“A study on benchmarking techniques used by companies with reference to TATA STEEL”.

Submitted To:MISS POOJA MENGI. Faculty Marketing.

Submitted By:CHETAN KHAJURIA. 8NBJM012.

• • • • •

INTRODUCTION. OBJECTIVES. METHODOLOGY. COMPANY PROFILE. PRODUCTS • BENCHMARKS. • DATA ANALYSIS. • COMPARISON. • LIMITATIONS. • CONCLUSION. • REFERENCES.

Benchmarking is the process of comparing the cost, time or
quality of what one organization does against what another organization does. The result is often a business case for making changes in order to make improvements. Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to make improvements or adopt best practice, usually with the aim of increasing some aspect of performance.

Benchmarking may be a one-off event, but is often treated as a
continuous process in which organizations continually seek to challenge their practices.

Benchmarking, originally invented as a formal process by Rank
Xerox, is usually carried out by individual companies.

Collaborative benchmarking:
Sometimes it may be carried out collaboratively by groups of companies (e.g. subsidiaries of a multinational in different countries).

Procedure:
There is no single benchmarking process that has been universally adopted. The wide appeal and acceptance of benchmarking has led to various benchmarking methodologies emerging. “The most prominent methodology is the 12 stage methodology by Robert Camp.” He wrote the first book on benchmarking in 1989. The 12 stage methodology consists:1. Select subject ahead 2. Define the process 3. Identify potential partners 4. Identify data sources 5. Collect data and select partners 6. Determine the gap 7. Establish process differences 8. Target future performance 9. Communicate 10. Adjust goal

11. Implement 12. Review/recalibrate.

Cost of benchmarking:Benchmarking is a moderately expensive process, but most organizations find that it more than pays for itself. The three main types of costs are:
• •

Visit Costs - This includes hotel rooms, travel costs, meals, a token gift, and lost labor time. Time Costs - Members of the benchmarking team will be investing time in researching problems, finding exceptional companies to study, visits, and implementation. This will take them away from their regular tasks for part of each day so additional staff might be required. Benchmarking Database Costs - Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice now.

The cost of benchmarking can substantially be reduced through utilizing the many internet resources that have sprung up over the last few years. These aim to capture benchmarks and best practices from organizations, business sectors and countries to make the benchmarking process much quicker and cheaper.

Technical Benchmarking/Product Benchmarking:-The
technique initially used to compare existing corporate strategies with a view to achieving the best possible performance in new situations (see above), has recently been extended to the comparison of technical products. This process is usually referred to as "Technical Benchmarking" or "Product Benchmarking". Its use is particularly well developed within the automotive industry (“Automotive Benchmarking “)

Types of benchmarking:1.

2.

3.

4.

5.

6.

Process benchmarking - the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration. Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your overall competitiveness. Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms. Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses. Strategic benchmarking - involves observing how others compete. This type is usually not industry specific meaning it is best to look at other industries. Functional benchmarking - a company will focus its benchmarking on a single function in order to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison.

To know the various benchmarks set by TATA STEEL. To have a comparison between TATA STEEL and other Steel Players.

Secondary Data:• By collecting information from various resources available on the internet through Google search engine.

Books from various authors.

History of Tata Group
The Tata Group is a multinational conglomerate based in Mumbai, India. In terms of market capitalization and revenues, Tata Group is the largest private corporate group in India and has been recognized as one of the most respected companies in the world over the years. It has interests in steel, automobiles, information technology, communication, power, tea and hotels. The Tata Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations. The Tata Group comprises 98 companies in seven business sectors, 27 of which are publicly listed. 65.8% of the ownership of Tata Group is held in charitable trusts. Companies which form a major part of the group include:1. 2. 3. 4. 5. 6. 7.

Tata Steel Corus Steel Tata Motors
Tata Consultancy Services Tata Tea Titan Industries Tata Power

8. 9. 10. 11.

Tata Communications Tata Teleservices Tata Auto Comp Systems Limited Taj Hotels

The group takes the name of its founder, Jamsetji Tata, a member of whose family has almost invariably been the chairman of the group. The current chairman of the Tata group is Ratan Tata, who took over from J. R. D. Tata in 1991 and is currently one of the major international business figures in the age of globality.The company is currently in its fifth generation of family stewardship.

Tata logo:The Tata logo was designed by the Wolff Olins consultancy. The logo is meant to signify fluidity; it may also be seen as a fountain of knowledge; maybe a tree of trust under which people can take refuge. Some though say it just looks like the letter T.

Company Profile: Tata Steel Limited 2008 Sales: 1,315,400,000,000 Major Industry: Metal Producers & Products Manufacturers Sub Industry: Steel Producers - Integrated Country: INDIA Employees: 37205

Established in 1907, Tata Steel is Asia's first and India's largest private sector steel company. Tata Steel is among the lowest cost producers of steel in the world and one of the few select steel companies in the world that is EVA+ (Economic Value Added). Its captive raw material resources and the state-of-the-art 5 MTPA (million tonne per annum) plant at Jamshedpur, in Jharkhand State, India give it a competitive edge. Determined to be a major global steel player, Tata Steel has recently included in its fold NatSteel, Asia (2 MTPA) and Millennium Steel (1.7 MTPA) creating a manufacturing network in eight markets in South East Asia and Pacific Rim countries. Soon the Jamshedpur plant will expand its capacity from 5 MTPA to 7 MTPA by 2008. The Company plans to enhance its capacity, manifold through organic growth and investments. The Company's wire manufacturing unit in Sri Lanka is known as Lanka Special Steel, while the joint venture in Thailand for limestone mining is known as Sila Eastern.

Tata Steel's products include :1. 2. 3. 4.

hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, Construction rebars , rings and bearings.

In an attempt to 'decommoditise' steel, the company has introduced brands like • Tata Steelium (the world's first branded Cold Rolled Steel), • Tata Shaktee (Galvanized Corrugated Sheets), • Tata Tiscon (re-bars), • Tata Bearings, • Tata Agrico (hand tools and implements), • Tata Wiron (galvanized wire products), • Tata Pipes (pipes for construction) and • Tata Structures (contemporary construction material).

The company has launched the Customer Value Management initiative with the objective of creating complete understanding of customer problems and finding solutions jointly. The company's Retail Value Management

Tata Steel's products are targeted at the quality conscious auto sector and the burgeoning construction industry. With wire
manufacturing facilities in India, Sri Lanka and Thailand, the Company plans to emerge as a major global player in the wire business. While the Company is focused in the pursuit of its operational goals, it is also committed to being a good corporate citizen. Tata Steel extends support to the economically underprivileged not by charity but by strengthening and empowering them with expertise and knowledge. Its community outreach programmes covers the Tata Steel managed city of Jamshedpur and over 600 villages in and around its manufacturing and raw materials operations.

Other Projects: India
• • • • MTPA Metcoke project in West Bengal Deep sea port in Dhamra, Orissa Titanium Dioxide project in Tamil Nadu Joint Venture with BlueScope Steel for metallic coating and painting steel unit

Overseas:
Development of a source of low ash coal from Queensland, Australia • Ferro Chrome production in Richards Bay, South Africa

Future Plans :Steel Plant Projects: India
The Company has embarked upon setting up three green field steel plants in eastern India:

Overseas
3 MTPA in Iran 2 MTPA in Bangladesh addresses the needs of distributors, retailers and end consumers. The company has also launched India's first steel retail store – steel junction - for making steel shopping a happy and memorable experience. . With 48,000 employees, an asset base of US$2.3 billion, and annual turnover of US$1.5 billion, the steel manufacturer sells long and flat steel products to over 5,000 customers around the world.

The journey of Tata Steel since 1922 has been marked by steady growth through various Benchmarks. 1922:- The Tinplate Company of India prompted along with Burmah Oil Company (India trading), Glasgow 1959:- The Tata Pigments, a wholly owned subsidiary, incorporated. 1962:- TRF (earlier Tata-Robins-Fraser) promoted along with the Associated Cement Companies, in collaboration with Hewitt Robins Incorporated, USA, and the General Electric Company, UK. 1968:- Tayo Rolls (formerly Tata-Yodogawa) promoted in collaboration with Yodogawa Steel Works and Nissho Iwai Corporation, Japan. 1986:- IPITATA Sponge Iron became Tata Sponge Iron. In 1994, it ceased to be a subsidiary of Tata Steel. 1990:- Tata Incorporated, established in 1945, became a wholly owned subsidiary 1994:- Tata Metaliks promoted with assistance from WBIDC. 1997:- Tata Ryerson, 50:50 joint ventures with Ryerson International of the US, launched.

1998:- Jamipol (formerly known as Jamshedpur Injection Powder), joint venture promoted along with SKW Metallchemie GmbH, Germany, and Tai Industries, Bhutan. 2001:- Mjunction Services, largest e-commerce venture in India, launched. 2002:- TM International Logistics, a wholly owned subsidiary, launched. 2003:-The Indian Steel and Wire Products acquired. 2004 :-( 1.)Jamshedpur Utilities and Services Company (JUSCO) established as a wholly owned subsidiary. (2.) Lanka Special Steel launched as a wholly owned subsidiary in Sri Lanka. (3.) Sila Eastern promoted along with Unistretch, Thailand. 2005 :-( 1.) NatSteel Asia, Singapore, acquired. (2.) Hooghly Met Coke and Power Company, a joint venture with WBIDC, incorporated. (3.) BlueScope Steel of Australia, a joint venture, launched. (4.) Millennium Steel, Thailand, acquired. 2006:- Set up by Tata Africa Holdings in 2004, Tata Steel KZN (Pty) became a part of Tata Steel's South African operations. 2007:- Corus, an Anglo-Dutch steel company, acquired. .

WITH RESPECT TO TATA STEEL VARIOUS OTHER PLAYERS ARE COMPARED ACCORDING TO GROWTH IN STEEL INDUSTRY.

INDIA HAS A POTENTIAL FOR EXPONENTIAL GROWTH IN STEEL CONSUMPTION
Peak Point Point of S aturation S ingapore
J apa n EU

US A Point of Inflection
Japan

20 hina 00 -0 6

EU 15 Australia Singapore USA

T rigger Point

C

India

China India 0 100 200 300 400 500 600 700 800

Per capita in KG

India will be a part of The new Steel world …

9

CONSTRUCTION & AUTOMOTIVE ARE THE KEY SEGMENTS TO WATCH
Othrs: 4.0 Cons Dur : 1.0 Packaging : 1.7

Galv 6% CR 12% HR 26%

Auto : 2.7 Cap Goods : 3.7

Bars & Rods 43%

Construction : 21
Rails 3% Structurals 10%

FY06: 34.1 million tonnes
All fig in million tonnes; Tata Steel Estimates

10

THE OVERALL GROWTH IN DEMAND OF STEEL IS THEREFORE HEALTHY

ADC : INDIA (till FY-12)
12

CAGR in %

70 60 50 40 30 20 10 0 FY03 FY04 FY05 FY06 FY07 26.7
10.9

9 6.7

65.0

51.1
23.5

56.9
30.0

28.8
11.9

31.2
13.2

34.1
15.0

36.9
16.5

26.2

15.8

16.9

18.0

19.2

20.4

Pess.

27.6

Most Likely

30.7

Opt.

LONG
All fig in million tonnes Source : Tata Steel Estimates

FLAT

FY-12

35.0

14

STEEL PRODUCTION HAS JUMPED SINCE THE ECONOMIC LIBERALIZATION
42

YEAR

CAGR (%)

38.4

1950-’93 1993-’05

6.5 8.8
23.8 21.4 15.2 13.0 7.5 5.1 29.7 30.6

All fig in million tonnes

1.1

2.4

1950 1960 1970 1980 1990 1993 1995 1998 2000 2001 2004 2005

16

CRUDE STEEL PRODUCTION IN INDIA (million tonnes)

CAPACITY UTILIZATION ARE STRETCHED..

SECTOR BF/BOF Steel CRUDE STEEL EAF Indn. Fce Corex TOTAL

No. of Units

Total Capacity

Working Capacity

10 38 750 1

21 13 16 1.6

21 7 12.4 1.6
42.0

All fig in million tonnes

18

Source : JPC, Tata Steel est.

INDIA WOULD EMERGE AS A GLOBAL HUB

India to play the Key role in Steel Market dynamics
22

Global Steel Demand Is Expected To Grow At ~3% Till 2015
Global steel demand Million tons
Decade of 1980’s Decade of 1990’s Decade of 2000 Future outlook

CAGR = 2.8%

1,231
CAGR = 4.2% CAGR = 2%

1,113 887

CAGR = 10%

785 658

789

834

582

582

644

1980

1985

1990

1995

2000

2001

2002

2003

2010E

2015E

Source: IISI Factbook; McKinsey analysis 32

Raw Material demand in India to increase by 13% to meet the rise in steel demand
Sectoral Share % in 2004 - GDP growth 6%
Sectoral Share % in 2010 - GDP growth 8%
14

24.6

24.4 Agriculture Services Industry 51
34

Agriculture Services Industry 52

Imperatives for 8% GDP Growth  Manufacturing must grow at 11%  This means a growth of 13% for Mining Industry if it has to contribute 5% to GDP by 2010 instead of 2.5% at present.  13% growth in mining has to be driven by few lead minerals such as coal, iron 36 ore, supported by other minerals.

Robust growth in infrastructure, power, construction and steel sectors will drive the Steel Demand
Investment in construction sector (Rs m)
2500 2000 1500 1000 500 0 FY'03 FY'04 FY'05 FY'06 E FY'07 E FY'08 E FY'09 E FY'10 E

Construction sector will grow at CAGR of 15%.

Source: SSKISept’05 issue

Incremental Steel demand for Power Sector
Incremental Consumption in '000 tons
1200 1000 800 600 400 200 0

Expenditure on Infrastructure

'04

'06E

'08E

'10E

'12E

In addition there will be investment for additional 25 mt capacity in steel itself37 by 2010. Potential for steel - 25-30% of the investment cost.

Ranking of World Class Steel
Rankin g 1 2001 2002 2003 2004 2005 2006

TATA STEEL USINOR

POSCO

POSCO

POSCO

TATA STEEL

TATA STEEL

2

NUCOR

BAO STEEL TATA STEEL NUCOR

SEVERSTAL

POSCO

POSCO

3

POSCO

TATA STEEL GERADU

BAO STEEL

SEVERSTAL

BAO STEEL

4

GERADU

TATA STEEL

BAO STEEL

SEVERSTAL

5

NUCOR

BAO STEEL

GERADU

Blue Scope

MITTAL

MITTAL

• Internet facility was not so good speed was very low as well as most of the sites are restricted by the System Administrator. • Information was good enough so it was difficult to decide upon what to write and what to not.

Topic was very vast itself. So covering all the aspects of topic was quite difficult for me.

Tata Steel has been conferred the first CII - ITC Sustainability Award for the year 2006.By this Tata Steel is maintaining benchmarks for other Steel players. • Tata Steel's excellent environment, social and economic performance & growth in the world steel market has led to follow other steel manufacturers as benchmark. • Tata Steel: Knowledge Management = people + culture + technology. • Indian steel industry exudes optimism. So there is a great opportunity for the growth of steel industry. • Tata Steel has increased its steel capacity from 5mtpa to 6.8mtpa by setting up a new H-Blast furnace at Jamshedpur, which was commissioned in June 2008.

• Strong steel prices in the global markets helped Tata achieve almost 30.4% growth inblended realizations • Tata Steel’s consolidated Revenues increased by a significant 36% mainly due to strong • Steel prices during 1HFY2009, which helped it achieve better realizations.

BOOKS:ICFAI University Press study material on “Marketing”. “Benchmarking Concepts & Cases” By Lata Chakravarty.

INTERNET:www.wikipedia.com www.Scribd.com www.Tatasteel.html