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August - 2007 - issue > Entrepreneur
Unalloyed enthusiasm and nerves of steel
Michael Paulraj
Wednesday, August 1, 2007
Possession of a rare combination of industry know-how and business acumen has propelled Bhadresh K Shah, Managing Director, AIA Engineering Ltd, to the pinnacle of success.

Bhadresh Shah has come a long way since he began making small alloy castings more than thirty years back in 1976 when he was a fresh graduate in metallurgical engineering from IIT Kanpur. Within three years he founded Ahmedabad Induction Alloys Pvt Ltd to manufacture steel, alloy steel, and alloy iron castings used in the cement, mining, and thermal power generation industries.

He early realized that an overseas tie-up was the best way to gain valuable industry know-how and signed up collaboration with Magotteaux of Belgium in 1991. The Belgian company set up Magotteaux India Pvt Ltd, a joint venture, which was later merged into Ahmedabad Induction Alloys as the foreign company decided to leave India.
But, refusing to be bogged down, Shah inked a deal for technical collaboration with South Western Corporation (SWC) of the US in 1999. In May 2001 he re-christened the company as AlA Engineering.

Growth and business stability
Today, AIAE boasts a wide range of blue-chip clients from the cement and mining sectors that includes Aditya Birla Group’s Ultratech, ACC, Gujarat Ambuja, and the Kudremukh Iron Ore Company. The thermal power industries almost exclusively rely on the products of AIAE.

Shah says with audacity “The company should be able to maintain its leadership position in the special alloys market and post an annual growth rate of 25 percent while maintaining a net profit margin of 10 percent.” Stability begets growth and development breeds success.

AIAE raised Rs. 140 crores through Initial Public Offering (IPO) in 2005 and used a substantial part of it, inter alia, for financing its new greenfield facility for manufacturing high-chrome mill internals at Changodar in Ahmedabad.

Competition and confidence
A niche player in the value-added high-chrome metallurgy segment, AIA Engineering is today pitted against global giants like Christian of Italy and Toyo of Japan, apart from its own former Belgian collaborator Magotteaux in the global market. But Shah is unfazed. The company’s large share in exports – as high as 46 percent of its sales is to Europe and North America – and Shah’s industry experience have infused confidence in him.

Global presence and roadblocks to further expansion
At present, AIAE markets it products and services through wholly owned subsidiary companies in the USA, the UK, and the Middle East under the brand name Vega. The company came across a virtually insurmountable hurdle when a new law passed in the US required new plants to adhere to many times stricter pollution norms, as compared to the existing ones, and effectively jeopardized Shah’s plan to takeover a plant near Chicago at the close of 2005.

Shah, however, remains undeterred in his efforts. He is on the look out for opportunities to acquire mines and power utility manufacturing facilities in geographies like South East Asia and North and South Americas where he is determined to set up bases.

Managing a metallurgical industry with mettle
AIAE now controls 90 percent of domestic market in the high-chromium alloy segment. Shah has single-handedly steered his alloy steel industry to an enviable position.

The initial challenges that he faced in the eighties, especially the setback caused by the withdrawal of his ally Magotteaux from the collaboration, only strengthened Shah’s willpower and spruced up his ability to stay put in the game and meet the challenges with courage.

The company’s consistent growth record over the past three decades is the result of the dynamic and meticulous leadership of Shah. At 54, he is still as energetic as ever and looks ahead to further the company’s global growth with vigor and vision.

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