A Paradigm of Production Outlook

A leading bronze certified and green channel supplier has achieved a global milestone in quality, and has successfully drawn the focus of the industry towards them with their ‘Just-in-Time’ delivery, high commitment and integrity. The man of the hour Dhruv Moondhra, Director & CEO, ICE STEEL1 India Pvt. Ltd., will enunciate, on the improvement in Manufacturing Processes achieved…

 

How did Steel1 evolve?
Arcelor Mittal has investments in downstream steel processing units with success par excellence. As they were unfamiliar with the Indian market, they entered into a joint venture with Moondhra family to form Steel1, and that is how we started. Today, we have very clear three businesses – all of which are located at Ranipet – and within these 10 years we have established our name – If you want high quality, on time, with the commitment to face difficulties together, you go to Steel1.

We are the tier one suppliers to global customers like Caterpillar, Bombardier, Volvo, Terex, etc. and significant suppliers to large Indian customers like Bharat Heavy Electricals, Larsen & Toubro, etc. In case of powerplants, we supply ready to erect steel columns which is completely welded and painted at our factory, and then erected at high speed at the site. For construction equipment, we manufacture the entire chassis in our plant, and supply Just In Time to our customers assembly lines. Our customers have had the confidence to sub-contract to us very critical components which they would have otherwise preferred to have done in-house. Where the customer feels the welding is critical to the performance of his products, then the answer is Steel1.

For example, in case of thermal power plants, the boiler column is as much as 100meters high, with > 100MT pieces, which when erected, should fit without any adjustments. Our customers do not want to do weld corrections at 100meters height; they want something that is very precise, and when you ask about precise work; precise welding; the answer is STEEL1. The largest project we have delivered is to BHEL for Neyveli Lignite Corporation – wherein average piece was 100 tonnes, with a maximum of 130MT.

The columns were erected with these weights at 80 meter plus heights. The beams were 30 meters long and weighed 130 tonnes and vertical bracing was 110 tonnes and our mandate was to fabricate so precisely that when it goes up to those heights for erection, they have no corrections to do. They were able to erect the main steel structure in five and half months because of the quality of our fabrication.

When Delhi metro wanted to manufacture the coaches in India, they gave the order to Bombardier, which is a Fortune 50 company, under the condition that Bombardier will make the coaches in India. Bombardier rejected a large number of fabricators before they came to our plant, and we passed their audit in half a day. Today in partnership with Bombardier, we have supplied the Delhi Metro, and additionally, we have supplied to Adelaide Metro, Melbourne, and Victoria in Australia, Riyadh in Saudi Arabia, and Sao Paulo in Brazil.

Since inception how has been Steel1’s journey so far?
We started operations in 2009-10 which was not a great time to start a greenfield business in India. As it was just after 2008 economic crash and just after the crash we had these new plants and we had to look for business. So, we started with 984 kg/hr fabrication and today we are at 4,812 kg/hr. This is how we measure the journey in terms of physical output, and during those times we have become number one supplier to BHEL Trichy for the boiler columns, we have also supplied boiler columnss to BGR Hitachi, to L&T Mitsubishi. We have delivered to the top global names and the top global designs.

We supplied to Thermax the steel structures for Reliance Jamnagar project. So, we have had wide experience across the country. At the same time, we have bagged awards from Caterpillar and Bombardier, and, for all these we have become the green channel suppliers, where products are delivered directly to assembly line. The components we supply to Caterpillar are exported to 24 countries. We have also close partnerships with other Fortune 100 companies like Terex, Bombardier and Volvo. Therefore, the journey has been very productive and fruitful.

According to you what is the current construction scenario and the upcoming trends in India with respect to steel construction?
Our enquiry loads across the spectrum seems to have gone up. Even a sector like bridges, where most of the construction has been civil construction, the government and the government agencies are experimenting with steel bridges. As far as airports are concerned it is well established in steel construction and as the capacity required will grow, we anticipate a lot of projects in this space. At present there is a start of enquires coming from residential and commercial buildings, which earlier was always civil. As they are looking for faster delivery, so they are talking about steel. Overall I see that construction is subdued but the volume of construction between civil and steel is shifting like in the case of bridges where 4 per cent of the bridges made in India are made in steel. So even if we don’t increase the number of bridges but that 4 per cent becomes 8 per cent we have doubled the business of steel requirements. So, I see that as a very positive sign so overall the culture is more willing.

For example, they have built a fire escape at my daughters school, which was previously in concrete. As it had reached its life they were demolishing it, and, surprisingly they had opted for steel construction for the same. The parent body agreed, that the fire escape would be a steel fire escape and that it could be made in the factory and erected within 3 weeks in the school building.

Now, this body of parents are not big architects or structural engineers, for them to think that we can consider a steel structure because it is fast, is a good demonstration of the psyche of the Indian customers. This shows that the change has begun but is a very slow process for every year you will have few more examples of steel structures which will make people more interested. It’s not going to be an overnight change but a long-time trend, and the trend is in the right direction.

In the increasingly large steel building projects in India, what role does STEEL1 have to play?
We have built largest power plant columns in India. The main steel structure for one boiler alone was eight and a half thousand tonnes of steel. The project fabrication was completed in 11 months and erection in five and half months in concurrent direction. We are also building the largest air cooled condenser in the world in North Karanpura in Jharkhand. It’s a 17,100 tonne project and we have been selected among global vendors to build this type of project.

These are not commercial or residential buildings, but these are very large steel buildings. The Air condenser, up to 55meters is civil columns and the next 23meters is steel structures. The entire platform is 396 meters long by 132 meters wide. So, it is nowhere in the world anybody has built condenser this large.

So, these are some marquee projects that we can speak about.

Can you give details about the unparalleled technology of your manufacturing facility in terms of various processes followed?
It is not technology, but it is about production mindset. The best quality manufacturing today in our country is automotive manufacturing. India knows how to manufacture cars and in small cars we are the global leaders. The car manufacturing industry follows line manufacturing system while the steel fabrication industry doesn’t follow this system. It is the same labour contractor who is paid on some kilogram rate who in a very unorganized manner does his job. For most projects, we have established assembly line culture manufacturing which is developed by us. The products move at each station wherein the inputs get fitted and since we follow Built in Quality no inspection is required and the end product meets all requirements.

For example, we did a project for Shapoorji Pallonji with MRF in Trichy. They made an estimate that they will erect 25 tonnes per day, but eventually they erected 75 tonnes per day – you can call it technology or something else, but we have improved the production process. We have made a quantum leap in the way we produce. We can produce a quality where the customer can erect three times what he estimated with another supplier. So that is the best example of the innovation I can give you.

What are the unique products and offerings that STEEL1 provide to the Indian construction industry?
I would say ready to assemble steel. Others, say the fabrication and on the site also we will do the welding and will do the correction little bit on in the structure but when it comes to us you just have to assemble at the site. it is like a lego that is unique which many company aspire to do, and we deliver to this. If we talk about road construction STEEL1 makes the chassis for 1 out of 5 road compactors made in this country; STEE1 makes chassis for 1 out of 3 dump trucks made in this country. Out of the significant metros in the country, Delhi being the most significant, we supplied bogie/primary parts to 50 per cent of the Delhi Metro. So, I would say these are really the unique offerings that we have made, and we are now recognized globally for our products.

Which are your key customer segments? How different is STEEL1 from its competitors?
Our customer segments are Railways, Construction Equipment and Structures. This is a unique combination. In India either a person is either doing just Construction Equipment or only Railways or just Structures but not all the three. The businesses are very different – with construction equipment’s, we supply twenty-three buckets every day so the truck leaves three times in a day, and the customer then fits that bucket into its machine. While in railways, we supply to make 40 cars every month. It is a very clear and defined business. In the construction business we are trying to bring the same concept of manufacturing with Built in quality and Just In Time delivery.

BHEL is doing a power plant in Telangana – they ordered different parts for the power plants from 15 or 16 companies and we were the first one to reach, to be erected and completed. So, we plan a project like we plan a car production which begins with what is going to be erected. So, in many cases the customer when he gives us the project he has not even appointed the erection company nor the drawing company but us. So, we have a simple thing you appoint the erection company, let the erection company say what/how he will erect so and so and the drawings are made in the same manner.

In our business everybody gets paid by tonnes. They don’t get paid by speed of erection. So, what happens is the columns which are heavy are produced first irrespective of whether it would be erected first. The innovation brought by us is we insist is that if this must be erected first, then it must be drawn first, and which then will be manufactured first and delivered first. So, the entire schedule goes on the erection schedule that’s how we can do just in time. So far Steel1 is not doing erection but in 2019-20 we will build that erection capability as well. At present we will continue to build our capabilities in bridges and industrial structures and in 2019-20 we will start erecting.

What are the major challenges faced by you today? How do you plan to overcome it?
The major challenge is getting skilled labour, training of the labour and the government of India’s labour laws. Each project has a peak and trough staffing plan. I read in the papers a few days ago the government has allowed fixed term contracts which is going to be fantastic for our industry. As we take labor for a project it runs 12-24 months.

The other thing that we do is we run a welding institute. So, we take people from 10th or 12th we train 100 welders every year. They go through 2-3 years training programme, depending those that we need for our own works we absorb, and the rest get good jobs in the industry. So, that certificate from us say that you are a trained welder from STEEL1 and it is a very prized certificate. A worker in China does welding, fitting, drawing reading and grinding; in other words he is 100% multi-skilled. In India the worker has only one skill and hence the Chinese productivity is four times than us. The person who is trained from our company he can do everything. So, that is the strength of our training programme and what we contribute to the industry.

What are your current priorities and your action-plan to achieve them?
Deliver to customer the confidence that a steel structure will be at the same cost as a concrete structure that is the number one priority and that is where the industry has failed. Every customer says steel structure is ten or fifteen percent costlier. We are not able to save on the material cost, but we can save on the interest cost. In a construction project 30 per cent cost is on the interest, if a two-year project is completed in 8 months then we save significantly on interest cost which will then make the steel building viable. Just- in-time, speed, quality our entire focus is there.

If we are able to crack that equation and give the customer that option than there is no reason you should not be looking at steel as very active option. Remaining part of the world steel is preferred as a construction solution because it is not very expensive, but it actually delivers faster. In our country cost is ten percent more and delivers at the same time. The reason for delivering on the same time is because the consultant, contractor, fabricator, etc. are from civil background who first need to get synchronized. We should be able to complete a 5,000 tonne project in four months and a twenty floor structure in 5 months that is the kind of confidence we should give our customers with steel building and that is our priority.