Monolithisch India CEO Says Company Growth Tied To Demand, Not Steel Cycle

Monolithisch India, a supplier of ramming mass used in induction furnaces, will continue to grow on the back of demand-led expansion and product retention, rather than cyclical swings in steel prices, its managing director Harsh Tekriwal, said in an interview with BW Businessworld.

Monolithisch’s July initial public offering (IPO) was oversubscribed 183 times, part of a wave of small and medium enterprise (SME) listings on  National Stock Exchange (NSE) Emerge that have raised billions from retail investors. But many SME listings have struggled after the initial excitement, with weak volumes leaving investors stuck.

Tekriwal insisted Monolithisch’s stock had avoided that pattern. “Our stock has consistently seen an average daily trading volume of 40,000 to 50,000 shares since listing, which is a healthy indicator of liquidity,” he said, adding that volumes would improve once the NSE reduced the lot size. However, liquidity across SME platforms remains a concern. Data from Prime Database shows that the average daily turnover in NSE Emerge stocks fell nearly 40 per cent between 2022 and 2024, leaving investors with limited exit options.

Dependence On The Secondary Steel Sector
More than 80 per cent of Monolithisch’s business comes from India’s secondary steel producers, who operate induction furnaces that consume ramming mass. Tekriwal dismissed concerns about concentration risk, saying steel remained the backbone of India’s growth. “As long as the Indian economy is thriving, steel demand will remain strong,” he said.

At the same time, he acknowledged the risk of depending too heavily on one sector. “We are conscious of concentration risk and are working on diversification into consumables for other metals in the longer run to build a more resilient business model,” he added.

India’s secondary steel sector, which accounts for nearly 60 per cent of total steel production, according to the Joint Plant Committee, is highly fragmented and often squeezed during downturns when larger integrated producers retain pricing power. The Ministry of Steel projects demand will continue to rise as the government targets 300 million tonne of capacity by 2030.

Commoditised Market, Customer Loyalty
Ramming mass, a refractory material, is often viewed as a commodity product with low barriers to entry and many suppliers. Tekriwal said Monolithisch retained 67 per cent of customers over the past six years, which he cited as proof that customer loyalty was stronger than perceived.

“Ramming mass may appear to be a commodity, but our experience proves otherwise,” he said. “Much like how brands thrive in competitive FMCG categories, we differentiate ourselves through proprietary product formulations, consistency, and decades of process optimisation.” He claimed that while it appeared simple for competitors to enter, “in reality, it takes years of refinement.”

Notably, Monolithisch has announced capacity expansion plans, though industry-wise, some analysts caution that excess capacity in a cyclical industry can hurt margins. Tekriwal said the company’s investment plans were not speculative. “Our capex is demand-led, not speculative. We have planned expansions based on clear visibility from our customers’ growth pipelines. This ensures that new capacity is aligned with actual demand for high-grade, quality products, minimising the risk of underutilisation,” he said.

India’s steel capacity utilisation stood at 81 per cent in FY24, according to the Joint Plant Committee, compared to a global average of 74 per cent reported by the World Steel Association.

The steel industry is cyclical, with profitability tied to price movements. Tekriwal rejected suggestions that Monolithisch’s growth was driven by the current cycle. “Steel prices today are not at the peak of an upcycle; in fact, they have been at median levels for the last two years,” he said. “Our growth is not cycle-driven but structural, aligned with India’s roadmap to nearly double steel capacity to 300 MTPA by 2030.”

He said investors should focus on volumes, customer retention, and efficiency gains as indicators of the company’s strength. Also, global steel demand is expected to grow 1.7 per cent in 2025, according to the World Steel Association’s April forecast, with India leading growth at 8.6 per cent.

Profit Growth And Sustainability
Monolithisch’s profit after tax rose 70 per cent year-on-year in FY25. Tekriwal said this was not driven by price spikes. “Our 70 per cent PAT growth in FY25 was driven primarily by higher sales volume, not temporary price spikes. The pricing environment has remained stable; we simply sold nearly double the number of units,” he said. He added that the company was focused on improving productivity and cost efficiencies to sustain growth.

Asked about the risk of volatility in raw material costs, Tekriwal said the company maintained a buffer. “We maintain a three-month inventory buffer to shield against short-term price fluctuations. This ensures uninterrupted supply without immediately passing the burden onto customers,” he said. He added that prudent procurement was used to protect margins if customers resisted price increases.

The company has said that Eastern India offers strong growth prospects, with infrastructure projects in Uttar Pradesh, Odisha, West Bengal, Jharkhand and the North East. Asked about the risk of a slowdown in government spending after elections, Tekriwal said infrastructure was a long-term trend. “Infrastructure development is no longer a short-term election cycle trend, it is a national necessity,” he said. Regardless of which government is in power, the demand for steel-intensive infrastructure will remain strong, Tekriwal added.

On governance, Tekriwal said credibility was critical for smaller companies listed on NSE Emerge. “We recognise that governance is the foundation of long-term credibility, especially for SME-listed companies. We are committed to full regulatory disclosures, robust internal controls, and a culture of transparency,” he said.