Retailers test online route to boost sale of branded wire rods

Retailers test online route to boost sale of branded wire rods
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First Published: Mon, Sep 03 2007. 12 53 AM IST
Updated: Mon, Sep 03 2007. 12 53 AM IST
When businessman Anand Jhunjhunwala decided to build a house in Salt Lake City on the eastern outskirts of Kolkata, he wanted to ensure that the steel he used to fortify the foundations of the four-storeyed structure was a certified product. He decided to purchase the steel directly from straightline.in, a website service that promises to deliver goods at your doorstep.
“I wanted assurance on quality,” says Jhunjhunwala, who bought some 10 tonnes of wire rods and ribbed steel rods, better known in the trade as TMT (thermo-mechanically treated bars). “When I read an advertisement that big companies are supplying the products, I went for it,” he adds.
The two big steel makers involved—Steel Authority of India Ltd (SAIL) and the Ramsarup Group—are testing this niche online retail service to boost sales of their branded ribbed wire rods among consumers. A majority of wire rod manufacturing falls in the unregulated sector, with little quality control enforcement, especially in an environment where demand for the product is soaring due to a construction boom across India. Officials in SAIL and Ramsarup say online sales through staightline.in, run by Mjunction Services Ltd, a joint initiative of Tata Steel Ltd and SAIL, are still too small to matter.
Mjunction did not reply to an email inquiring about sales volume, but Manish Jhunjhunwala, chief executive officer of Ramsarup, says online sales will remain small compared to its physical retail presence. “It’s hard to change people from an old shopping style,” he says.
Branded ribbed bars, and efforts to sell them online, make their appearance at a time that standard specifications for steel remain loosely defined, at best. There are wide variations in quality and experts say that sometimes the rods are of such poor quality that there is the danger of buildings where they are used collapsing.
Tests on samples carried out by National Institute of Secondary Steel Technology two years ago revealed that poor metallurgical quality could pose risks to structural buildings.“You could call the majority of those steel available in the market, ‘parallel products’ to TMT bars, but not the same thing,” says R.K. Bagchi, director of the institute, located in Mani Gobindgarh, a steel manufacturing hub in Punjab.
Currently, the Bureau of Indian Standards has specifications for mechanical properties and chemical compositions for wire rods, but none for its metallurgical properties, a crucial measure to determine its strength.
India’s three largest TMT bar producers—Tata Steel, SAIL and Rashtriya Ispat Nigam Ltd—make about 3.5 million tonne of the rods a year. But some 70% of wire rods are made in small furnaces, out of sponge iron and metal scraps, which are then further shaped into wire rods by rerollers.
The rerolling industry insists that it’s the government that should lay down the rules to keep a check on quality of raw materials that are rerolled into wire rods. Anil Suraj, secretary general, All India Steel Rerollers Association, says the government controls steel imports and most of ingots, billets and blooms, produced from sponge iron and scraps, are supplied by private steel firms. He adds that both SAIL and Tata Steel hire conversion agents to make wire rods across the country. “But who really keeps a check?” he asks. “Quality checks are much to be desired. Until the time there is a standard for every kind of retail steel, there’s nothing that can rerollers can do.”
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First Published: Mon, Sep 03 2007. 12 53 AM IST
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