprecedented contraction and one of the greatest mass migrations in history.
The full effect of the lockdown was captured in GDP figures of the first quarter of 2020-21. India’s GDP shrank by 23.9% on a yearly basis (year-on-year) in Q1 (April-June 2020) of FY 21. However, the nation has gradually moved out of the lockdown and the government has gradually eased out several restrictions, July-September quarter (Q2) of 2020-21, the Indian economy contracted 7.5 percent from the same quarter last year as per the official data released by the National Statistical Office.
The COVID-19 pandemic has pushed the global economy into one of the worst recessions of recent times. It has created various operational and financial challenges for the businesses which have to be dealt with lots of prudence and proactive decisions. Post-COVID, the market conditions have drastically changed. Businesses have been adversely affected and there might be still many more challenges in store for the near future. Some of the major concerns to be dealt with are uncertainty about future conditions, the consequences of poor demand, managing supply-chain fluctuations and restoration of production systems to the fullest extent with keeping all employees safe at all times. During the lockdown, approximately 71.31% of the businesses units had to deal with reduced cash flows with the manufacturing sector being the worst hit.
Expectations from the Government:
The COVID-19 has been the biggest hit of this century and these perturbed times has surely impacted the overall growth of various Industries. The magnitude of the economic impact is now manifold. We are definitely looking forward to government support for the industry. The Atmanirbhar 1.0, 2.0 and 3.0 stimulus packages along with help from financial institutions under the guidelines of RBI have helped businesses to get back on their feet.
We seek further assistance and intervention from the government more specific to the wire and steel industry:
We request intervention from the government to control contentious and sharp increases in steel rates by primary producers. The rates have now increased almost 50% in the last 3 to 4 months.
Many steel units are shut down on account of raw material availability. Steel export to China has increased up to 8 times as per the latest market reports. We request to intervene for smooth and regular availability at right prices.
Piped natural gas, which is an environment friendly, industrial petroleum product, piped should be brought under GST. Earlier, under the VAT system, the industry used to set off the VAT amount, but after the implementation of the GST policy, the same could not be set off resulting in an increase in the manufacturing cost.
“We had changed our strategy and now, we are in the process of doing all our major expansions in manufacturing value added high margin products.”
The Finance Minister has announced an INR 90,000 crore liquidity infusion into cash-strapped discoms. Discoms have been facing the demand slump due to the lockdown to contain COVID-19. We request immediate disbursement under this package to all the Discom suppliers/contractors to rebut the demand along with rotation of money.
Strategies to strengthen the economy post-COVID:
The Company is expanding its footprint nationally and globally with additional diversified products in its portfolio. H D Wire is having an installed capacity of 88,000 MT i.e. the fifth largest in the country. In the recent past, we have further added 32,000 MT of capacity more predominantly in the high carbon spring steel wire segment to cater to the various demands of the automobile sector. As per market research reports, we are the largest supplier of cable armor wire in India having 27% share in the organized industry and supplying to all the major industry giants that manufacture HT cables.
The products manufactured by the company are serving the needs of various sectors in the economy. This will help them to tackle the downturn in particular sectors more effectively. Some of the major sectors wherein the company is supplying their products on long-term and perpetual basis are – electrical, telecom, infrastructure, railway, general engineering, auto ancillary etc.
Fast forward to 2021 – the way ahead:
We have to come out stronger with this experience, which will teach us to respect the environment, respect work life balance, and in a nutshell, respect each and every kind of resource. We derive our strength from the support from our customers, suppliers and each and one who is either directly or indirectly associated with us. The disturbance and the imbalance created with disruption of business cycles will be overcome with standing up for each other as an industry member. We always look at recession as an opportunity; this characteristic has always helped us take the recession as spare time to productively plan expansion. At that time, you get the best deals and excellence in execution. This also results in optimum utilization of your managerial resources in the recessionary times of under utilization.
We had changed our strategy and now, we are in the process of doing all our major expansions in manufacturing value added high margin products. These include – spring steel wires, RDSO Cable Tape, High GSM GI wires for Gabion Industries, Strand PC wires used in railway sleepers etc. We are pleased to advise that the commercial production of some of these products were recently initiated and others will be commenced with very shortly. The expansion and product bouquet augmentation is aligned to our existing customers and sales network which is helping us market the same efficiency and contributing exponentially higher to our top line growth.
We can’t thank each and every individual and organization enough for the support and guidance for the growth of HD Wires. We greatly value our association with all of them and assure them of our continued cooperation and support.