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Corporate Report

Published on: May 16, 2022, 12:56 p.m.
Rajratan’s global ambitions
  • Rajratan Global's Thailand plant

By Daksesh Parikh. Executive Editor, Business India

Sunil Chordia, 58, CMD, Rajratan Global Wire Ltd, was born and brought up in Indore. From a young age he aspired to be an engineer. Destiny, however, had some different plans in store for the young, would-be engineer. It felt Choradia was more suited to building his own empire rather than working for others. Currently, RGW has a market cap of a little over Rs3,100 crore and with the rapid expansion underway, the company is looking to become a meaningful global player.

After graduating in Science from the Indore University, Chordia tried his best to secure admission but was disappointed as there were only a handful of colleges then. The young man thereafter did a three-year course in management from Indore University. In life when one door closes, another opens. In Chordia’s case there was no need for another door.

“My father was in the steel trading business and like an obedient son, I joined the family business,” Chordia recalls. This was in the late 80s. The desire to do something different stayed rooted firmly in his heart.. India, at that time, had not opened up its economy fully and Indian industry still operated in a closed economy with supply side constraints being rampant. Any quality and non-quality products produced got consumed. 

Soon after Chordia joined the family business, a new company was incorporated in 1988 for setting up a wire project in Pithampur, a notified backward district, (Dhar) in Madhya Pradesh near Indore. The name selected was an acronym based on the first name of his grandfather (Rajmalji) and his younger brother (Ratan Lalji).

The new company had an initial seed capital of Rs30 lakh contributed by the family. Sunil Chordia was put in charge of the business. The plant for manufacturing prestressed concrete wires and strands started in 1991. The business was pretty successful and within months the company started making money. 

In 1993, post the liberalisation of the economy, Sunil Chordia realised that the new venture was doing pretty well and the company was paying around R30 lakh income tax in the fourth year of operations. In those days, incentives by way of tax exemptions, euphemistically called tax holidays, could be availed for setting up new ventures. With this in mind, Rajratan Wires Private Limited as it was called, scouted around for new opportunities.

“At that time, I wanted to do something more challenging and not the typical products which were being manufactured,” recollects Chordia. He zeroed in on making specialised steel products like tyre bead wire which use high carbon steel wire as a raw material and is coated with either bronze or copper.  The tyre bead wires (TBW) is a steel cord product which holds the tyre on its rim and also keeps the inflation of the tyre in check while the vehicle is running. The TBW finds applications in various tyres – for automobiles, earth-movers and aeroplanes.

While the cost of the bead wire forms less than 4 per cent of the overall manufacturing cost of the tyre, it is a very important part. The product enhances tyre safety, strength and durability. Besides precision manufacturing each tyre company requires customised tensile grades as per individual requirements. The original capacity for the TBW was 5,000 tonnes and the estimated project cost was Rs8 crore, a princely sum at the time.

  • Sunil Chordia: wanted to do something challenging

    Sunil Chordia: wanted to do something challenging

The development institutions which were the major source for project finance in those days asked Chordia to partly fund the cost of the project through raising funds from the public as the prestressed concrete wire units were making a decent profit. The company issued 7.5 lakh shares at Rs18 in 1995. With the funds firmly in place one would have assumed that setting up the project would be just a matter of time. It was however not a cakewalk and in the words of Chordia: “It was a miserable failure, almost wiping out the entire net worth of the company.” 

While Chordia’s initial attempts to make a success of the beading wires business failed, his persistence and the setup he had created for the production stayed. Chordia recalls that getting approvals from tyre companies was a major challenge as the product was critical and companies were reluctant to try out a new vendor. A meeting, set up by one of Chordia’s friends, with a top executive, Dr Ernst Wolf from Gustav Wolf GmbH (a German company which had been producing tyre cords since 1955) proved to be the turning point in the company’s history. Impressed with the setup, Gustav Wolf inked a joint venture and a technical collaboration. To imbibe confidence, it also took 26 per cent stake in the company.

The name was changed to Rajratan Gustav Wolf. The collaboration with a German company opened the doors of several tyre companies and Gustav Wolf also allowed it to export a portion of TBW overseas. A strike in Special Steels (now a part of Tata Steel) provided Rajratan with further momentum. JK Tyres, Modi Continental, Dunlop, Apollo and MRF were some leading manufacturers which approved its products. Customisation was done as per the specific requirement of the companies. 

Chordia soon began to contemplate expanding TBW capacities. Gustav Wolf, unfortunately, did not share Chordia’s vision and it wanted Rajratan to diversify into other related products like steel cords, elevator wires and wire ropes using their old machines. Some felt it was the fear of Rajratan Wires cannibalising Gustav Wolf’s markets that further exacerbated the disagreement. Chordia bought over the stake from Wolf and reverted back to the name of Rajratan Wires Ltd. He went along with the expansion and doubled his capacity at the existing plant.

“He is a determined person,” says Anil Kumar Sinha, director operations. A BITS engineer, Sinha who has been with the company for the last 27 years, says: “Chordia is firm and once he commits, he fulfils.” Many employees like Sinha have worked for several years. Sinha adds: “We operate in a family-like atmosphere and we work together to solve problems. With changing technology and new demands of the company we have to constantly modify our tests.”

The adhesion test (which determines the strength between the strands for ensuring the strength of the TBW to the vulcanised rubber compound) has been changing over the last three decades. Sinha, who has worked across all divisions in the company, points out that every day, function heads meet and every month they have a meeting with the MD.

The entire earnings from the business were redeployed in growing the business, says Chordia and no further funds were raised from the public for expansion. With demand picking up following the sharp rise in automobile production with new entrants, Rajratan had to keep on expanding. Amongst various options considered were those in Gujarat, Madras and Visakhapatnam.

On one of his overseas trips, Choradia decided to set up a plant in Thailand. The advantages were obvious. There were no manufacturers of bead wires in Thailand. One plant which was then in existence, could not meet the exacting requirements of the tyre manufacturers and shut down once Rajratan took off. The second reason was that Thailand could be used as a base for exporting tyres globally. Initially, Rajratan Thai Wire Company had a plant with a capacity of 12,000 mtpa.

Thailand turnaround

Like the initial plant in India, the Thai company also faced a lot of challenges. It took nearly five years for the plant to stabilise. The year after it started it was hit by the 2008 financial crisis. Demand went for a toss and huge losses were incurred during the early phase. Getting approvals was also a big problem. “Bead wires marketing involves a different type of marketing,” says Parag Khanwalkar, 56, GM Marketing and Business Excellence. It takes years before the products receive approval. Some may take as many as 10 years, he points out, adding that each tyre plant of a company requires separate approval.

Khanwalkar, a science graduate who had done his MBA from the Indore University, says entry barriers are high. While 80 per cent of the technical specifications may be common for most manufacturers, the balance often requires to be customised to the tyre companies’ requirements. Khanwalkar has been with Rajratan for over 15 years. 

The credit for the turnaround of the Thailand plant goes to Yashovardhan Chordia, 32, son of Sunil Chordia. Graduating from the FLAME institute in Pune, in finance and psychology, Yashovardhan took up a job with a management consulting firm, Lever for Change, a turnaround institute headquartered in Chennai.

“It provided good insight and understanding into the problems faced by companies. We acted as a facilitator,” claims Yashovardhan. During his two-year stint at the boutique firm, he had the opportunity to work and be involved in a project – ‘Operational Turnaround’ – at one of Tata Steel’s plants. Tata Steel is, incidentally, one of the largest suppliers of bead wires in India.

After a two-year stint, Yashovardhan joined Rajratan and moved to Thailand in 2013, in a bid to turn the plant around. He spent a lot of time in meeting people at the shop floor, looking at internal systems, speaking to existing customers and studying the culture. “One thing was clear, the company could not run on remote control from India. I chose to put up base in Thailand and sort out the cultural issues.” He points out that the people were highly skilled and creative. 

  • Sinha: family-like atmosphere

    Sinha: family-like atmosphere

Even though the attrition rate was high, the people were happy-go-lucky. Gambling on the shop floor was the norm in those days. Yashovardhan slowly started hiring more and more female workers at the shop floor to stabilise the workforce. Unlike India, in Thailand women are the decision-makers. It took much effort to persuade them to join and women in lots of 10 were met every day to instil discipline on the shop floor. Currently, women employees make up half of the workforce of 400 workers. Even today, Yashovardhan spends a lot of time in discussions with employees.

Thailand has a huge number of tyre manufacturing units. Many of them are Japanese and a few are Chinese. Rajratan Thailand counts Yokohama, Continental, and Sumitomo among the company’s marquee clients. Over the years, the capacity in Thailand has steadily increased and currently plans are on to increase it from 40,000 tonnes to 60,000 tonnes per annum.

The project is expected to commence operations by mid-2023. Tyre companies which import from the Thailand unit include Dunlop, Trelleborg and several more across Vietnam, Sri Lanka, Malaysia, Italy, Indonesia and the Czech Republic. Thailand currently accounts for 40 per cent of the total sales in FY23. Following the growth in Thailand’s contribution over the years, the company’s name was changed to Rajratan Global Wires Ltd. 

Unlike in India where the raw material, high carbon steel, is sourced from leading steel companies JSW and Tata Steel, in Thailand steel wires are sourced locally. During the volatile period Rajratan passed on the increase in prices to customers every quarter. While the raw material is sourced on a monthly basis, the sale prices are fixed on a quarterly basis. Fixing prices on a quarterly basis is good in times when the prices of raw materials are stable; however, it does dent profits during times of volatile prices as seen in the last couple of years. 

As a measure of mitigation against volatility Rajratan stocks up high on raw materials, thereby reducing logistic costs. Besides Rajratan, there are only a couple of manufactures of bead tyres in India, one of which is Tata Steel. In India, Rajratan counts most of the leading tyre companies as its marquee clients. The list includes Apollo, MRF, JK, Balkrishna Tyres, Ceat, Bridgestone, Goodyear, and Michelin.


TBW is dependent on the growth in the tyre industry. Recovering from Covid, the demand for tyres both in the OEM market as well as the replacement market has seen a good surge, with the industry growing between 7-9 per cent in FY22. It is expected to grow between 7-9 per cent in terms of volumes between FY22-25. Rajratan’s volumes are unhindered by the changes in car fuel.

Even electric cars require tyres. Radials or otherwise. In FY23 the company saw capacity utilisation levels reaching 95-97 per cent. As a result of volume and price increase, the total income of the company went upto Rs898 crore in FY2022 as against Rs548 crore in FY21 – a sharp rise of nearly 64 per cent. 

  • Rajratan is one of the leading manufactures of bead tyres in India

A rise in efficiency levels and higher volumes also saw profit outpacing growth in total income. Operating margins were 20.29 per cent, the highest ever in its history. Net margins were also in double digits at 13.9. PAT saw an 86 per cent jump to Rs69 crore. This is more than the combined profit earned in FY20 and FY21. T

he record performance coupled with the new expansion projects underway have seen the share of the company being rerated. The shares, which had dipped to Rs39 during the Covid period, zoomed to a 52-week high of nearly Rs800 in the last week of April. This was post the shares of Rs10 being split into 5 shares of Rs2 each. The EPS post the split was Rs24.49 as against Rs52.32 in FY21. 

Anticipating a high rise in volumes, Rajratan Global is expanding production to a new location in Chennai. Taking advantage of the China Plus One policy and the government’s PLI scheme, the unit at Chennai, with a capacity of 60,000 mtpa will cater to the export markets. Rajratan does export from its Thailand plant; however, the China Plus One policy has seen many tyre companies flocking to Thailand.

And being the only producer, Rajratan will be able to meet the demands of that country.  Its own capacity at its existing plant has also been increased to 72,000 mtpa. The company, with a combined capacity of nearly 180,000-190,000 tonnes, will be able to look at new markets in the US and Europe. 

Chordia feels that the market in India is also in expansion mode. With the government’s measures on anti-dumping of tyres in place, he expects a good volume growth for the automobile, which in turn will help tyre companies. He does not plan to get into any adjunct businesses. Steel cord is one new line which he may look at in the future. However, by and large, tyre bead wires will be the mainstay.

Given the limited bead wire companies in India as also overseas, Chordia may well keep on expanding his empire, now that his son is totally immersed in the business. Destiny has played its cards well and Rajratan may well be another good MNC from India.

  • Yashovardhan: getting into steel cord might be the next growth avenue

Focus on team strength

Sunil Chordia, who is now eyeing the global market, speaks to Business India from his Thailand unit. Excerpts

Why did you get into bead tyre wire initially?

The company did very well in the initial three-four years and gained some expertise in the wire business. This motivated us to look around for another wire product and we decided on bead wire. Foreign investment in automobiles had opened up in 1991 and I felt this would in turn see good growth in the tyre industry.

What is the status of the expansion projects in India and Thailand as also the new project in Chennai?

We have finished some debottlenecking at Indore which will help us to utilise the entire installed capacity. Thailand is in the process of EIA approval and will commission the new line by July. This will take us to a capacity of 60,000 TPA in Thailand. At Chennai construction work has started and we expect the production to begin by the first quarter of the next FY.

What are the challenges that you foresee in tapping new export markets?

Connecting with new overseas customers will take longer efforts of Meeting, Approval & the start supplies. Logistics might continue to be a challenge for some more time for now.

We will also have to focus on building our internal team strength for much larger export & multinational sales in the future. 

Volumes play a big part in your industry. Will you look at setting up a new project overseas once your Chennai project starts full stream?

We will explore the options, but cost of manufacturing in those advanced countries might not be favourable.   

Many large global players have got into adjunct verticals like steel ropes, elevators ropes, etc and construction equipment. Do you have similar plans? 

We would like to continue our focus on rubber reinforcement products; getting into steel cord might be the next growth avenue.

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