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Scrappy, Low-Profile Indian Metals Trading Company Gets Better Of Bigs

By MetalMiner CommoditiesJul 03, 2013 02:34AM ET
www.investing.com/analysis/scrappy,-low-profile-indian-metals-trading-company-gets-better-of-bigs-174024
Scrappy, Low-Profile Indian Metals Trading Company Gets Better Of Bigs
By MetalMiner   |  Jul 03, 2013 02:34AM ET
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Here’s one Indian metal trading company that serves as an example how adverse situations can be turned into an advantage.

Voted India’s fourth-fastest-growing company, Ushdev International Ltd (UIL) was recently in the headlines for the manner in which it had managed to take on the “biggies” of the Indian copper trading world by procuring and selling 2,000 tons of copper rods within less than 60 days, despite domestic shortages.

Using the opportunity presented by recent smelter shutdowns, Ushdev managed to procure supply for 100 clients, gaining a foothold in India’s copper market. Buoyed by the success, it now plans to add zinc and aluminum to its portfolio.

The Group’s Managing Director Arvind Prasad told Reuters that since the competition did not have production, his company was presented with a window of opportunity. For two months, India’s top smelter Sterlite was shut down after complaints over emissions, creating a shortage that was compounded when Hindalco Industries also shut its smelter for maintenance in May.

Ushdev is India’s biggest nickel supplier with 40 percent of the market share. The Reuters report stated the Group had “pounced” on a copper supply squeeze after the two top domestic smelters were temporarily closed earlier this year.

Who Is UIL?
UIL is one of India’s largest companies in the ferrous and non-ferrous metal trading sector, having started operations with the trading of steel and steel products, and a core business in metals. It is now in the Top 50 global metal trading companies. In 1997, it diversified into power generation, specifically wind energy. For many manufacturing mills, UIL is not only supplying raw materials, but also purchasing finished goods from them.

India’s metals market is dominated by a mere handful of topline producers such as Sterlite Industries, Hindalco Industries Ltd and Hindustan Zinc, which together produce about 90 percent of the country’s copper, and meet 85 percent of its zinc needs.

But with the temporary hiccups in supply, manufacturers who source from these big companies still like to maintain a relationship with “alternate” suppliers like UIL.

In the words of the company’s managing director himself, rather than taking the big suppliers head-on, Ushdev hoped to sidestep the big producers by nurturing a new customer base and beefing up its sources of supply of copper, zinc and aluminum to provide a cheaper alternative.

The Mumbai-based Ushdev, capitalized at about US $190 million, also has offices in Hong Kong and Singapore and sources most of its London Metal Exchange (LME)-grade metals via Hong Kong-based Noble Group.

by Sohrab Darabshaw
Scrappy, Low-Profile Indian Metals Trading Company Gets Better Of Bigs
 

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Scrappy, Low-Profile Indian Metals Trading Company Gets Better Of Bigs

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