India’s opening market

Abu Dhabi

Anil Dhanania, director of Sanjay Bonny Forge, sits down with TOGY to talk about challenges faced by manufacturing companies in India, how the market is coping with the fall in oil prices and his positive expectations on the future of the country. The firm is a manufacturer of pipe fittings for many large hydrocarbons firms all over India and abroad.

When did you enter the Indian market and what activities do you do here?
We have been in this business as a family for more than 40 years as Amit Tube Corporation. We had a factory in Calcutta, but we closed it down and shifted to Mumbai in 1980. After that we put up a plant in the Bhilad area of Gujarat, but we were too early and there was no infrastructure so we moved back to Mumbai.
We mainly manufacture pipe fittings in sizes from a half inch to 24 inches. We are concentrating on only seamless pipe fittings under one roof equipped with automated machinery, dies and tools.
There are a lot of companies which provide welded piping and others, but we are not getting into that. Demands for seamless pipes and pipe fittings are continuous since India have few such-quality plants.
We get all of our raw material from Jindal because of their quality, time and prices. They are also only 300 km away from our plant. We are doing a lot of work for a lot of oil and gas companies and export to Turkey, UAE, Saudi Arabia, Spain and Venezuela. We manufacture products for energy and petroleum industries, as well as for the fertiliser sector. Last year, approximately 30% of our products were exported, but this year we are not keen on exporting. A lot of projects are coming up in India, so we don’t have time to focus on the export market.

Where does Sanjay Bonny Forge stand in terms of certifications and inspections?
We have had all the inspections agencies come to our plant on a regular basis to inspect the goods and manufacturing process. If you want to survive in India, these international companies are the ones you need.
You also need to have a pressure equipment directive certificate to export in Europe, or you must have a local agent. We are approaching Oil and National Gas Corporation for getting our company registered with them, which takes about six months. This involves getting the documentation checked and them visiting our plant.

Could you describe some of the major projects you are currently working on?
Right now we have a contract with TATA Projects which is doing tanking systems in Sharjah, UAE. All the fittings are being exported by our company. The contract is worth 51 lakhs (USD 76,200).
We have also taken up a project with Apollo Tyres. This project is ongoing and is for approximately 61 lakhs (USD 91,100).
We are planning to work with petrochemicals companies such as Reliance and Essar and we are tendering for Indian Oil Corporation and Nuclear Power Corporation Of India. We have also submitted documents to oil companies such as Hindustan Petroleum and Bharat Petroleum.

What kind of challenges do you face when signing tenders with government entities as opposed to independent companies?
It is definitely more difficult to tender for government companies since there are many traders who present themselves as manufacturers, but in fact aren’t. There is a lot of manipulation with their documents. For example, they might sell Chinese products saying they are Indian-made products because the certificate is given by their own Indian company. When they have an inspection, the inspector might look at only 10% of the products and no one can stop this unless the government company has a rule to verify it.
Scrutinising and documentation needs to be undertaken properly. If a supplier is a real manufacturer, and if the property belongs to him, those documents should be submitted to the buyer to authenticate that that particular plant belongs to the supplier.

Is India’s manufacturing sector ready to compete on the international stage?
India is absolutely ready for competition if China were not in the game. We can compete with Korea, Japan and any other part of the world, but China is always cheaper.
I have made calculations on why products are cheaper from China. Between us and China, the labour costs are almost the same and taxation is roughly the same. It is the quality of the raw material that matters at the end of the day.

In what markets do you see opportunities for growth?
We will have to see if the oil price goes up. If it does, a lot of opportunities are going to open up, for example in shallow water in Saudi Arabia and in Abu Dhabi. Since the oil prices are not going up, no one is coming up with new projects.
We would be impacted by the falling oil price if there were no projects in India, but this is not the case. This is how we survive. We have a few jobs from Indian companies and we have a regular supply from other small manufacturing buyers.
I see India’s market looking very bright for the next couple years. Investors are coming in. South East Asia is too far to supply materials, and logistics becomes expensive. The Indian market, especially the Mumbai market as it is near to the port, is on the rise.

What kind of activities have you been involved with in terms of corporate social responsibility?
We are supporting charity groups related to match-making and marriages within our community. My father is a part of a charity trust that organises meetings for partners and their families. Should they want to get married, all the expenses are borne by our charity, including the food and the cost of the wedding.
We have other charity organisations which provide food and supplies on traditional and significant religious occasions. We have a stall at Girgaon Beach during Ganeshutsov where we give out free food and water for 24 hours. We have been doing this every year for the past 30-40 years.

What is your vision for the company in the next couple years?
We are going to go big. We are planning to go public in the next three to four years. For international investors, our doors are wide open, and we are very open to JVs.
India is definitely coming up. I have travelled all over the world and met with many people who all share a kind of trust in India. When doing business with India, this trust will not be broken.

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