Magadh Precision Equipment plays a key role in India’s steel supply chain by providing machinery for steel processing. With clients such as JSW and Tata Steel, the company supports the sector’s ongoing shift toward modern, engineering-led manufacturing solutions. Learn more about the company’s journey from Chief Operating Officer, Parijat Sharma.
Mubina Kapasi: Hello and welcome to SmallCap Spotlight. I’m Mubina Kapasi and today I have with me a company that serves as the backbone of the entire steel industry, Magadh Precision Equipment Limited. Parijat Sharma who is the CEO of the company is joining us today.
Thank you so much Parijat for joining us and I did say backbone but that was just a teaser for our viewers. Why don’t you introduce this company to our viewers and what exactly is it that you’re doing for the steel industry?
Parijat Sharma: Okay, so first of all thanks for this arrangement. So I’d like to first tell about what steel is doing in our everyday lives.
So whatever you see right from automobiles to almirahs, microwave ovens and so many things and even now buildings they are made from steel. So steel is one of the most important part of our daily lives and it also has a lot of connection with the GDP and growth of the nation. So our company is basically manufacturing equipment for processing of steel.
So the process starts from iron ore and then it goes on to refining of ore and then molten metal and then creating into continuous slabs, coils. So this is a very long process and we are taking care of the flat product part which is basically used to make all the auto wheels and whiteboards and things like that. So then we make machinery for that business.
So the biggest challenge that we face is the technology. So technology is very important and since India is an important player in this business, so we have to constantly upgrade our technology and you know for higher production and better quality products. So we have a team of designers and you know research and development team members to upgrade the products.
So that is a big challenge. Apart from that, it also involves a lot of manufacturing which basically consists of fabrication, machining, assembly of bought out items and commissioning at site. So this is a very engineering centric process and this is a challenge but it is very exciting because it denotes the development of the nation.
It makes us really proud.
Mubina Kapasi: Yeah, absolutely. I mean we know the role that steel plays, the contribution it has to the GDP and in a way you are powering an important industry.
So would I be correct in saying that you’re almost like an EPC for steel companies in the sense you design it as per their you know the final product that they want to make. You design the machinery or processes, you procure all the materials that are required to build that machinery and eventually you’ll hand over the final commissioned units to them.
Parijat Sharma: Yeah, that’s right.
So it’s almost an EPC job but the only thing that is generally eliminated is the civil work. So these machines are really big and heavy. So it needs a very big foundation and very strong foundation to take the loads.
So we only design the foundations and the civil jobs are done by you know another set of contractors who specialize in this job. Companies like L&T and HCC kind of companies. So apart from that we do from concept to commissioning almost everything.
Mubina Kapasi: And the manufacturing of these different machines that will go into the entire process is done at your facility or it could also be done actually at the client’s units.
Parijat Sharma: So it’s basically a lot of manufacturing as I said a fabrication machining is done in our factory which is located in Devas 35 kilometers north of Indore. But we need a lot of systems from industry leaders who do automation jobs.
So you have companies like ABB and Siemens. So we buy a lot of automation from them because that is something we cannot make in-house. And that itself is a big system consisting of hardware and a lot of software which is basically intelligence to the machines.
And we have a lot of hydraulics. Hydraulics is again in our everyday lives. You see JCB is a backhoe loaders and also they use a lot of hydraulics.
So we also use a lot of hydraulics. They are supplied by again industry leaders. So what we make is a collection of machines made by our own company and also procured from major industry leaders.
So that is how we accumulate and assemble everything at site and then make the equipment perform. So that is the job.
Mubina Kapasi: Okay. I think the company was established in the 80s if I’m not mistaken. So that means in the last 40 years you’ve borne witness to how the steel industry has transformed. I mean there’s been automation of processes.
There’s been reduced downtime thanks to upgrades to technologies and machinery. Simple things like moving to EAF for more sustainable road of making steel. You’ve seen it all.
And in fact you’ve been at the forefront of doing it for the industry as well. So could you talk to us about that because it’s important that you as well keep yourself abreast, right? That will ensure you even the right service and the most modern service and technologies to your client.
Parijat Sharma: Yeah. So you know steel industry in early 80s was a controlled industry and then only the major players were companies like Steel Authority of India Limited, a government enterprise and Tata Steel. So these companies were basically taking care of the entire production of steel in the country. But when it opened up to the private sector in late 80s.
So a lot of private sector companies started putting up their own plants and out of which the biggest company which you see in India today GSW. That is how they started with very humble beginnings. So most of the equipment that they sourced was second-hand equipment from Germany or Europe and Americas.
So they were basically outdated technologies but and they could give a good beginning to the steel producers. But gradually the industry has evolved. India is becoming a very big player in steel.
So now the role has shifted. Now earlier we started with refurbishing or probably supplying space for these machines which were second-hand machines. But now India is buying the best machinery in the world.
Yeah. So we also have a challenge to keep us updated with the latest technologies and offer equipment which are if not better at least at par with Europeans or Japanese or Americans. So that is how things have changed a lot in the past 40-50 years.
Mubina Kapasi: Okay. Your machinery is made purely in-house by your design conceptualized and created and crafted by you. So you’re a truly a make in India brand and that was something that’s so intensive that’s so heavy industry which is I think very remarkable.
How are you viewing the entire capex mode in this industry? Because they are big drivers of private capex as we are talking right that we’ve seen government capex kicking private capex is still a bit amiss. So how are you seeing share some trends on that?
Parijat Sharma: Do you mean capex investment by our customers?
Mubina Kapasi: By customers yeah.
Parijat Sharma: Okay. So in the past maybe 25-30 years as I told you small companies like General Group which is now JSW. They have done really well. They have supported the economy of India.
They have made products which are in poor substitutes. So the government has been very supportive in capex. They have in fact they have a lot of plans when you know plans and offerings when you buy from Indian manufacturers equipment which are largely import substitutes.
So they have been supported very well by the government and the institutions in India. I think IDBI, ICICI they started all this in India and now even the private banks they are supporting the industry very well and of course now almost every steel major has a public issue. So and they are giving good returns to their investors.
So I mean capex investment is not at all a problem.
Mubina Kapasi: But you’re getting a good pickup in order activity in your own order book perhaps?
Parijat Sharma: Yes for sure. We have in fact also focused on exports but for now with the growth potential in India and with the kind of investments all the steel majors have planned we see India as the focus market and we are really gearing up to meet the demands.
Mubina Kapasi: Could you tell us a bit about your customer? I mean I do see some of the biggest brands already out there. Could you tell us a bit about those customers?
Parijat Sharma: I don’t know fortunately or unfortunately we have been focusing on very high quality equipment because our chairman has one with the top companies top you know equipment manufacturing companies of the world. So we have always focused on top quality.
So that is why we our customer base consists of companies like JSW, Tata Steel, Auxilor Metal and even in the metal segment we have Hindalco which is a aluminium major. They are also our customers. So because of our good quality of products, updated designs and excellent after sale service we have been able to cater to these top class companies who of course they are still importing equipment from the industry leaders but we are trying to shift that to in our favor.
Mubina Kapasi: So hopefully one day India will become completely self-sufficient on equipment supply for steel. Not just steel in fact all metal industry. How do you see Magadh growing maybe as a company?
I mean perhaps filling in certain gaps that maybe you’re not offering so far but now maybe you want to start offering to the industry.
Parijat Sharma: So as I told you before the biggest challenge is to introduce technology. So we really have plans to you know invest a lot in research and development and designs for which we need bright engineers. Now the challenge is to create job opportunities which can be interesting to good engineers.
So right now industries like software and these kind of industries are taking the cream out of the engineering colleges. So we have to create job opportunities which can be interesting for these students and finally this industry is entirely technology driven. So we have to invest on technology, we have to you know create a team who can develop new technologies.
So that is the challenge and we are very confident because India has excellent pool of talent. So we are very confident that we should be able to you know reach the number one status in the world. That is the vision.
Mubina Kapasi: Do you have a rough estimate of how many millions of tons of capacities you’ve installed so far? It’s a tough one I know.
Parijat Sharma: Yeah so we initially we started with very small plants but if you were to ask how many million tons of capacity we have contributed it would be around eight or ten million tons. But it is not entirely the credit doesn’t go to entirely our company because there are a lot of things in steel making and steel processing.
So many engineering companies you see they need heavy cranes. So crane is also a very big business in India. So you know in totality yes must be around.
Mubina Kapasi: You are a contributor to this for sure.
Parijat Sharma: That’s right and we are really proud that we have been able to reach this milestone.
Mubina Kapasi: So I mean is there a certain capacity or something that you all can work or certain capacity of projects you all can take on and is there any plan to grow that so that you can take on more?
Parijat Sharma: So right now where we start from is basically cold roll products.
So cold rolling is basically a process which starts from hot rolling. So basically you start from iron ore then you have molten metal which is hot then you convert it into thin strips. So that is hot rolling process.
So our job starts from cold rolling. So that is basically more towards a finished. So now we are moving backwards and we are entering the market wherein we will make more of hot roll machinery because that is what brings volume to the business.
So every steel company focuses on how many million tons they will produce. So that starts from steel making. So our vision is to go back one of the chain and make machinery which help in steel making and hot rolling.
So with that our contribution will be much more and that is really massive. So India has to gear up especially the engineering industry has to gear up and be able to provide raw materials and things like that. So that manufacturers like us can really grow.
Mubina Kapasi: All right Mr. Sharma, this was a wonderful conversation. Thank you so much for joining us.
Parijat Sharma: My pleasure. Thank you.