The steel industry is largely known as an unorganized sector where there is no uniformity of rates, guaranteed supply or quality control, and the major players also manipulate “market sentiment”. In India, Pune is the country with the highest steel consumption due to the huge industrial zones in the region, including car companies around Pimpri-Chinchwad. Realizing this market gap, Vedant Goel, a business angel and serial entrepreneur who started his entrepreneurial journey at the age of 16, launched Neo Mega Steel in 2018, which supplies iron and steel infrastructure products to several major automotive, real estate and infrastructure. Vedant is also launching an e-commerce platform for the purchase of steel and other goods that would “organize” the sector and further increase the transparency of operations.
At the beginning…
Originally from Chandrapur in the Vidarbha region of Maharashtra, Vedant came to Pune to pursue his studies in commerce. Coming from a business family, Vedant has always wanted to start his own venture. He started his entrepreneurial adventure with a small start-up “Har Aadmi Online” in 2010, when he was only 16 years old. The vision of “Har Aadmi Online” was to digitize all types of businesses and turn their offline presence into an online presence. Similarly, it also launched “Ekveda Superfoods” as a premium dried fruit supplier in Pune. He created the IPO Corner company, which contains all information about companies for investors and shareholders. This online platform bridges the gap between future startups and investors in the market at no charge.
Vedant says, “Although my early endeavors failed, my family has always supported me in every possible way. After years of these failures and learning, I decided to do something in the manufacturing sector, especially in the steel industry. Because I had experience dealing with business people and an established network, players in the steel industry also found me credible. Even then, the first six months of operation were a struggle.”
Vedant strives to make Neo Mega Steel the most people-centric company, delivering value and great experiences to its customers and employees. “I want to help customers source the best quality steel products at the right price, while making sure the whole process is ethical and transparent,” he says.
To paraphrase Vedant, iron and steel are two things that are essential to our country’s GDP just as “dal and chawal” are to our daily meals. “Because of the ‘trader mindset’, the steel industry suffers from opacity both in purchasing from the plant and in delivering to customers. The supply chain is quite large. Usually, an unorganized sector means more earning opportunities. However, we decided not to act like traders. We were very aggressive and acted transparently,” said Vedant.
“Usually in the steel industry, if someone is looking for raw material prices, they get different rates from different suppliers. We got rid of this by making the price list available to our customers. Even some websites now offer online rates. It is thanks to this transparency in doing business that we have gained great credibility, which has become a “distinguisher” for us – he added.
Conquering the Pune market
Dedicated to conquering the Pune market, Vedant also had his fair share of hard lessons learned in his first year alone. Recalling one of his worst experiences, he said: “The steel business as such has no barriers, but we have to be careful who we deal with. We had a client who initially ran a business worth approx ₹30 lakh with us and won our trust. In the second transaction, we had an unpleasant adventure with it and it expired during the Covid-19 epidemic. We had to suffer heavy losses. In these difficult times, my family stood by me and helped me get out of this situation. It wasn’t my first failure or my first rescue, but it made me realize what was waiting for me here.”
“In 2019, we tried to board a large infrastructure player. It took over 50 visits and many references to become an empaneled salesperson. It was also a good experience for me. Currently, we are one of the leaders in the steel industry. In Pune, we supply approximately 1,200 companies in the areas of Pimpri Chinchwad Municipal Corporation (PCMC). We serve nearly 50 percent of Maharashtra including Pune, Mumbai, Baramati, Satara, Ahmednagar, Nashik, Solapur etc.
Neo Mega Steel is also involved in one of Pune’s major transportation infrastructure projects. The company also helped a luggage company design the handle of the bag by reducing the thickness of the material used. The Neo Mega Steel team has achieved this by conducting product design research and development that no other supplier is involved in, according to Vedant.
He says, “In our industry, no one is doing product samples or new research and development. We help our clients directly from the perspective of the raw material, design and testing team. First, we understand our customer’s requirements. We then sit with the teams involved during product design. During this interaction and conversation, we share our suggestions for the grade and type of steel or raw material that would be required. Our team works with the product design team from the design stage to the delivery and execution stage. Suggested steel depends on strength, required load capacity and cost.”
“Another aspect we care about is that the customer will not have to take any follow-up. Our order acceptance and fulfillment process is transparent and regardless of any ups and downs in the commodity market or other factors, we always communicate proactively with our customers. This led to the creation of brand credibility and the association of a “trust factor” with the brand, Vedant stated.
Explaining the supply chain and operation, Vedant said: “We also work closely with Original Equipment Manufacturers (OEMs). If the customer wants to develop a product, they will ask an external consultant to do the design or do it in-house. Since most of them already know our expertise, they call us to deliver the project. Our supply chain takes care of all parameters from design to plant. We share and coordinate with the client whether they are viable for any issues, we take samples, deliver and then do third party testing. Tensile or load capacity tests are not performed in the traditional business model. Not only do we test the product, but we give three options to all major customers who have high-end products.
Vedant further added: “Logistics is also an important factor in the supply chain. Because the cost increases if the plant is far from the source. Since steel is a commodity, we have to be careful because prices are constantly changing. We are more focused on customer experience, customer requirements and their fulfillment, thus ensuring that production at the plant never stops.”
Traditionally, all steel suppliers had an inventory or stock, but after Covid, most players have abandoned this system. “Now the market is more dependent on sentiment. When demand increases, prices increase, but plants are at a disadvantage. In my opinion, steel prices were artificially inflated after Covid and some major players also contributed to this rally. After reducing imports from China, Indian companies thought they would benefit from exports, but this did not happen as China and Vietnam are still cheaper in the global market.
Neo Mega Steel will soon launch an e-commerce platform for buying steel and other goods. According to Vedanta, this will be one of the first players in India to try this.
Vedant stated, “Our concept is simple. Anyone wishing to place an order will simply need to enter their PIN. The platform will then immediately display the shipping cost and the minimum quantity required to place an order. The user can then add items to the cart and select further options. Online payment features will not be available during the trial period of the first six months due to fluctuating steel prices. During this period, the back-office team will call customers and send proforma invoices.”
“During our initial discussions with the companies’ purchasing departments, we realized that there was resistance to change and adapt to these innovations. We believe that when we offer better pricing options through this platform, we will overcome the attitude barrier,” added Vedant.
Vedant said: “We usually prepare a list of potential clients. The initial inquiry team takes care of this list and arranges the meeting, schedules the visits and identifies the right purchasing team person to meet. Customer requirements are recorded and communicated to the success team at the Pune office. This team tracks price quotes and negotiations, and then a vendor code is created. In addition, the verification team visits the client’s office and we also collect two credible credentials to authenticate clients. We also check the company’s financial information before boarding. The whole process takes place in two days or a week.”
“After the transaction closes, the nearest facility ships the material. We have a dedicated logistics partner for deliveries, and the whole process is automated thanks to internal software,” he added.
Sharing his plan for the future, Vedant said, “I want to cater to the pan-Indian market, and we will soon be entering the manufacturing space as well. The next two years will be good for the segment of the automotive market and infrastructure. In addition, two months before the central government approved the creation of 25 sugar factories around Pune. This means that we have a ready market of 25,000 tonnes and it is now up to us to capture it. In addition, we will expand our operations to Maharashtra as far as Nagpur, and we will open offices in all locations. Over the next five years, we are targeting 20 markets, including Chennai, Hyderabad, Bengaluru, Ahmedabad, Surat, etc., where our sales team will be present. Pune will be our central office.”
Offering his insights on the impact of electric mobility on the automotive industry, Vedant said: “India’s electric vehicle market has yet to mature. So far, it hasn’t had much of an impact on the steel industry, but we’re excited about the future. While the demand for steel in vehicle manufacturing may fall slightly, there are other opportunities. For example, the charging infrastructure for electric vehicles that will appear in various locations will increase the demand for steel. Every existing petrol station and premises of housing cooperatives will soon be equipped with charging stations for electric vehicles and the surrounding infrastructure. The government also plans to have one EV station for each PIN nationwide. This is a great opportunity for the steel industry.”
“In addition to vehicles, automotive parts such as clutch plates are now being produced in India. This is a positive sign for us,” added Vedant.