‘Indian economy cannot go down any further and should recover in about six months’

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: The journey of Pennar Industries, manufacturers of cold-rolled steel strips, metal profiles and engineering components, was never a bed of roses. The company, which made a modest beginning with production capacity of 30,000 tonne per annum, managed to grow year-on -year till it got caught in the turbulence caused by recession, during the late 90s. A three-pronged approach adopted by the company, under its vice-chairman Nrupender Rao, helped in the turnaround process. Today, the company has a strong topline and is raring to go up to Rs 1,000 crore by 2009-10. In a freewheeling interview to FE’s Kavitha Venkatraman and B V Mahalakshmi, he talks about the slowdown in the Indian economy, company’s turnaround story, future prospects and foray into other business segments. Excerpts:

How is the slowdown affecting you?

The slowdown definitely has had impact in certain sectors especially in the auto industry. I personally feel the Indian economy cannot go down any further and should recover in about six months.

But as far as Pennar is concerned, the slowdown has not affected us to a great extent as the company supplies to a large number of industrial segments, including pollution control, railways, packaging, auto and road. There is no reduction in our turnover over the past two months compared to the earlier quarter performance. The effect will be seen only to the extent of our exposure to the auto sector.

Pennar Industries has seen both the good and the bad times. How did you negotiate the1998-2002 recession?

Pennar Industries was the first company to be established within the Pennar group. The journey started in 1988 with the setting up of a cold-rolled steel company at Isnapur in Medak district near Hyderabad. In fact, during the first year it made cash profit and from the second year onwards it started giving dividends. The journey has not been very easy as far as Pennar is concerned.

In 1997, we enhanced the production capacity from 50,000 tpa to 1,40,000 tpa by merging Nagarjuna Steel with Pennar Industries. And the merger also gave Pennar a diversified product mix that included cold rolled steel, cold formed profiles and pressed components. But right after the time of merger, between 1998-2002, recession caught on with the Indian economy and the engineering and steel sector in particular were the worst hit in the country. Auto sector also did not do well.