Story of Astral Pipes: From Bankruptcy in 2001, to over Rs. 3000 Cr in sales today
3 min read
In today’s Newsletter, we bring to you the story of India’s legendary entrepreneur – Mr. Sandeep Engineer, and his rise from ashes of bankruptcy in 2001, to ‘Astra’nomical heights with a net worth of over $2.2 Bn in 2021.
Today,
What Pidilite’s unbreakable bond is to carpenters,
Asian Paints SAP analytics & relation is to painters,
Astral’s innovative pipes & marketing are to plumbers.
From projects like Renaissance Hotel in Mumbai to Hilton Hotel in Bengaluru, Astral has established its dominance by winning some of the largest domestic contracts in the construction and real estate sector.
Let’s go back to where it all began:
Prior to starting his entrepreneurial journey, Sandeep Engineer worked as a Project Engineer at Cadila Laboratories Limited in 1985.
In 1986, he started ‘Shree Chemicals’ which had to be shut in a few years as their products became obsolete and had quality challenges. In 1992, the fiercely determined Engineer decided to give entrepreneurship a second shot with his new pharma company ‘Kairav Chemicals’ to manufacture bulk drugs. This venture was later sold as it eventually didn’t take off.
Around the same time in the early 1990s during his visit to the USA, he observed that CPVC and anti-corrosion was a new solution that was replacing the traditional iron and copper pipes. With a plan to replicate the rising global popularity of CPVC pipes in India, he got a license for domestic production from the world’s largest CPVC producer – Lubrizol. And that’s how Astral was founded in 1996.
Sandeep Engineer had sold his house in Ahmedabad for the construction of his first pipe manufacturing factory. But after all the efforts it was hard to compete with Jindal Steel and Tata Steel, who had started selling galvanized iron pipes and Astral suffered heavy losses.
He then pivoted the entire business to ‘plumbing pipes’. Fiercely targeting consumers of plumbing throughout the decade, he even organized annual meetings of the 300+ members’ Plumbers Association in Mumbai in 2002.
The secret sauce for popularity in Tier 2, 3 & 4 cities?
Aggressive regional campaigns. Ad campaigns on locally popular channels like AajTak and Star News. In the opening scene in the movie Dabangg, the pipes Salman fought goons with? Yes, those were Astral. Got popular among plumbers as ‘Dabangg pipes’ or ‘Salman-wali pipes’.
A pioneer in India’s manufacturing blitz scaling he scaled CPVC pipes production capacity to 10x in 10 years. Turned Astral into the ‘cashflow machine’ of today.
- Cashflows are up 20x in the last 10 years!
- Plant capacity utilization rising up 50-60% YoY
- PAN India’s presence saves 2-3% savings on logistics in comparison to industry peers.
And just like:
- Private banks grab market share from PSUs
- Airlines take market share from railways
- Indian Pharma and IT took market share from global ‘expensive’ counterparts.
Similarly, in India: The pipe industry: 35% unorganized, 65% organized. Largely unorganized ₹6000 Crore water tank market, has 250 smaller organized players in India. In India >50% of raisins of PVC pipes are imported, in the last 1 year, these imports went crashing and so did many unorganized players. Result? Organized + higher quality alternative Indian company like Astral is taking market share from unorganized players.
Why is the Indian pipe industry growing at 10-12% YoY?
- Construction, Industrial, Agricultural uptick
- Govt initiatives & favorable policies
- Value migration to high-quality CPVC technology pipes from old PVC pipes with weaker applications.
Astral’s gross profit margins % jumped from around ~28% to ~38% over the last 5 years.
- Over 750 distributors across India.
- Revenue per distributor growing fastest in the industry among competitors YoY!
As said by one of the world’s most powerful billionaires Stephen A. Schwarzman, CEO of Blackstone Group – “.. Sometimes the sheer force of will to succeed is all that counts..”
Sandeep Engineer’s four-decade journey from humble beginnings, to multiple failures, to bankruptcy, to a multi-billion dollar net worth today, is the truest case study of persistent entrepreneurial spirit that fuels ‘The India Story’.
