Vertical integration; The cornerstone for Sakthi’s Growth

Sakthi Ferro alloys, established in 1984 as a trading company in Chennai, Tamil Nadu, has come a long way from just trading scrap metals. Today, Sakthi Group manages, develops and deals in more than half-a-million metric tons of ferrous scrap each year.

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Ever-increasing demand has helped Sakthi to move rapidly, expanding activities to other non-ferrous and plastic material, including sourcing supplies and resources from other countries.

Starting with scrap metals, the company has moved to trading and casting of steel billets, and further in to manufacturing of TMT bars (Sri Durga & SSI TMT bar). Steel 360, in an interview with Anandh, MD of Sakthi Group, who started his career as a small time trader, tells about scrap growth and how in a short time frame, Sakthi grew to be one of the largest scrap traders in South India.

2019 is seeing raw material moving to the higher side, how do you see scrap leveraging?

The steel market is seeing a perpendicular phase, there is clear demand for raw materials like scrap, whereas the finished product, rebars and billets, are experiencing a downward trend in the market. Scrap demand is mostly seen in the foundries, automotive and other reusable markets, and the Indian scrap market is driven by the foundry market. As of now the prices of domestic scrap are a bit higher comparatively than the imported scrap.

How much is your share in imports & domestic scrap? And do you use a blend with sponge iron?

Sakthi Group is one of the leading scrap importer & consumer, deals in more than  half a million tonnes per annum; as a manufacturer we do import, we buy domestic scrap and sponge iron according to the market availability like Domestic – 35%, Import – 35% and Sponge Iron – 30%. Both import and domestic scrap is done according the market price and availability of scrap. We cannot point out specifically for import or domestic. We use sponge iron also, but no specific percentage is fixed for production. On that particular period whichever is viable for our production to maintain the quality of the finished product, we decide the percentage of scrap and sponge iron.

Which are the preferred countries that you import scraps & why?

We are one among the leading steel manufacturer and dealer in South India, we handle around half a million tonnes of scrap per annum. We import scrap from USA, UK, Germany, Africa, Australia, Malaysia, Singapore, South Central America, Dubai, Kuwait, Indonesia, Hongkong, Japan.  Our domestic purchases are mainly in and around the three plants which is situated in the Andhra Pradesh and one in Tamil Nadu. Our pricing will always go with market price. The scrap price is influenced by Import scrap, Rupee value, local season, festivals and etc…

The general trend in South India of steel products consumption is usually higher side between January to July. From August to December due to festivals and rainy season, the market trend is to slide and more over the steel market kind of move with the Government policies and projects. The same is applicable for import of steel product also.

There is lot of automation taking place in steel manufacturing unit & the production capacity is increased 300 times in the last ten years, so new technology helps in producing steel bar directly from scrap. At present, fully car manufacturing industry and some of the engineering industry are taking care of the major consumption of steel products.

With increase in scrap availability, vehicle scrappage policy in the process, how you are preparing in this direction?

There is a research and Development going for last so many years to scrap the old vehicle in India. As of now the old vehicles are scrapped in an un-organized sector. If it is regularised and brought in to an organized sector and with the Government policies there will be lots of scrap generation. This will also help in pollution control and all over the world this process is successfully managed. Recycling is one of the main industry and it has been playing an important role in terms of Economic output as well as Employment. Sakthi is closely watching the statutes being framed for the dismantling of end of life vehicles and gearing up to play a major part in this business. We are in the process of associating with JICA for various technologies in this area.

Sakthi is strategically located in the middle of the automobile capital of India near Chennai in Sriperumbudur & Oragadam. Having an area of 5 lakh square feet of land and 2 Lakh square feet of building is in the offing for this business. Sakthi is talking to equipment manufactures in Europe like Bonfiglioli and Palfinger to set up the infrastructure for the same. End of life Vehicle solution largely depends on the function of reusing the parts dismantled, it is in this area where Sakthi would have an edge over its competitors with its strong background in Logistics to ensure supply chain of these reusable parts. Going forward Sakthi would be the leading contender in South India when the government announces its policies on this End of Life Vehicles business.

Ka. Anandh MD of Sakti GroupYou have diversified into different verticals, what is your new growth area?

Sakthi Group is developing and diversifying the activities as and when it is required. The strength of our company is our Promoters timely decision, accepting the modern developments and market condition. We believe in diversifying in different activities and that’s how Sakthi Group stepped into Warehousing, Property Development, Infrastructure Development, Material Handling Equipments etc… From trading of metal scrap Sakthi has come a long way in becoming the largest melting house of Iron and steel in South India. Currently we are manufacturing TMT Bars for the construction industry with a capacity of 15000 tons per month and building a capacity of another 15000 Tons. Sakthi has plans to foray into similar long products like Angles, Channels, Flats, Squares and Bright Bars. We are building plants in Kancheepuram district of TamilNadu with a investment of 150 Crores and further to this Sakthi has signed a MOU with the Government of TamilNadu

Sakthi Group has entered into a strategic tie up with the renowned Murugappa group to manufacture TMT bars in the name of “Ti Macho”. The Group has entered into another strategic tie up with Sargem Metals to manufacture Aluminum Ingots and has also taken operations of Chennai Ferrous Pvt Ltd in gummudipoondi to manufacture Sponge Iron

Sakthi Property Developers India Pvt , the Infra arm of Sakthi Group is investing hugely in developing Warehouses and Logistic services for the automobile giants in Chennai and Ananthpur Dist of Andhra Pradesh. With more than 1/2 million spaces developed and a strong fleet of 100 trucks and growing, the company is making exponential growth in the field of Kitting and Logistics.

Company Info

Sakthi Portugal

Avenida das 2 Rodas, 1091 - Parque Empresarial do Casarão
3750-860 Águeda