Sethi Brothers Ghana Limited: Steel Industry and Real Estate Sector in Ghana

Interview with Charanjeet (Charles) Sethi, Founder of Sethi Brothers Ghana Limited

What are the current trends in the steel industry? Is it a very competitive market?

The steel industry is a growing industry. I came here in 1992, and there was not much development here at that time. I came from Liberia, where business was more viable. Because I had a lot of experience working for the steel industry players, I learned the business there, then I came to Ghana and used my knowledge to start Sethi Brothers. I was one of the pioneers in the steel business here, then people began to follow. I started in Accra in a small shop in Adabraka where my son still is now. When I came to this location, the first shipment was so big that I could not even keep it here because people were stealing it. So, I was forced to store it somewhere else far away. I also started a steel business in Togo. At that time, Togo was a very difficult market because we had a French company there called AGG and they had a monopoly on steel and many other things. We had to break that monopoly and it was quite difficult.

Is there a monopoly here in Ghana?

There is no monopoly here. It is a free market.

How many competitors are there here?

We have about 22 competitors. We are one of the leaders. Sethi Brothers is number one or number two in the steel business.

What makes you stand out from the competition? Why are you one of the leaders in the market?

Sethi Brothers is an importer and marketer of steel. We work with a large variety of steel material. We import from many countries such as France, Ukraine, China, Turkey and Brazil.

People have confidence in our products. We give good service. My wife downstairs treats the customer not as a customer but closer. This way, the customers come, and they keep on coming even if they have to pay a higher price. They like to come here because of the motherly love that she gives them.

You center on confidence, service, and customer care. What about quality?

Here, most people do not understand the steel business. The steel business is based on weight, not on the pieces themselves. There is almost a ten percent difference between 11 and 12 steel. If somebody were to undercut me, instead of giving you 12 they will produce 11.5 or even 11, but we do not do that. That is why over time we have built up confidence with our customers. We have clients that will insist on us because contractors cannot negotiate. That is our strength here.

What does the company do? You are importers and traders, but you also produce.

Sethi Brothers is an importer and marketer of steel. We work with a large variety of steel material. We import from many countries such as France, Ukraine, China, Turkey and Brazil. We will buy from wherever we have the opportunity to get better prices and good quality. There is no barrier.

What is the demand for steel? Is the construction sector in the most demand of steel?

There is a boom. There is a lot of demand for steel and building now, especially rebars. There are about eight factories producing steel and they have nothing on the floor. Everything they produce is sold. We are also feeling the shortage of steel here now, because steel around the world has become very expensive. The local investors want to compete, and they are a bit lower than the imported steel. As a result, the import of steel rods has now stopped. The eight factories that are here are only producing iron rod. Because of this, unfortunately, our steel factory is not doing well, and we are trying to revive it.

How are you trying to revive it? What is missing? Do you need investors?

We estimated the factory to cost around 30 million dollars to build. When it was finished, the cost was 65 million dollars. So, that caused a lot of shortfalls for us. We are still investigating options for banks to finance us to run that factory.

What are the key criteria that allows your business to be profitable?

We make sure cost is to a minimum. There is so much competition. Everyone has the same products and the same suppliers. Maintaining your cost and keeping your cost as low as possible is the key.

Besides, we have built a reputation here. If someone talks about steel, they talk about Sethi. We have covered all of Ghana. It is our strength. Also, we do not cheat our customers. We try to be straight with them. We recently had a customer overpay by 350 Ghana cedis, and we immediately called them to have it returned and they were very grateful.

What different sectors are you involved in besides steel?

We were depending on steel too much and wanted to diversify the business, so we went into real estate. We have two commercial complexes here in Ghana, one in Tema and one in Accra. The one in Tema is a five-story commercial office space building. Then, we built 240 houses at the cost of about 20 million dollars. It is part of a contract to build 4,000 houses and the first phase is for 240 two and three-bedroom units.

What is the progress on this project?

The first phase is 95% complete. We are now looking for various institutions locally, so we can start the second phase of 600 units.

Do you plan to be here for the long-term?

I bought a lot of land here. One day it will pay off. This is our home because my family is here, I am here, so we will continue expanding our business here.

In the real estate business, are you looking to attract investors? If so, what kind of investors?

Investors are welcome. Investors will have to tell us what they are investing in and if we are interested, we will join them. You cannot have investors in steel, but if they are interested in housing or some other projects they have, then we are interested. Housing is a very big market here because we have a shortage of housing. If you can do affordable houses with the new technology, it will work. The cost of living is too high here. People do not have the money to buy a 50,000 dollar house, but they do have the money to buy a 15,000 to 20,000 dollar basic house. This is where the demand is.

Are you working with the government?

On one project we are. On this project we are working with a public private partnership.

Do you have other businesses?

We do business throughout Ghana. We have Sethi Takoradi, Sethi Kumasi, Sethi Tamale, and we are in Accra as well.

What do those businesses do?

We sell the same steel products. They are steel outlets. My son is in the paint business and my other son is also in the manufacturing business. My one son has Premier Steel and he also has a factory here called Steel Co.

Would you welcome people to come and join you on a specific project as an investor?

Right now, solar is a very good project. We already have 150 kilowatt solar panels on this building to generate electricity. We have land here where investors can come and do any sort of business they would like.

We also have the real estate project. Since we have the land and we have the PPP in place, we are open to equity finance as well where people can come in with either construction technology or finance to develop the remaining 4,000 units.

Have you approached these funds?

No, we did our own funds in the beginning to kickstart things. On the second phase now, we can do it better. The first phase was 5% of the whole project, and now we have the bulk of the project to do.

Is this social housing project going to become a large chunk of your business?

Yes, it is estimated to be about a 200 million dollar project. The housing will help support our steel business.

Project yourself into the future. What are your long and medium-term projects? How do you see yourself in two to three years’ time? What do you want Sethi Brothers to have achieved in 2021 if everything goes according to plan?

Honestly, I would like to be retired (chuckles).

We have so many plans going on right now. With the new business we are exploring now, such as manufacturing concrete bricks, we are looking for joint ventures from South Africa. We want to start making a comprehensive block factory that will do all types of pavement, roofing blocks, etc., because there is a lot of construction going on here and everyone needs quality blocks. With Sethi’s reputation for good material, we should be able to market these blocks. The blocks will also help us with continuing to work on our housing project.

There is no battery manufacturing, here, which we would like to explore in the future. We will be starting that project within two years’ time or less. We want to set up a battery factory because we have a lot of land here.

There are so many projects we are beginning. One of the industries that has shown interest in our existing land is aluminum panels.

We are also discussing entering the glass business because that is a product that everyone needs. It is in the very early stages right now.

In the near future, we want to be the number one real estate provider in Ghana.

 

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