So why did APL Apollo group acquire Best Steel Logistics and rename it as Apollo Tricoat Tubes? This was all planned a few years ago, when Rahul Gupta (promoter’s son) had joined Best Steel Logistics.
The company had the land (Malur) and other infrastructure available in proximity to APL Apollo’s plant in Hosur and Bengaluru. Hence, this provided the company an opportunity to leverage on APL Apollo’s supply chain. The new visionary promoter owns majority of the company as on date.
What are Tricoat Tubes?
Tricoat is a product that provides corrosion resistance through triple coating. Its manufacturing process uses galvant technology in order to ensure that the corrosion resistance offered is top of the line and provides maximum benefit to the user.
It has three layers of coating on the outer surface for maximum protection and a zinc-rich polymer resin paint on the inner surface. Apollo Tricoat is the first product of its kind to give a combination of three different coating i.e. zinc, paint and polymer clear coat unlike the competitive products that either give paint finish or zinc finish.
If Sanjay Gupta could transform Bihar Tubes (renamed later as APL Apollo), an absolute ‘nil margin, no hope converter’ business, into a Rs 7,000 crore company from Rs 200 crore in 12 years, then imagine what he could do with a premium product that is manufactured by only a few players in the world.
He seems to be one of those promoters who are committed to building wealth for his stakeholders. He has been there, seen it and done it all. He will just replicate everything in Apollo Tricoat.
Common sense is the most uncommon thing in equity market. The company ended FY19 with hardly any sales to talk about. The numbers should not be taken into context as the company has changed hands with new promoters coming in last year and they did stop the old steel trading business.
The new promoter has got a habit of under-promising future numbers and over-delivering, which the market participants absolutely adore. For instance, they had pointed at a capacity of 50,000 MTPA for ILG, but commercialised 75,000 MTPA in March 2019. Then again they had guided for additional 50,000 MTPA by H1FY20 for value-added products, but they are expected to come up with 75,000 MTPA to achieve an annual target of 150k MTPA.
This facility is near Bangalore, which will cater to the needs of pan-India clients. Apollo Tricoat is one of the pioneers in India to launch inline galvanised pipes, designer galvanised pipes, hybrid pipes (ILG + PVC) and narrow sections. The products seem to be very niche, requiring much technological knowledge.