For the $10-billion OP Jindal group, naming its company SAW?an acronym for submerged arch welder, a generic technology to produce oil & gas pipes?was an ?act of patriotism?. Today, Jindal SAW Ltd is a Rs 7,000-crore company with a market capitalisation of about Rs 3,800 crore. Indresh Batra, its managing director, talked to FE?s Malvika Chandan about key transitions the company has been through. Excerpts:

What triggered the creation of Jindal SAW by the parent company?

Jindal SAW started as SAW Pipes Ltd in 1984 as an act of patriotism by the group as at the time most saw pipes that were used to transport oil & gas were being imported from Europe and the US. The company recognised the opportunity and decided to manufacture them domestically at a competitive price offering as the cost to do so is 60% of the cost of the imported product.

How has the market composition changed from an export dominated to domestic one for oil & gas pipes?

Now there are hardly any imported products, most are manufactured domestically. IOC, ONGC, GAIL, HPCL are some of our flagship clients. Typically companies float tenders and give the project to L1 or the lowest tenders. Wellspun in Gujarat and Man industries are other manufacturers of SAW pipes along with Jindal SAW. 60% of our revenues come from our SAW pipes. The total market for this product is Rs 20,000 crore in India. Jindal SAW also manufactures seamless pipes and ductile iron for water and sewage distribution, which we mainly supply to the municipalities and civil contractors such as IVRC and L&T.

In fact, from the year 2000 onwards, we started building a sizable export market providing to West Asia, North Africa, the Middle East, specifically Saudi Arabia where there is significant hydrocarbon. Until the downturn last year, 60% of our revenue was from the export market and 40% from the domestic, going forward we expect a 50-50 break up.

What has been the company?s strategy for setting up new plants?

The demand for oil & gas pipe products has been mainly from the South and the West. Our strategy has been to set up our factories near our customers. For instance, our factory in Gujarat was set up after the 2001 earthquake and our unit was able to meet the immediate need of the time of rebuilding the affected areas. Likewise, our factory in Mundra is close to the Mundra Port from where a lot of the export equipment ships take off. Ours is a logistics-driven business rather than a labour-driven business and this factory drives our location strategy. The high weight to volume ratio of oil & gas pipes requires us to minimise the travel distance between our manufacturing units and customers. The closer we are to our customers the more beneficial for us.

Post-liberalisation we were one of the first companies to conduct an overseas acquisition or export capital which we did in 1994 of a US-based steel company specialising in pipe and plate operations in Texas, which we later integrated with one of OP Jindal?s affiliated companies.