Colours Of Chrome

The founder of AIA Engineering returns to the Rich List after seven years by adding more heft to his metallurgical export power house

- Samar Srivastava

Bhadresh Shah remembers his early brush with entrepreneurship with a hint of embarrassment. Soon after he graduated from IIT-Kanpur in 1975, he found himself back in his hometown Ahmedabad and, as he remembers, “The problem in Gujarat is that everyone wants to be an entrepreneur.” So with 1 lakh in capital, the metallurgical engineer set up a small foundry that made pressure dye castings and succeeded in losing all his money in the first year.

Fast forward four decades later and in a country that can boast of few manufacturing successes, Shah, 67, has built a world-class metallurgical company, AIA Engineering which exports three quarters of what it produces. It counts among its formidable set of customers the who’s who of global metal, mining and cement companies from ArcelorMittal to Rio Tinto and Heidelberg to Lafarge. As customers have accepted his products (and service), Shah has announced plans for a big expansion to take capacity up by 40 percent.

Clearly Shah sees a long runway ahead. It is an assessment the analyst community agrees with. “There is a huge opportunity in the wear parts business in the mining space with global demand at 3 million tonnes and penetration by ferro chrome alloys at less than 20 percent,” says Shradha Sheth, research analyst, institutional equities, Edelweiss. After its recent expansion, AIA’s capacity stands at 440,000 tonnes. At 32 times earnings (14,200 crore market cap) the stock is pricing in rapid future growth even though the last five years have been subdued with profits rising by 6.3 percent a year to 443 crore.