Tune in to this insightful conversation as we dive into the journey of Sheikh Naseem, Chairman & MD, Shera Energy Ltd. From his beginnings in transformer manufacturing to leading a global enterprise, Sheikh Naseem shares his vision for sustainable growth, expansion into international markets, and the future of metal recycling. Discover the synergies between their subsidiaries, and learn how Shera Energy is navigating challenges while achieving milestones.
Rumela Banerjee: Hi, this is Ramela Banerjee and joining me today is Sheikh Naseem, Chairman and Managing Director at Shera Energy Limited. Many thanks for joining us. Since listing, you have delivered fantastic returns to your shareholders.
Before we talk about operations, I would like to talk about your journey. Where did it all begin and how did you come about to become part of Shera Energy?
Sheikh Naseem: I greet all my friends. I started my journey in 2003.
After doing my engineering, I ventured into a transformer making company. Then I started making my own winding wires. And from there, I started making my own winding wires and then pushed this material to all other transformer making companies, where the material was accepted.
And it was appreciated by our customers because of the quality. And we started our journey from there. Our major operations for winding wire started in 2006.
And then gradually it went on to recycling of non-ferrous metal and further going for forward integration, making tubes, buzz bars, and different wires and alloys of copper, aluminium and brasses. So, we have in our group two more subsidiaries and that is Rajputana Industries Limited and Shera Metal Private Limited. One is a forward integration and one is a backward integration.
So, this is the way we have started our journey and we are selling goods.
Rumela Banerjee: Okay, could you tell us about your product profile and the key industries you cater to?
Sheikh Naseem: In Shera Energy, we deal with all major winding wire components, either for aluminium, copper, and we do the winding strips suitable for transformers, motors, and various electrical appliances. Then we do our brasses for hardware applications, for valve industries, for jerry industries, for zipper industry, and bullet shells.
And we do copper tubes and brass tubes for heat exchangers, for electrical furnaces, arc furnaces, transformers, and we do a variety of buzz bars for switchgear and panel industries.
Rumela Banerjee: Could you share synergies between the two, like your subsidiary Rajputana and Shera Energy?
Sheikh Naseem: Madam, it was a subsidiary that was incorporated back in 2011 around and it started its operation in 2016-17. And there we melt all kinds of non-ferrous metals, including copper, aluminium, and brasses, where our raw material is majorly scraps, where we refine them, recycle them, and produce different kinds of alloys as per customer need.
And we expertise in metallurgical divisions and we excel in quality and we match all the major requirements of chemical composition, and then mechanical properties, and other physical properties that are required for different kinds of alloys for different manufacturers.
Rumela Banerjee: And you have gone global, backed your first export order from Africa, Zambia. Congratulations on your milestone. What is your vision for the company’s export business?
Sheikh Naseem: That is the first global order for Africa. We are already presenting to the Middle East. All Arabian countries are our customers.
We are supplying to Malaysia, we are supplying to the USA, and we have recently ventured into the US market as well. And African, since we have opened one more subsidiary into the country that is called Zambia, where we have started our procuring of raw material, and as well as we are finding orders to supply the electrical cables and conductors from here. And soon we will be doing a lot of exports, mainly focusing on the African countries’ requirements.
Rumela Banerjee: Okay, can you please tell us if you get any government benefits for being in the metal or scrap recycling business?
Sheikh Naseem: As of now, there are no major incentives from the government of India to be in metal recycling, but soon I feel that the government will be focusing more into the metal recycling part, because that is the need of time. You need to develop a good recycling process to handle the scraps generated pan India, and a huge replacement business is coming up. You are changing your appliances, home appliances, every two to three years.
So a lot of scraps you are producing, and these are not being recycled in a proper way. So this type of incentive is going to come up very soon in the Indian market, and I can foresee a great business for the recycling industry in non-ferrous metals in India as well.
Rumela Banerjee: Could you also share any challenges you foresee that could potentially hamper operations?
Sheikh Naseem: As of now, I don’t feel major challenges.
The only challenge is that to be a responsible entrepreneur, you have to be very careful about the environmental policies, whatever emissions that you are doing, you are doing it in a proper way, and emissions or there should be no pilferage of acidic waste to our environment, and for that we are taking all special care, and we are very responsible to handle the pollution things that we do in our company, since scrap recycling is definitely comes under an orange category. So the focus of the company is to minimise the gas emissions, minimise the waste, and to whenever we do our acidic operations, we have to neutralise it before we discard it to the waste lines.
Rumela Banerjee: Okay, we understand your key raw material is copper. There are supply disruptions due to various reasons which then hamper prices also. Does that affect your margins in a large way?
Sheikh Naseem: No madam, the margins of our business are not affected by any price changes globally or any supply changes globally. The margins are basically backed on a back-to-back purchase system.
Whatever we sell, we have to buy at par. So our margins remain intact and margins are constant irrespective of the global changes or the global scenarios.
Rumela Banerjee: With metals or any commodity kind of business, a big chunk of your profit actually comes from volumes. Could you tell us what is your current capacity and what percentage you’re operating at? Any plans to ramp that up?
Sheikh Naseem: Presently, our group capacity is roughly 35,000 tons, but recently we have added some more capacities, increasing our capacity up to 38,000 to 39,000 tons a year, and we did around 65% of our utilisation last year. This year, with a growth of 30%, I expect our utilisation to grow beyond 75% in the range of 80%. Taking that point well noted, we have already started doing our expansion projects. We are installing the new machines to cater the additional requirement that the company is having.
Rumela Banerjee: The last quarter saw you crossing a 100 crore revenue milestone. Congratulations again. What revenue targets are you looking at for the next three to five years and what will drive that?
Sheikh Naseem: When we opened ourselves to public equity and our first IPO was in 2023, that time we were doing our top levels in the range of roughly 520 to 550 crores. Last year, we did approximately 875 crores. This year, our target is to further grow our business and get a substantial increase by minimum 35% to 40% on our top lines.
Rumela Banerjee: All right. Time to wrap up this conversation. Many thanks for joining.