Hariom Pipe Industries locks in upper circuit; heres why!

Hariom Pipe Industries Ltd is based in Hyderabad (Telangana) and is part of the prominent Hariom Group. The firm is a leading producer of iron & steel goods.

Hariom Pipe Industries Ltd is based in Hyderabad (Telangana) and is part of the prominent Hariom Group. The firm is a leading producer of iron & steel goods. The share of Hariom pipe Industries was locked in the upper circuit today and is trading at 210.55 per share. 

The company uses ore to generate sponge iron, which is subsequently processed through several steps to manufacture end products, resulting in cost-effectiveness. This makes the fabrication of MS Pipes and Scaffolding more cost-effective. All final goods at various phases serve as inputs for the next process, allowing for product mix changes based on market demand & supply, market location, and gross margins.  

Product differentiation vs the competition: Hariom takes pride in its high level of product diversification and backward integration, which gives it an edge over its competitors.  

The material is sold to dealers and sub-dealers rather than stockists, which allows for margin benefits. Generally, stockists sell to dealers, who then sell to sub-dealers after adding their own margins. This provides dealers with the benefit of receiving proper merchandise that meets their needs as well as the ability to keep the margin benefits. In South India, the dealer network consists of about 200 distributors with over 1,500 selling outlets.  

Manufacturing units are strategically located: The company has two manufacturing units. Unit I is situated in Mahabubnagar district of Telangana. Unit II is a sponge iron-producing facility in Andhra Pradesh's Anantapur district. Sponge iron is largely produced at Unit II and transported to Unit I as a raw material for MS Billets, MS Pipes, HR Strips, and Scaffolding. Procurement, logistics, inventory management, energy-saving & quality control are all aided by the strategic integration with Units I and II.  

Capacity expansion: Hariom's current pipe capacity is 84,000 MTPA, whereas Ultrapipes' capacity is 36,000 MTPA. Harioms' capacity would increase to 1,32,000 MTPA, following the IPO. Hariom has a crude steel capacity of 1,32,000 MTPA and a primary steel capacity of 1,69,000 MTPA, which includes an 84,000 MTPA pipe capacity.  

The company operates on a cash-and-carry basis since it does not believe in credit. It is primarily utilised for projects (10 per cent), specifically in the scaffolding industry.