We intend to augment our production capacity across various regions by adding more franchise manufacturing partners/ units to our network.
Satish Kumar Agarwal, founder of Kamdhenu Limited, is a Gold Medalist in B.E. (Mech.) from Banaras Hindu University. Agarwal has extensive industrial experience of 45 years and has played a pivotal role in the success of the Kamdhenu Group.
In the year 1994, he founded the Kamdhenu Limited with a single unit for manufacturing of HSD Bars at Bhiwadi (Rajasthan). Under his guidance and leadership, the company introduced the franchisee business model, which proved to be a resounding success. Kamdhenu Group takes pride in its nationwide presence through franchisee units and is gaining a well-deserved place among the largest manufacturers of international quality steel bars in India. He has closely witnessed the phenomenal growth of the Kamdhenu Group and sharp business acumen has been instrumental in evolving the growth strategies and thereby significantly contributing to the implementation of expansion and diversification plans in different business verticals.
Kamdhenu Group is one of the leading building materials company in India. The company is engaged in manufacturing, marketing, branding and distribution of a vast range of quality building materials including steel TMT bars, structural steel, colour coated sheets etc. Kamdhenu Group’s flagship product ‘Kamdhenu TMT Bars’ is synonymous with good quality and ranks as the most preferred brand in the field of construction in India with a brand sales turnover of over Rs 6,000 crore.
Kamdhenu’s commitment to comprehensive solutions in construction translated into expanding the product basket to decorative paints. The company is well poised to grow in decorative paints segment with multiple growth avenues unfolding seamlessly. The paint products of the company are being distributed across India through its 32 sales depots and over 4000 dealers and distributors.
In the steel business, the company has pioneered unique franchisee business association model. Under this model, the company allows the franchisee units to manufacture steel bars under the brand name ‘Kamdhenu” under strict quality regime laid down by it.
In an interaction with IIFL, Satish Kumar Agarwal, said, “We intend to augment our production capacity across various regions by adding more franchise manufacturing partners/ units to our network.”
Excerpts of the interview:
With demand for metals going northwards, how do you envisage growth for your company as well as the industry?
The rise in demand for metals is a global phenomenon and is due to a recovery in developed economies and accelerating growth in emerging and developing markets, especially Russia, Brazil and India.
Increase in demand for metals, especially steel, in India can be attributed to a renewed focus of the government on boosting infrastructure, provide housing to all by 2022 through affordable housing schemes and increasing connectivity through national highway projects etc.
In view of the above, we are anticipating a rapid rise in demand for steel products like TMT Bars, structural steel and towards this, we intend to augment our production capacity across various regions by adding more franchise manufacturing partners/ units to our network. Kamdhenu is planning to ramp up its production capacity in Karnataka to 1.5 lakh tonnes per annum by 2018.
Will you please elaborate company’s plant wise capacity utilisation?
Karnataka is an important market and geographically strategic for us. The state has an ambitious infrastructure policy and we are fully committed to cater to its requirements. By adding more number of franchisee units, we will be able to increase the production capacity in the state. The units cumulatively will be able to achieve 1.5 Lakh MT capacity by 2018.
How much has GST impacted the company’s business?
GST will benefit Kamdhenu Limited as key inputs like coal, iron ore will attract lower GST rate of 5% thereby reducing the input cost. We also anticipate a substantial reduction in our transportation costs due to smoother movement of finished goods besides unified and standard tax rate under GST regime which will do away with the need to have multiple warehouses and check-posts.
GST will give the unorganised sector no other choice but to be tech-compliant. This will ensure better tax compliance by companies’ evading taxes and will catalyse movement of unorganised players to the organized form of doing business.
We are receiving a lot of interest from companies in the unorganised sector who want to join our franchise manufacturing network. This will help us increase our franchise business network at a rapid pace while franchise manufacturers will benefit from Kamdhenu brand name which will enable them to earn a premium for their products thereby leading to higher capacity utilisation.
Can you give us segmental revenue mix of Kamdhenu?
Our segmental revenue for FY2016-17 is as follows:
i. Revenue from Steel business Rs 678.55 crore
ii. Revenue from Paint business Rs 188.56 crore
iii. Revenue from Power (Wind Mill) business Rs 1.23 crore
Total Rs 868.34 crore
What are the company’s future expansion plans for metals as well as paint segments?
We are planning to scale-up our steel business further in the current financial year to achieve 25% growth in our steel business. Towards this, we are adding more units from unorganised sector across India to our franchisee network and providing them assistance in technology, quality consistency and access to our strong market network. We have come a long way to become a household name since we forayed into decorative paints business in the year 2008-09.
Decorative paint segment currently comprises 75% of the overall paints market while rest is industrial paints segment (Indian Paint Association (IPA)'s report). Decorative paint market is expected to witness CAGR of 12.7% in the coming years in comparison to 9.5% of industrial paint segment. Going forward, we intend to boost our revenue from paint business and further gain market share by focusing on designer paint products.
Will you please throw some light on the company’s organic as well as inorganic growth plans?
We intend to grow our steel production capacity inorganically by adding more franchisee units/ partners to our existing franchisee network of over 70 members. We intend to acquire new customers for our steel and paints business through organic route. Towards this, we are coming up with innovative new products and undertaking a series of ATL and BTL campaigns to highlight our value proposition.