India's steel industry is a maze of red tape and controversy. But smart partnerships and a low-key approach can help find one's way, as British company Stemcor has shown
If the Indian metals industry, especially the steel part of it, were a prized territory, then multinational companies would resemble invaders who failed to hoist their flags after repeated attempts. Rio Tinto, ArcelorMittal and Posco haven’t been able to master the elements in a country that has one of the largest deposits of metals and minerals in the world.
Stock, too, needed the deal badly. Intense competition from richer rivals like Japan’s Marubeni and Mitsui had threatened its trading volumes and the Essar project gave it a substantial boost. In fact, Stock’s strategy would prove useful years later, when the spread of Internet would erode all the traditional advantage of price information that big companies like Stemcor had enjoyed. “Now buyers in India immediately know if there has been a price correction in Brazil,” says Stock. Moreover, margins in trading have reduced from $10-$15 a tonne to $5 over the last three years. Having a reliable source of supply, especially one that is partly owned, has become all the more important now.
(This story appears in the 16 July, 2010 issue of Forbes India. To visit our Archives, click here.)