(Updates with CEO comments from second paragraph.)
July 16 (Bloomberg) -- Trafigura Beheer BV, the second- largest metals trader, opened an online store to boost sales in India, where the metals market is an $8.4 billion business.
The venture, called Lykos, will target small and medium- sized factories, the Amsterdam-based company said in an e-mailed statement. Indian metals consumption may grow by more than 8 percent a year if the new government follows through on plans to improve infrastructure and build new cities, according to the head of Trafigura’s local unit.
“Five to eight percent today increasing to 12 to 14 percent if the right decisions are made in the country for investments and logistics,” Raoul Bajaj, chief executive officer of Trafigura India Private Ltd., said in a telephone interview.
India’s economic growth has been hampered by poor infrastructure, and per-capita metals consumption has lagged behind China. Prime Minister Narendra Modi pledged $25 billion to unclog transport links, raise power output and build cities in his government’s first budget on July 10.
“Optimism has increased greatly with the change in government,” said Bajaj, 39.
Smaller factories in India account for almost 40 percent of sales of metals including aluminum, copper, lead, nickel and zinc, Trafigura said in the statement. Manufacturers procuring metals in India have had to contend with a “lack of automation, erratic supply, complex transportation logistics and opaque pricing,” the company said.
Lykos will offer customers consignments of 1 metric ton to 24 tons and will take delivery from newly built Trafigura warehouses located near manufacturing hubs in Gujarat, Rajasthan and West Bengal. Trafigura plans to open more metals warehouses in the southern city of Chennai and Indore in central India in the next six to 12 months, Bajaj said.
Including working capital requirements, Trafigura spent $300 million setting up the new business, Bajaj said. Lykos will enable customers to check metals index-linked prices and place orders online.
Trafigura, with major trading operations in Geneva and Singapore, expects the new venture to generate $400 million in annual revenue, Bajaj said. The closely-held company employs 450 people in India and almost 9,000 worldwide.