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The Indian steel industry, one of the core industries in India, is more than a century old when the

integrated steel plant was established by Tata Iron & Steel (popularly known as Tata Steel) in 1907. India
is currently the world's fourth largest producer of crude steel and is expected to become the second
largest producer by 2015.
Steel industry derives its demand from other important sectors like infrastructure, aviation, engineering,
construction, automobile, pipes and tubes etc. Thus its intense integration with other important industries
makes it a strategic sector for the Governments as well.
The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron
ore is also available in abundant quantities, though the recent mining restrictions have put a strain on its
availability. This abundance has been providing a major cost advantage to the domestic steel industry.
Steel plays a vital role in the development of any modern and emerging economy. The per capita
consumption of steel is generally accepted as a yardstick to measure the level of socio-economic
development and living standards of its countrymen. As such, no developing country can afford to ignore
the steel industry.
Therefore, our endeavour, through this conglomeration of Governments, policy makers, industrial leaders
and potential investors from India and abroad is to discuss new growth drivers that are revolutionizing the
Indian steel industry and assess the challenges & opportunities associated with new technologies along
with identifying new growth frontiers

Indian steel companies will need to:

1.Deepen their understanding of buyer values and create differentiated products
and service offerings The understanding of the end customer buyer values would
need to go beyond the basic knowledge of grade and volume and into the realm of
product usage and identification of critical attributes. Indian steel companies could
leverage this knowledge to create a differentiated value proposition targeted at the
appropriate customer segment. In some cases, they could bundle the product with a
value-added service to create a differentiated offering.
2.Embrace leading sales and distribution practices Traditionally Indian steel
companies have been laggards when it comes to adapting leading sales and
distribution practices from consumer-focused companies. As the emphasis on selling
their products increases, Indian steel companies will need to institutionalize leading
practices and become more customer-centric. This would include adapting aspects
such as customer account management, effective sales call processes, structured
market working across the business-to-business, business-to-consumer and
business-to customers.
3.Enhance pricing capabilities Indian steel companies will need to align their pricing
strategy with the changing market conditions and customer segments.
Organizations need to incorporate leading practices to maximize pocket margins
and reduce revenue leakage including:
Aligning pricing with customer value: Understand the value delivered to
customers or their customers end customers, and capture a part of the value-in-use
for customers via pricing. For instance, if a coil with customized thickness or width
results in a five percent reduction in manufacturing costs, steel players price the

custom SKU to share this benefit along with additional cost incurred in rolling the
same. Executing this pricing decision is challenging as it requires understanding the
criticality of product attributes to the end customer and cost elements across the
value chain.
Improve pricing discipline to prevent margin leakage: Indian steel companies need
to balance price flexibility and monitoring to control off invoice leakages. Companies
can enhance pricing discipline by adhering to standard price-setting models
mapped to the segmented strategies and streamlining the invoice to-payment
process. This is typically done by using price waterfall approach.

Differentiated supply chains Firms will also need to develop nimble supply chains to
minimize working capital and improve customer service. Firms will need to
reevaluate their manufacturing strategies and adopt a differentiated approach for
specific segments. At the same time, they will need to build flexibility in their supply
chains, for instance, by pushing differentiation further down the supply chain and
adopting Finish-to-Order approaches in order to balance inventory and customer
responsiveness. As customers get more sophisticated and demanding, Indian steel
companies will need to move away from the one-size-fits all approach and
customize their service levels and supply chains by customer segments.
Historically, when the Indian steel market was a sellers market, Indian steel
companies would ration out the production and deploy a make-to-order (MTO)
strategy across products and customer segments. Going forward, companies will
need to reevaluate their manufacturing strategies and adopt a differentiated
approach for specific segments. At the same time, they will need to build flexibility
in their supply chains; for instance, by pushing differentiation further down the
supply chain and adopting finish to-order approaches in order to balance inventory
and customer responsiveness. Indian steel companies also would need to:
1. Segment customers and products by service levels and align manufacturing
strategy and supply chain to the customer segments Indian steel companies
need to do this in three steps. In the first step, they need to define customer
segments based on size and profitability, service levels and product
specificity. Post this, they need to define the manufacturing strategy and
supply chain for each customer segment.
2.Implement integrated order management To support order promising to large,
demanding and sophisticated customers based on capable-to-promise (CTP) and
available-to-promise (ATP) capabilities rather than on an ad hoc basis. This will
enable the companies to balance responsiveness and inventory carrying cost in
lower margin, over-supplied markets.
3. Deploy improved demand forecasting and sales and operations planning
(S&OP) techniques Indian steel companies will need to improve their demand
forecasting techniques as an over-supplied market will enable their customers to
demand lower lead times. Further, the companies will need to develop the ability
to assign the right order to the right plant as several of the Indian steel

companies have already moved to a multi-plant and multi-location environment.

As an example, a leading Indian steel company implemented an advanced
optimization solution that allows it to block capacity in an optimal manner across
plants based on demand forecasts. The solution then confirms the same on the
receipt of orders. This process allows the enterprise to maximize the overall
contribub ction for a given demand basket.
Focus on reduction of raw material and manufacturing costs Firms with large
scale operations can look at elimination of raw material risks through backward
integration. Few large north Indian steel players have built upstream facilities in
iron ore rich states. Similarly, larger steel players can also look at investments in
hydro-electric power projects to ensure stable supply of power for operations.
Smaller players will have to explore consortium based approaches for optimizing
their costs.
Human capital management India steel companies ability to manage and
leverage its human capital will become a key differentiator and will play a key
role in enabling their growth aspirations. We believe Indian steel companies will
need to address the 4 Ds of managing talent.
1. Define talent required by identifying and articulating the organizations
critical talent needs for each area of the business, in particular for the
mission-critical workforces. This entails defining the specific technical and
behavioral competencies by workforce and level that will be required to
execute on the organizations chosen strategy.
2. Discover talent by sourcing and selecting the best talent to propel the
execution of an organizations chosen strategy. Organizations will need to
innovate to find the best talent for their needs. For example, as steel
marketing organizations become more customer centricthey could benefit
from sourcing talent from more traditionally consumer focused industries like
consumer durables, automotive and durables.
3. Develop talent by continuously developing individual and collective skills,
knowledge, and behaviors to expand the organizations capabilities and its strategic
advantage. In fact, developing the next generation of leadership is one of the
foremost challenges facing Indian steel companies today.
4. Deploy talent by building the capability to put the right talent in the right place
at the right time to allow the organization to execute its current strategy and
prepare for future challenges and opportunities. For example, organizations need an
active program of performance and career management to rotate high potential
executives between specific functions to build a cadre of strong future business
leaders. In summary, in order to attract and retain the best talent the steel
companies would require to:
Develop a long-range plan in line with the growth objectives
Institute programs to attract talent and retain key talent

Up-skill existing resources in order to stay relevant in the changing marketplace

Strengthen the overall employee value proposition
Build an HR work-force that focuses on Strategic and Performance Enhancement
and less on Transactional and Administrative activities