Discussing Trends in the Steel Manufacturing Sector in Uganda with Nilax Bhatt of Steel and Tube Industries

Interview with Nilax Bhatt, Executive Director at Steel and Tube Industries Ltd (STIL)

Where has STIL’s journey taken you since we last spoke just before the pandemic started?

As the pandemic started, it caught us out as we were not ready for it, but we quickly adjusted as we were learning the magnitude of it. There was a big disruption to the supply chain on the global level, not only in our region. We had to change a lot of patents and we focused on collaborating with the government, so we changed our operations. We supplied medical grade oxygen to hospitals, and we started running our plant on a 24/7 basis. We have learned how to implement SOPs (standard operating procedures) as we have 1300 employees, and the risk of COVID spreading within our operations was very high. We quickly put in required safety measures and got certified, and we were ranked at the topmost for the systems we put in by the private sector and the government of Uganda in their joint assessment. Our focus has been primarily on how to fight the pandemic, how to cooperate with the government, and help the community at the same time. We have started sourcing a lot of our raw materials locally and we are moving into the next stage of our expansion.

What is the focus of your production and what are your most popular products?

We still support the government by supplying oxygen bottles to hospitals because we are certified by the Bureau of Standards of Uganda. The most popular products are those made from wire rods, things like nails, welded mesh for the reinforcement of concrete, and iron bars made with TMX (Thermax powered) technology. We also make various sections like angle bars, STIL cut bars and high beams. And we are very good on pipes, such as hollow sections. They start from the 6-millimeter size and go up to 100 millimeters. I would say that we are one of the market leaders in these products. They all fall in the downstream, as I explained last time, so now we want to go into the mainstream because there is a vacuum there. Wire coils are coming in as imports from outside the region. For making tubes and pipes, the hot rolled coils are still imported, so we want to go a step back whereby we want to make the coils in the region. That is our short-term objective, to fill the mainstream vacuum.

What makes your company stand out?

The steel sector is not new to the region. There has been a lot of investment over the last 30 years or more and people have been producing steel here. There is definitely competition, and the level of investment is very high. What we have identified is for producing products that meet international standards, which is the bare minimum requirement, for strategic projects that are undertaken by governments or development partners like hydropower dams, express highways, railways and ports, all those initiatives require high quality and consistent products. That gap is the one we are eyeing. That is where we are meeting their quality standards and are supplying to major projects. All of our products are up to the mark. That is what makes us stand out from the crowd.

Are there any Steel and Tube Industries success stories?

There are many key projects that we are involved in such as the Karuma hydropower dam. It is the biggest dam in Uganda, and we have supplied good quantities of materials for it. The Kampala Northern Bypass was a seven-year project and was fully supplied by us as far as steel is concerned. There is the Jinja Bridge, a cable stayed bridge which is the first of its kind, with the help of the Japanese government. We have been able to supply steel that meets their requirements. We also supplied the Entebbe Expressway, which was recently completed, and we are currently supplying the expansion project of the Entebbe International Airport, the main airport in Uganda. Now what we are eyeing is the oil and gas sector. We are registered, all of the formalities have been completed, and we are just waiting for the requirement to come out and we are confident of participating.

Do you have plans to expand internationally?

We are known internationally because we work with major steel-supplying countries such as China, South Africa, Russia, and some in Europe. We are known as a sourcing partner, but once we are able to produce our own steel here using local iron ore, we can start supplying countries and become known as a supplying partner. We already have a presence in neighboring countries in the East African region. We supply materials to big companies in Kenya, Burundi, Congo (DRC) and South Sudan. Those are our traditional markets, and the time will come when we start exporting beyond East Africa.

Is the Russian invasion of Ukraine impacting your business?

Some of the raw materials we use come from Russia and some are sourced from Ukraine, so that is now a challenge as it has created a short supply, which has increased the price of raw materials. That gap cannot be filled quickly, and it will take at least four to six months for that shortfall to be made up by other countries that supply raw materials. The second thing, indirectly, is wheat imports to East Africa. More than 75% is supplied by Russia and there are other foodstuffs that are affected which has generally doubled the price of foodstuffs in the market. If this war continues, it will force a rise in the cost of products manufactured here and that will go on until the situation stabilizes and there are alternate sources of supply.

Does your company have a policy to conserve the environment?

Once you are in Africa, you love green. Here you will find every household has a surrounding that is green. It is a part of life, it is like a culture, so whenever we invest in a new project, we go for various certifications such as health and safety and energy efficient systems. Because we are the last in this chain, and because the majority of the green left in the world is in Africa, we have to jealously protect it. So, we try as much as possible to retain it because it is part of the wealth of the region.

What is your inspiration that drives you to do what you do?

I have been in Africa for more than 20 years and my kids have grown up here, so we have become a part of Africa. When you are inside you see much more of Africa than from outside, so eventually you start thinking what can we do for Africa? Can we contribute to the economy positively? Your mindset changes once you are within, you want to do something. People are so loving; the resources are abundant. They are scarce in other parts of the world, but here they are easily available, so what you need is for someone to take the initiative to make it happen. That mindset makes you wonder why the country is so dependent on the outside world when it has so many resources. The irony is that a lot of high-quality raw materials go out of the country and come back as finished products. Whether it is coffee, or even matchsticks, the same thing happens. That is where we are focused, and that is what keeps me going.

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