The FINANCIAL — GeoSteel, company representing one of the largest direct foreign investments in Georgia is ready to boost sales. In an exclusive interview with The FINANCIAL Mr. Hardeep Singh talks about the potential of GeoSteel and his experience in doing steel business. “One day Georgia could become the Switzerland of the Caucasus,” Mr. Singh believes.
GeoSteel was founded in Georgia three years ago. The people behind this company are from one of the biggest companies in India, Jindal South West (JSW) and U.K. based Georgian Steel Group Holding Limited. Two major partners put up this plant in Rustavi, town close to Tbilisi.
“JSW is mainly owned by Mr. Sajjan Jindal, who is the Vice-Chairman and Managing Director of the company. The second partner is me representing Georgian Steel Group Holding Limited. I hold almost the same percentage of shares of the company as my partner,” Mr. Singh says.
“I studied in India. I did my post graduation MA in Economics. After that I did a job in Iraq for four years where I was working as a Commercial Executive of a construction company, which was a joint venture between India and Yugoslavia. From there I moved to London, where I started my business in Steel Trading and since then I have been involved in this business.
Q. Mr. Singh, could you say more about your family and the place where you grew up?
A. I was born in Jalandhar (Punjab-India). I am the youngest among six brothers and one sister. I received my education upto Post-Graduation in the city of my birth. I am married and have three children. My eldest son is doing Law and is in his second year in Aberdeen University. My daughter is studying for a business degree at Kingston University in London. My youngest son third child, is studying in A Levels in London. My wife looks after the children and also looks after the business.
Q. Your surname – Singh, indicates nobility and has feudal associations. It has a long history in Northern India. Tell us more about the history of your family.
A. There is no feudal association with word Singh. All male members of the Sikh community (Sikh Religion is the youngest and is the fifth largest religion in the world) carry the surname of Singh which literally means ‘Lion’. There are three basic principles of Sikh way of life – dwelling on name of Lord Almighty, to earn living honestly and with sweat of own brow and share these earnings with others. Our religion believes in equality of men and women and there is no discrimination on the basis of caste, creed and religion.
Q. What is your attitude towards money, wealth, managing strategy, career building?
A. Money plays important role in building one’s life. Still money is not everything. The most important thing is sharing and caring. The best thing you can do in life is share with others, provide for them, give them the opportunity to do something constructive and to achieve something worthwhile. Education is always very important because it creates a basis for the later-lives of children.
Education helps in nurturing values which can be given to children :- honesty and diligence. It is at university that they learn discipline and the combination of these will build their lives and careers.
Q. What does Wealth mean to you?
A. Wealth is important when you share it with others. This is the real joy of wealth when you give something to someone else. That is the real purpose of the wealth that one acquires.
Q. Tell us about the lifestyles of the people working under your management. Who are they? How good is it to work for GeoSteel?
A. All the managers have a sound/good background in engineering and are skilled people who had been working in the steel industry for a long time.
Most of our employees are Georgian. The total number of our employees is approximately 550. Out of that about 60 people are Indians. Most of the local staff are keen learners who I am sure will excel in their field where they are working. It is a big pleasure to work with such people.
Q. As we know you have much experience of doing business in Russia. Tell us about your background in Russian business?
A. We had a steel trading business in Russia and had close association with some of Russian steel plants. I have travelled to Russia many times and even spent a couple of years there, from 1996 to 1998. At that time Russia was opening up to international relations and business. Actually, entering a new market is always difficult. Still, you have to go through this process and built up from scratch.
The Georgian and Russian markets are different.. Industry and trading is also different in the two countries. So really there is no comparison. Each industry is unique. The steel industry is highly capitalized.
When entering a new market you have to establish your credentials on quality and build up trust in the products you are offering. For the Georgian market GeoSteel is trying to offer the best technologies. We will continue working on fulfilment and development of quality. Our existing customers are satisfied to use our materials and we believe they are the best source of advertisement for our new potential customers.
Q. Are the problems connected with occupying a new market similar in every country? For example are the risks investors face in Russia equal to the risks in Georgia?
A. Frankly speaking, we have not faced any problems in Georgia. From my own experience I would say that everyone has been very cooperative, both officials and others. People are very helpful and we have never faced hurdles. I would also mention that this is very important for every foreign investment which comes to this country.
Georgia is a corruption free country. We have never seen evidence of corruption and so we believe that Georgia is a corruption free country.
Q. Georgia and India had close ties many centuries ago. Indian culture was widely presented in Georgian literature, most famously the poem of Shota Rustaveli. How similar are Georgian and Indian cultures and traditions nowadays?
A. Georgian and Indian traditions have lots in common. The biggest thing I have noticed is family values, the family system of living together, looking after each other, these things are part of Indian society and I have seen the same in Georgia. Here people are closely connected with their families, even extended relatives. Another similarity is that Georgians are very hospitable, just like Indians. So when you look at Georgian culture you can find obvious similarities between the two countries.
Q. How difficult was it adapting to Georgian lifestyle? What do you like and what you do not like about life in Georgia?
A. I am a British citizen and have visited Georgia many times for the setting up of this plant. I have been spending more time in Georgia recently. But I have had absolutely no difficulty in living in this country and if you ask me I think that Georgia is one of the most beautiful countries in the world.
There are always things which some people like and others do not like. The things which you like are based on no particular reason other than personal preference.
Q. JSW, India, is famous for being one of the biggest global steel manufacturers. Why did Indians become involved in that field so actively?
A. It just so happens that Indians are doing well in the steel business. It is the result of hard work which these people have put in to develop this industry.
Q. From the very beginning of 2007, when you entered the Georgian market it was envisaged that annual production would be sold principally in Georgia and neighbouring Armenia. What has the marketing strategy been since that time?
A. In Georgia there was no steel production, in Armenia too, steel was coming from Turkey and Ukraine. We had to set up a modern plant with similar technologies to those which Turkish mills have. We have a well qualified staff with expertise in Steel Industry and with modern technology. We are capable of producing superior quality products.
We will help Georgia and Armenia in reducing their dependence on imported steel. The customers will have the advantage of having quality materials and goods readily and available here. They will not have to wait for a long time to buy our stock, and they will not have to buy a large quantity. So there are lot of advantages for users of our materials. We are interested in providing all the benefits to our customers.
Q. What kind of advantages does GeoSteel production have?
A. We are using domestic scrap, which is presently exported and we are converting it into billets and Rebar making value addition to it. The steel produced is an import substitute. This way we are able to provide employment to people here and at the same time able to produce it at lower cost. We will be selling the materials at lower cost than importers are selling. We want to take advantage of the comparison with our competitors and offer lower prices. We would like to give various advantages to the consumers of our steel products.
Q. Please tell us about your clients. Name some of them. What is their feedback etc?
A. Our potential customers are construction companies, contractors and traders working in this country, or in Armenia. The contractors and construction companies are our actual users, the consumers of steel. They are interested in good quality and availability. On top of that, the competitive prices which we are able to provide.
Q. When will you replace the import of steel from Ukrainian and Turkish markets?
A. When you import steel from Ukraine or Turkey, it takes a minimum of 2-3 months to arrive and during this time besides your investment is blocked for this period you are also out of stock, and for this reason no one likes to block their investment. Just in time delivery, that is what we are looking to provide to our customers. So we are optimistic that we will be able to meet the requirements of all our customers locally.
Q. How has the global recession and crisis in the construction sector changed your business in Georgia?
A. The global recession has affected businesses in Europe. Steel and cement producing companies were some of the first businesses to have been affected by the recession,
When everything became stagnant it had a big impact on the steel business also. Now there is a little improvement, we are seeing signs that the recession is going away, and hopefully things will improve and we are sure that the situation will be better in Georgia too. We are optimistic that in the second quarter of this year things will be much better.
As the recession is receding, we are optimistic that the Georgian economy will resume growth.
Q. Which field can be considered the most profitable for foreign investors in Georgia?
A. This country has lots of potential and lots of companies are now focusing on it. This region needs to develop further though. This country has huge potential for tourism. It is very close to Europe and the Middle East and the environment here is very attractive. Georgia has beautiful mountains, natural rivers and forests. Hospitality business will be very successful in this country.
I think that hydro plants also have a big future here. There is a lot of potential. It is a long term investment and takes a much longer period to get benefit from it.
I believe, one day Georgia could become the Switzerland of the Caucasus.
I have been to Batumi, Poti, Gudauri and Bakuriani, and they are all beautiful regions. I went to Gudauri to ski actually. I did not go to Gudauri to ski this winter perhaps when I find some time I will go there. Gudauri is one of the most beautiful winter resorts I have ever visited.
I also love Georgian fruit which is particularly fresh all year round. I love Georgian apricots in particular and I think there is huge potential of exporting fruits. It is necessary to improve the packaging industry. Georgian fruits are organic, as you do not use any fertilizer or chemicals. In the west there is a huge market for this.
Rustavi was rebuilt as a major industrial center during the Soviet era. The development of Rustavi was part of Stalin's accelerated industrialization process, and included ironworks, steelworks, chemical plants and an important railway station on the Tbilisi-Baku railroad line.
After collapse of Soviet Union, still production was interrupted by 80%.
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