We targeted better capacity utilisation, which would reduce our cost of production

01 Aug 2018 CW Team

This group has come a long way since 1984, and today consists of two companies, Gallantt Ispat (GIL) and Gallantt Metal (GML), which were established in 2005. GML started commercial production in 2005 and GIL in 2009; GML and GIL reported a turnover of Rs 8.50 billion and Rs 5.88 billion respectively in FY2017-18. Chandra Prakash Agrawal, Chairman & Managing Director, Gallantt Ispat, shares more... Please highlight one major challenge faced in FY2017-18. Over 95 per cent of the steel sector funding was on the NPA list for 2017-18. The margin was extremely thin and so was the demand for the product. We could maintain the strength of our balance sheet owing to: No term loan, which resulted in fighting the odds of the market as interest and repayment were never an issue, which they were to other units. To convert this negative into positive, we planned an expansion of Rs 3.97 billion, which was commissioned in December 2017, whereby we doubled our production of steel from 167,400 tonne to 330,000 tonne and tripled our captive power generation from 18 MW to 53 MW. This was primarily to reduce our cost of production owing to economies of scale, which would, in turn, enable us to be more competitive. We aimed to increase our market share by being cost-effective.  To be competitive in the market, we also targeted better capacity utilisation, which would, in turn, reduce our cost of production. The company has a robust risk management process, which involves periodic identification of risks likely to affect the business adversely, rating the risks on their impact and likelihood, preparation of risk heat map, implementation of risk mitigation plans by the risk owners and continuous monitoring of the mitigation plans by the senior leadership team. What decision do you consider the biggest contributor to the company's growth in FY17-18? Our expansion plan with low debt has been a key decision to enable us to be competitive at all times and increase turnover and profitability substantially. For selling products of existing as well as expanded plants, we have a system in place. Please share a decision you avoided, which could have otherwise impacted the company's top-line and bottom-line. We have avoided borrowing funds from lenders and bankers, which kept our company out of danger of the debt trap and heavy burden of loan repayment and interest portion. All our expansion programmes are going with internal accruals. Further, we were not dependent on indigenous procurements of raw materials and were open to importing raw materials at competitive prices.