Through the help of Business Model Canvas, we will try to understand only the precise aspect of RMTL’s business like Revenue, Production, Customer, Value Preposition and other cost related aspects. Let us check out Business Model Canvas of RMTL and understand each point in brief:

Business Model Canvas of Pipes & Tubes Segment – Ratnamani Metals & Tubes Limited:

• Production Side Advantages

Under Production Side Advantages, The key parameters to focus for RMTL are Key Partners, Key Activities, Key Resources and Major Costing. Have a brief look at them:

We know that Major Costs of RMTL are Raw Materials, Consumables, Power & Fuel, Employee and Freight which forms about 80% to 85% of total costing. Although major portion of expense are variable in nature, higher production will give small advantage to RMTL in achieving Economies of Scale. However, the impact of “Economies of Scope” will give higher benefit to RMTL in future years. RMTL has lots of customers across various industries and applications. Hence, it can easily leverage its newer product (new grades or sizes in Pipes) to its existing client base. The easy accessibility of its customers will help RMTL get a ready market for its newer sizes and newer graded Pipes & Tubes. Due to its larger reach of customer base, RMTL enjoys huge “Economies of Scope”, an advantage very unique compared to any other peer company.

Also, the reason for huge client base across industries & application which RMTL possess is due to its Key Activities. It is amongst few companies in India making critical pipes and tubes. In fact, few products by RMTL are import substitute i.e. they are not produced by any other Indian Company. RMTL is approved supplier in many reputed Oil, Gas and Power companies, states that it makes premium quality pipes & tubes. High Quality Critical Pipes & Tubes are made by RMTL due to Key Resource which it possesses. Upgraded to latest version Plant & Machinery, Timely Raw Materials Procurement, Transportation and their Experienced Engineers are all Key Resource which RMTL enjoys. These resource are provided by Key Partners of the company. Raw Materials and Technology Provider are two important partners of RMTL.

So in simple terms, RMTL acquires Resources from its Partners to perform its Activities of producing Pipes & Tubes. And all of the above involves Cost. Within this model, Production side advantage of is covered for RMTL.

• Customer Side Advantages

This aspect of Business Model, is again self-explanatory. Revenue of RMTL comes from two product categories i.e. CS and Other Alloy Materials. RMTL sells physical product i.e. one time transaction in nature through orders coming directly from its clients. Very less portion of orders come from government tenders and RMTL’s distributors and selling agents. Volume and Prices drive the revenue, the later determined by market demand-supply mechanism. However, for products being served to Niche Market, there is possibility of pricing power with the company.

Company has proper channels which help them deliver orders on timely manner with execution efficiency. One important concept by RMTL, which makes it a preferred company (for suitable orders) over others in terms of product delivery is its mobile plant. A plant which can be setup anywhere by removal, transportation and installation of its machineries. It is advantageous for both RMTL and its clients in form of lower transportation costs, lower product costs, delivery efficiency, and so on.

RMTL is able to make all types of Pipes & Tubes with grades and sizes which serves to very critical market as well as Basic Commodity market. Due to such flexible product mix, their products are marketable in application industry like Oil, Gas, Petrochemicals, Nuclear power, Power Companies, Fertilizers, Water Treatment Plants, Aerospace, Defence, etc. With high quality pipes & tubes, RMTL has bagged a variety of different customer segments and that too in crucial industries. This is bringing reputation and orders to RMTL. Existing clients repeat order keep coming but referred newer clients is another advantage for RMTL. Hence, RMTL is keen to focus on Customer Relationship as understood from the management.

• Value Proposition.

Value Proposition is extremely important for any company. It is something which brings revenue to the company through customers who prefer our products over others. Value Proposition for RMTL are explained below:

Critical applications require high quality and standard Pipes & Tubes. Many applications use Pipes & Tubes to handle extreme pressure of gasses and chemicals flowing inside them. Even a slight leakage in Pipes & Tubes can lead to explosion giving serious damage to the life of people working around. This is the reason why clients buy pipes & tubes from companies who adhere to premium quality and comply certifications from many recognized standard agencies. RMTL adheres to certification from reputed institutes like BIS, ADW, API, ISO, PED, ADWO, ASTM etc. which helps them to cater to many countries and clients (who require these certificates).

With these certification under the belt of RMTL, it is able to sell its product at relative ease. The experience, trust, timely execution skills, customization in products along with good customer relation are key for RMTL’s revenue. Because of the above, many companies prefer RMTL for its piping requirements. Also, RMTL is amongst only few producers in India making critical Pipe & Tubes. In fact, RMTL is only choice in India for many Import Substitute Products with quality matching its international peers. All these mentioned points are Value Proposition for RMTL as it brings revenue at decent pace.

Thank You!!

 

Disclaimer: Views are personal and presented through independent research. By no means there is any stock advice. Also, presented content is for learning purpose only. I might be wrong in presenting data and inaccurate data, let me know if you find any discrepancies.