Startup Mantra: Bringing transparency in steel supply chain
Founder of Neo Mega Steel aims to make the startup most ‘people-centric company’ delivering values and delightful experiences
Steel industry is largely known to be an unorganised sector wherein there is no uniformity in rates, guaranteed supply, or quality control and where the major players too manipulate ‘market sentiments.’ Within India, Pune is one with the largest consumption of steel due to the huge industrial zones around the region including automobile companies in and around Pimpri-Chinchwad. Realising this market gap, Vedant Goel, an angel investor, and a serial entrepreneur who started his entrepreneurial voyage at 16, launched Neo Mega Steel in 2018 which supplies iron and steel infrastructure products to several large automobiles, real estate, and infrastructure companies. Vedant is also launching an e-commerce platform for purchasing steel and other commodity items, which would ‘organise’ this sector and further bring transparency to operations.
In the beginning…
Hailing from Chandrapur in Vidarbha region of Maharashtra, Vedant came to Pune to pursue his higher education in the commerce stream. Coming from a business family background, Vedant was always keen to start his own venture. He started his entrepreneurial journey with a small startup ‘Har Aadmi Online’ in 2010 when he was just 16 years. The vision for ‘Har Aadmi Online’ was to digitalise all genres of businesses and permute their offline presence to an online presence. Similarly, he also launched ‘Ekveda Superfoods’ as a premium dry fruits supplier in Pune. He formed a company IPO Corner which contains all the information about companies for investors and shareholders. This online platform bridges the gap between upcoming start-ups and investors in the market with no charges whatsoever.
Says Vedant, “Even though my early ventures failed, my family always supported me in all possible ways. After years of these failures and learnings, I decided to do something in the manufacturing sector, especially the steel business. Since I had experience in dealing with businesspersons, and with an established network, the steel industry players also found me credible. Even then the first six months of business was a struggle.”
Vedant aims to make Neo Mega Steel the most ‘people-centric company’ delivering values and delightful experiences to its customers and employees. “I want to help customers source steel products of the best quality at the right price while making the entire process ethical and transparent,” he says.
To paraphrase Vedant, iron and steel are two things which are essential to the GDP of our country like ‘dal and chawal’ are for our daily meals. “It’s due to the ‘trader mindset’, steel industry is suffering from non-transparency right from procurement from plant and supplying to customers. The supply chain is quite big. Usually, unorganised sector means a bigger opportunity to earn profits. However, we decided to not behave like traders. We were very aggressive and operated transparently,” said Vedant.
“Typically, in steel industry, if one seeks pricing for raw materials, they would get different rates from different vendors. We did away with this by sharing the price list with our customers. Even some websites now provide rates online. It is due to this transparency in conducting business, we gained a lot of credibility which became a ‘differentiator’ for us,” he added.
Capturing Pune market
Set out to capture the Pune market, Vedant also had his share of hard lessons, which he learnt in the first year itself. Recalling one of the worst experiences, he said, “Steel business has no barriers as such but we must be careful with whom we deal. We had a customer who initially did a business of around ₹30 lakh with us and gained our trust. In the second transaction, we had an unpleasant experience with him and he expired during the Covid-19 outbreak period. We had to suffer major losses. In these difficult times, my family stood firmly with me and helped me come out of this situation. This was neither my first failure nor my first ‘bailout,’ but it made me realise what is up for me here.”
“In 2019, we tried to get onboard a major infrastructure player. It took more than 50 visits and a lot of references just to get empanelled as a vendor. This was also a good experience for me. Now, we are one of the leaders in the steel industry. In Pune, we are supplying to around 1200 companies in Pimpri Chinchwad Municipal Corporation (PCMC) areas. We cater to nearly 50 per cent of Maharashtra state including Pune, Mumbai, Baramati, Satara, Ahmednagar, Nashik, Solapur, etc,” Vedant stated.
Neo Mega Steel is also involved in Pune’s one of major transportation infrastructure projects. The company has also helped a luggage manufacturing company to design the handle of a bag product by reducing the thickness of the material used. Neo Mega Steel team succeeded in this by conducting research and development in product design, which no other supplier company engages in, claims Vedant.
He says, “In our industry, nobody does product sampling or new research and development. We help our clients right from raw material, design, and testing team perspectives. We understand the requirement of our client first. We then sit with their concerned teams when the product is being designed. During this interaction and conversation, we share our suggestions regarding the grade and type of steel or raw material that would be required. Our team coordinates with the product design team right from the design stage to supply and execution stage. The steel suggested depends on the strength, load capacity required and costing.”
“Another aspect of which we take care is that the customer will not need to take any follow-up. Our process of receiving orders and executing is transparent and irrespective of any upside or downside in the commodity market or other factors, we always communicate with our customers proactively. This has led to creating brand credibility and associating ‘trust factor’ with the brand,” Vedant stated.
Explaining the supply chain and functioning, Vedant said, “We also work closely with Original Equipment Manufacturers (OEM). If a client wants to develop a product, they will go to a third-party consultant to get a design done or make it in-house. With our expertise now known to most of them, they call us to provide a design. Our supply chain takes care of all parameters right from design to plant. We share those and coordinate with the client about whether they are feasible if there is any problem, sampling, supply and then getting third-party testing done. Ultimate tensile strength or load capacity testing is not done in the traditional business model. We not only get the product tested, but we give three options to all major customers who have high-end products.
Vedant added further, “Logistics is also an important factor in the supply chain. Because the cost increases if the plant is distant from the sourcing location. Since steel is a commodity, we have to be cautious as the prices are constantly fluctuating. We are more focussed on customer experience, customer requirement and its fulfilment and hence we ensure that production at the plant will never stop.”
Traditionally, all steel suppliers had an inventory or stock but post-Covid, most players have done away with this system. “Now the market is more sentiment-driven. When demand goes up, prices go up, but the plants are at a disadvantage. In my opinion, steel prices were artificially pumped-up post-Covid and some major players also contributed to this rally. After import from China was restricted, Indian companies thought that they would benefit from exporting, but they have not because China and Vietnam are still cheaper in the global market.”
Neo Mega Steel is soon launching an e-commerce platform for purchasing steel and other commodities. According to Vedant, it will be one of the first few players in India to attempt this.
Vedant stated, “Our concept is simple. Anyone who wants to place an order will have to simply put in their Pin Code. The platform will then immediately display the transportation cost and the minimum quantity required for order placement. The user can then add the items to the cart and they can select further options. Online payment features will not be available for a trial period of the first six months due to pricing fluctuations in steel pricing. During this period, the back-office team will call clients and send proforma invoices.”
“During our initial conversations with purchase departments of companies, we have realised that there is resistance to change and adapt to these new-age solutions. Once we offer better pricing options through this platform, we are confident that we will overcome the mindset barrier,” added Vedant.
Vedant said, “We usually prepare a prospective client list. The pre-enquiry team handles this list and securing an appointment, scheduling visits, and identifying the right person from the purchasing team to meet. The client’s requirements are noted down and passed over to the success team at Pune office. This team follows up with price offerings and negotiations and then a vendor code is created. Further, a verification team visits the client’s office and we also take two credible references to authenticate the clients. We also check the financial information of the company before onboarding it. This entire process is done within two days or a week.”
“After a deal is closed, the nearest plant dispatches the material. We have a dedicated logistics partner for deliveries and all this process is automated through in-house software,” he added.
Sharing his future plan, Vedant said, “I want to cater to the pan-India market and we will also be entering the manufacturing space soon. The next two years will be good for the automobile and infrastructure market segments. Also, two months before the central government has given the go-ahead for setting up 25 sugar mills around Pune. That means we have a 25,000-tonne market ready for us and now it is up to us to capture it. Also, we will be expanding across Maharashtra up to Nagpur and we will also start offices at all locations. In the next five years, we are targeting 20 markets including Chennai, Hyderabad, Bengaluru, Ahmedabad, Surat, etc and we will have our sales team present there. Pune will be our central office.”
Giving his insights on the impact of electric mobility on automobile industry, Vedant said, “Electric vehicles market is yet to pick up in India. There has not been much impact on the steel industry for now but we are excited about the future. Even though the steel requirement in manufacturing of vehicles may slightly go down, there are other avenues. For example, the EV charging infrastructure that is coming up at various locations will boost the demand for steel. Every existing fuel station, and residential society premises will soon have EV charging stations and surrounding infrastructure. The government is also planning to have one EV station for each pin code across the country. This is a big opportunity for the steel industry.”
“Apart from vehicles, there are auto parts like clutch plates which are being manufactured in India now. This is a positive sign for us,” added Vedant.