Rajratan Global Wire 1-Year Share Price Chart
There is a piece of steel wire inside every tyre that most people have probably never heard of. It is called bead wire, and its job is rather important: it holds the tyre to the rim and helps transfer the load of the vehicle from the rim to the road.
Rajratan Global Wire has spent the better part of 37 years doing little else. The company moved from steel trading into bead wire in 1989 and today supplies some of the world’s largest tyre makers, including Bridgestone, Michelin, Goodyear, Continental, Yokohama, MRF, CEAT, Apollo Tyres and JK Tyre.
That makes Rajratan an unusual kind of industrial company. It sells a product that is a small part of the cost of a tyre, but a failure can have very large consequences. And once a tyre maker has approved a supplier, changing that supplier is not as simple as asking another company to quote a lower price.
The interesting question now is what Rajratan does with that position. After spending decades becoming difficult to replace, the company is adding capacity, pushing exports, expanding in Thailand and Chennai and making its first meaningful move beyond bead wire.
The real business is not wire. It is getting approved
This is where Rajratan gets interesting. A bead wire supplier has to go through qualification before a tyre manufacturer can start using its product, and Rajratan says the process can involve multi-year qualification cycles. Changing suppliers can also mean requalifying individual tyre products.
So, unlike a straightforward commodity business, the customer cannot necessarily switch suppliers every time somebody offers a slightly cheaper product. The wire has to consistently meet very narrow specifications, and the supplier has to be trusted over millions of metres of production
Written by Sourya Agarwal
Source: Financial Express
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