STEEL AUTHORITY OF INDIA

LIMITED

A Project Report on “COMPARATIVE STUDY OF RETAIL BUSINESS OF

MAJOR STEEL PLAYERS IN INDIA”
Presented By : Sushil Kumar Rai (MBA, 3rd semester)
Roll No.: 09142009041
Registration No: 091420710053 Of 2009-2010
Session: 2009-2011
Meghnad Saha Institute of technology

1
To do my project work in SAIL was a golden journey towards the
corporate word. I have gathered some valuable knowledge along with the
practicality of real life situations. This will be of a good help & driving
force in my career. During the preparation of my project report I received
valuable guidance and advice from eminent experts.

Thanks giving seem to be the most pleasant of all the jobs but it is difficult
when one tries to put into words. This project has been brought into
fruition through the effort of some very special people.
I am grateful to my project guide AGM (M-FP) of SAIL, CMO-Kolkata Mr.
Sanjay Agarwal for his guidance and help in every respect.

I am thankful to Mr. Manoj Kumar Verma ( Junior Manager-SAIL-

Kolkata)who has put all his efforts to give me the knowledge about steel,
the required marketing information regarding products & has always been
there for me to see that I don’t fumble and help me to complete my project
report.

I am grateful to prof. Arun Mitra & all the faculty members of my college
for their help.

Sushil Kumar Rai

Meghnad Saha Institute of Technology (MSIT)
Project Trainee – SAIL

2
 CONTENTS
1. Introduction
2. Background History
3. About the Company
4. Vision
5. Organisation Structure
6. Plants And Units Of Sail
7. Products & Applications
8. SAIL Network
9. Central Marketing Organisation (CMO)
10.CMO Details
11.Global steel scenario
I. Global Ranking Of Indian Steel
II. Top Consumer Countries Of Steel
III. Comparison Of Steel Production Worldwide
12.Indian Steel Scenario
I. Steel Consumption In India
II. Promising Segments Of Indian Steel Industry
III. Top Companies Of India
IV. Major Steel Producers Of India
V. Major Steel Plants Of India
13.Competitor Analysis
I. TATA STEEL LTD.
II. JSW STEEL LTD
III. JINDAL STEEL & POWER LTD.
IV. ISPAT INDUSTRIES LTD.
V. ESSAR STEEL LTD.
14. SAIL SWOT Analysis
15. Conclusion
16. Bibliography

3
India is the fifth largest producer of steel in the world. India Steel Industry has grown
by leaps and bounds, especially in recent times with Indian firms buying steel
companies overseas. The scope for steel industry is huge and industry estimates
indicate that the industry will continue will to grow reasonably in the coming years
with huge demands for stainless steel in the construction of new airports and metro rail
projects. The government is planning a massive enhancement of the steel production
capacity of India with the modernization of the existing steel plants.

RINL, SAIL and Tata Steel are the major producers of long products. The
major producers of flat products are SAIL, Tata Steel, Ispat Industries, Jindal group of
companies, Uttam Steel and Bhushan Steel. These products are used for automotive
sector and white goods, fabrication work like car bodies, ducts, consumer durables and
roofing. The end user industries of these products are growing at a significant rate in
India.
About 50% of the steel produced in India is exported. India's export of steel during
April - December 2008 was 64.4 MT as against 9.7 MT in December 2007. In February
2009, steel export increased by 17% to 12.6 MT from 10.8 MT in the same month last
year. More than 50% of steel from India is exported to China. The Government's
decision to reduce export duty on iron ore lumps from 15% to 5% has given a major
boost to the export of steel.
In urban and semi-urban areas, the consumers bought small quantities of steel for
building houses and volumes would vary from one to three tonnes. In the rural sector,
consumers needed galvanized corrugated sheets for roofing application and their
average requirement is 50-100 kg.
However, steel producers had no mechanism to reach this market located at the
hinterland of the country. As a result, a large number of intermediaries thrived as they
were meeting the demands of the small consumers.
Retailing is one of the biggest sectors and it is witnessing revolution in India. The new
entrant in retailing in India signifies the beginning of retail revolution. India's retail
market is expected to grow tremendously in next few years. According to AT Kearney,
The Windows of Opportunity shows that Retailing in India was at opening stage in
1995 and now it is in growth stage in 2008. India's retail market is expected to grow
tremendously in next few years. Retail market is expected to grow 12% a year, with
modern retailing just beginning.

4
Hindustan Steel Private Limited was set up on January 19, 1954. Hindustan Steel (HSL)
was initially designed to manage only one plant that was coming up at Rourkela. For
Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel
Ministry. From April 1957, the supervision and control of these two steel plants were
also transferred to Hindustan Steel.

On December 2, 1972, The Ministry of Steel and Mines drafted a policy statement to
evolve a new model for managing industry. The policy statement was presented to the
Parliament on December 2, 1972. On this basis the concept of creating a holding
company to manage inputs and outputs under one umbrella was mooted. This led to
the formation of Steel Authority of India Ltd. The company, incorporated on January
24, 1973 with an authorized capital of Rs. 2000 crore, was made responsible for
managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and
Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured
as an operating company. The registered office was originally in New Delhi. It moved
to Calcutta in July 1956, and ultimately to Ranchi in December 1959.

5
Steel Authority of India Limited (SAIL) is one of the largest state-owned steel makers in India.
With a turnover of Rs. 48,681 crore, the company is among the top five highest profits earning
corporate of the country. It is a public sector undertaking which trades publicly in the market is
wholly owned by Government of India and acts like an operating company. Incorporated on
January 24, 1973, SAIL has more than 131,910 employees. The company's current chairman is
C.S Verma. With an annual production of 13.5 million metric tons, SAIL is the 16th largest steel
producer in the world.

Major plants owned by SAIL are located

at Bhilai , Bokaro , Durgapur , Rourkela , Burnpur (near Asansol) and Salem. SAIL is a public
sector company, owned and operated by the Government of India. According to a recent survey,
SAIL is one of India's fastest growing Public Sector Units.

Steel Authority of India Ltd (SAIL), India's largest steel maker, will raise its production to 60
million tonnes (MT) by 2020 as part of its plans to become a 'global player', the company
chairman said Monday.

SAIL is working on a massive expansion project and has set a target to raise production capacity
up to 60 MT by 2020, when the country's total steel output will reach 180 MT,' C.S. Verma, who
recently took over as SAIL chairman, told reporters at Bhilai.
He said his priority was to make SAIL a 'global player'. SAIL has presently just 19-20 percent
share of the country's total steel production but by 2020, 'we plan to have a one-third of India's
total steel output', he said.

The company is among the four Maharatnas of the country's Central Public Sector
Enterprises. SAIL has five integrated steel plants, three special  plants, and one
subsidiary in different parts of the country.
The Government of India ha accorded the status of ‘Maharatna’ to steel Authority of
India Limited (SAIL) through a memorendam issued on 19 th may 2010. Three other
central Public Sector Enterprises (CPSEs) – Indian Oil Corporation Limited, NTPC
Limited & Oil & Natural Gas Corporation Limited – have also received ‘Maharatna’
status.

6
 SAIL manufactures the widest spectrum of steel products in the country,
covering hot and cold rolled sheets and coils, galvanised sheets, electrical sheets,
structurals, railway products, plates, bars and rods, stainless steel and other alloy
steels. The products of the company are used in several sectors, encompassing
construction, engineering, power, railway, automotive and defence industries
apart from catering to the export market.

 SAIL has established a country wide marketing network with 37 branch sales
offices, 24 customer contact offices and 65 warehouses. It also extended its
distribution network through its dealers. As on Apr 1, 2009, SAIL’s distribution
network covered 625 districts of the country with over 2,500 dealers in place

7
To be a respected world class Corporation and the leader in Indian steel business in
quality, productivity, profitability and customer satisfaction.

 We build lasting relationships with customers based on trust and mutual benefit.
 We uphold highest ethical standards in conduct of our business.
 We create and nurture a culture that supports flexibility, learning and is
proactive to change.
 We chart a challenging career for employees with opportunities for advancement
and rewards.
 We value the opportunity and responsibility to make a meaningful difference in
people’s lives.

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9
 INTEGRATED STEEL PLANTS

 BHILAI STEEL PLANT (BSP) IN CHHATTISGARH

 DURGAPUR STEEL PLANT (DSP) IN WEST BENGAL
 ROURKELA STEEL PLANT (RSP) IN ORISSA
 BOKARO STEEL PLANT (BSL) IN JHARKHAND
 IISCO STEEL PLANT (ISP) IN WEST BENGAL

 SPECIAL STEEL PLANTS

 ALLOY STEELS PLANTS (ASP) IN WEST BENGAL

 SALEM STEEL PLANT (SSP) IN TAMIL NADU
 VISVESVARAYA IRON AND STEEL PLANT (VISL) IN
KARNATAKA

 SUBSIDIARY

 MAHARASHTRA ELEKTROSMELT LTD.

10
 OTHER UNITS

 SAIL Consultancy Division (SAILCON)

 R&D Centre for Iron and Steel
 Centre for Engineering & Technology
 Management Training Institute
 Raw Materials Division
 SAIL Safety Organisation
 Central Marketing Organisation
 Growth Division
 Central Coal Supply Organization (CCSO)
 Environmental Management at SAIL
 Central Power Training Institute

JOINT VENTURES

SAIL has promoted joint ventures in different areas ranging from power plants to e-
commerce:-

 NTPC-SAIL POWER SUPPLY COMPANY LIMITED

 BOKARO POWER SUPPLY COMPANY LIMITED
 SAIL & MOIL Ferro Alloys Pvt. Ltd.
 METALJUNCTION.COM PRIVATE LIMITED
 BHILAI-JAYPEE Cement Ltd.
 BOKARO-JAYPEE Cement Ltd.

NTPC-SAIL POWER SUPPLY COMPANY LIMITED

11
Set up in March 2001, this 50:50 joint venture between SAIL and the National Thermal
Power Corporation (NTPC) operates and manages the Captive Power Plants-II of the
Bhilai, Durgapur and Rourkela Steel Plants which have a combined capacity of 314
MW.
BOKARO POWER SUPPLY COMPANY LIMITED
This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in
January 2002 is managing the 302-MW
power generation and 1880 tonnes per hour steam generation
facilities at Bokaro Steel Plant.
SAIL & MOIL Ferro Alloys Pvt. Ltd.
This 50:50 joint venture between SAIL and the Manganese Ore (India) Limited for
production of Ferro Manganese and Silicon-Manganese at Bhilai with furnace operation
at Nandini / Bhilai.
METALJUNCTION.COM PRIVATE LIMITED
A joint venture between SAIL and Tata Steel on 50:50 basis, the company promotes e-
commerce activities in steel and related areas.
BHILAI-JAYPEE Cement Ltd.
Joint venture Company with Jaiprakash Associates Ltd. in the equity ratio of 26:74 to set
up and operate a cement plant of 2.2 million tonnes capacity, utilizing generated slag
during blust furnace operations at BSL, Bokaro.
BOKARO-JAYPEE Cement Ltd.
Joint venture Company with Jaiprakash Associates Ltd. in the equity ratio of 26:74 to set
up and operate a cement plant of 2.1 million tonnes capacity, utilizing generated slag
during blust furnace operations at BSL, Bhilai.

12
 POSCO – To establish strategic alliance for cooperation in a wide range of business &
commercial interest areas. Pursuant to this, another MOU has been signed for joint venture
initiative in the area of (a) manufacture & commercialization of CRNO; & (b) Exploration of
upstream & downstream opportunities in utilizing FINEX technology by both the
companies. 
 Rashtriya Ispat Nigam Ltd. (RINL) - To jointly explore and develop low silica limestone
mines in the Sultanate of Oman.

 Shipping Corporation of India Ltd (SCI) – To set up a joint venture which will provide shipping-
related services to SAIL for imported coking coal and also participate in worldwide dry bulk
shipping trade

 Government of Kerala (GOK ) – To revive the existing facilities at Steel Complex Ltd in

Calicut owned by the state government, and also set up, develop and manage a TMT rolling
mill of 65000 MT capacity along with balancing facilities and auxiliaries.

 Larsen & Toubro Ltd (L&T) – To jointly set up, develop, manage and own captive/independent
power plant(s) at suitable location/s to meet future power requirements of SAIL including
opportunities to own captive thermal coal blocks to cater to the power plants’ requirements.

 Mineral Exploration Corporation Limited (MECL) – To undertake exploration in SAIL mines.

Total exploration required in Iron ore and flux mines is estimated to be over 1 lakh metres to be
planned over a period of 5 years.

 M/s Heavy Engineering Corporation (HEC) for equipment/spares required for

modernization/expansion.
 M/s Bisra Stone Lime Co. Ltd. (BSLC) for dolomite
 Indian Railways for procurement of high power locomotives.

 Bangalore-based Bharat Earth Movers Limited (BEML) for supply of crucial equipment.

13
 Rajasthan State Mines & Minerals Limited (RSMML) for long-term supply of low-silica
limestone

 IIM, Ahmedabad and Management Development Institute (MDI), Gurgaon for knowledge
sharing.
 M/s Siemens Ltd. for manpower training.

 Military Engineering Services (MES) and Married Accommodation Project (MAP) of

Ministry of Defence, Govt. of India for long-term supply of construction steel.

 National Mineral Development Corporation (NMDC): To jointly develop limestone mine at

Arki located in Solan district of Himachal Pradesh with envisaged production capacity of 3
million tons per annum.

 Kobe Steel Limited (KSL), Japan: To explore the technical & economic feasibility of ITmk3
technology for producing premium grade iron in the form of nuggets.

14
Products Applications
HR Coils LPC cylinders, automobile, railway wagon
chassis and all types of high strength needs

Plates Pressure vessels, ship building and engineering

structures, space programmes
Special Plats Different defense applications building of tanks, bullet
Proof steel, etc.
Chequered Plates Flooring and staircases in the inductrial sectors
and railway platforms , etc
CR Sheets & Coils Steel furniture , white goods…refrigerators,
washing machines, automobile bodies, railway
coach paneling , drums, barrels, deep drawing
and extra deep drawing. etc.
Galvanised Sheets Roffing, paneling, industrial sheeting , air
condition ducting and structural
Electrolytic Tin Containers for packing of various products
Plates including edible oils, vegetables and
confectionery items
Silicon Steel Sheets & Small generators, starters for high efficiency
Coils rotating equipment and relays, etc.
SW Pipes High- pressure transportation of crude oil,
natural gas and slurry transportation, water
supply, sewage disposals, grain silos, civil
engineering pilings, etc.
ERW Pipes High pressure transportation of oil and water,
sewage disposal, tube wells, etc.

15
16
ISO 9001:2000 certified Central Marketing Organisation ( CMO ) is India’s largest
industrial marketing set-up. It markets carbon steel produced by the five integrated
steel plants of SAIL. Headquartered in Kolkata, it transacts business through its
network of 37 Branch Sales Offices spread across the four regions, 25 departmental
Warehouses equipped with mechanised handling systems, 42 Consignment Agents and
26 Customer Contact Offices. CMO’s domestic marketing effort is supplemented by its
ever widening network of rural dealers who meet the demands of the smallest
customers in the remotest corners of the country. With the total number of dealers
crossing 2,000, SAIL's wide marketing spread ensures availability of quality steel in
virtually all the districts of the country. CMO through its joint venture partner M/s
Metal Junction has simplified steel buying by providing net based facilities through its
on line ‘e store’, providing door delivery facilities to small house-builders.

17
In order to tap the rural potential for Steel consumption, it is essential to reach the
materials to the nearest consumption point. It is also necessary to communicate the
advantages of Steel over other competitive products. RM & DC established wide
distribution network of around 2500 dealers for promoting usage of SAIL branded
products like TMT and GP/GC sheets. The strong dealer network is enabling SAIL to
market its products at the pre determined price (MRRP) to small consumers like house-

18
builders, and small contractors in smaller lots and in processed condition. Proximity at
the doorstep helps these consumers in availing simpler commercial transactions, faster
settlement of quality complaints, if any and other after sales service. Materials are
marketed at the same price through out the State. In order to improve the visibility of
our Company and branded products various activities have been designed / used for
promotional activities like backlit boards, MRRP boards, various banners, promoting
and usage of SAIL products, organizing masons and structurals /engineers meet to
promote usage of steel. In addition, promotional activities like small clippings in TV,
advertisement in newspapers and magazines, circulation of pamphlets, product
catalogues and outdoor promotional activities like wall painting, hoarding etc are
regularly undertaken by the dealers for which the design and the technical support etc
are being provided by RM&DC.
In order to encourage, maximize sales and other promotional activities Dealers
Conference is also being conducted. To encourage the competition amongst the dealers
awards are also being given for regular sales to small customers, creation of additional
clientele for SAIL products, creation of new segment, house keeping of the dealers
godown /office and the promotional activities undertaken by the dealers. These awards
are given in Annual Conference which
is normally organized in the first month of financial year. Regular interactions are being
conducted with the dealers and also trainings are imparted by organizing interactions
and visits by dealers to steel plants, regional offices etc to impress upon the advantages
of our products over competitive materials.
The dealership network has started in the year 2004-05 with 200 nos of dealers which
spread out to 99 districts, has grown to around 2500 dealers covering all the districts of
country. Currently we are marketing around 40000 tonnes a month through this
dealership network.

19
20
21
22
23
 Date ER WR SR NR TOTAL
1.4.06 108 26 8 58 200
1.4.07 223 146 99 185 653
1.4.08 509 539 313 536 1897
1.4.09 579 691 475 661 2406

EAST TOTAL WEST TOTAL

ORISSA 86 GUJRAT 71
WEST BENGAL 150 CHATTISGARH 41
SIKKIM 0 MAHARASTRA 186
BIHAR 114 GOA 4
JHARKHAND 43 DAMAN & DIU 4
ARUNACHAL PR. 28 M.P 73
ASSAM 63 DADAR & NAGAR HAVELI 0
MANIPUR 14 RAJASTHAN 90
MEGHALAYA 14 TOTAL 476
MIZORAM 10
NAGALAND 17
TRIPURA 10
TOTAL 550

NORTH TOTAL SOUTH TOTAL

UTTAR PRADESH 240 TAMIL NADU 140
CHANDIGARH 5 ANDAMAN & NICOBAR 1
HIMACHAL PRADESH 49 KERELA 35
DELHI 39 LAKSHAWADWEEP 1
HARYANA 116 PONDICHERRY 8
UTTARANCHAL 14 KARNATAKA 50
PUNJAB 57 ANDHRA PRADESH 109
JAMMU & KASMIR 21 TOTAL 344
TOTAL 543

24
To intensify publicity of the SAIL (company/ Brand) image, and maximise
sales of SAIL branded products, appointment of Exclusive Dealers from the
existing dealers has been envisaged in selected branches. The basic
objectives in the appointment of Exclusive dealers can be broadly defined
as under:
1. To encourage sales of SAIL Branded items.
2. To derive wide publicity for the Company/ Brand, through uniform
design of these outlets etc., with an emphasis on “TOP OF THE MIND
RECALL” and immediate association of SAIL with good
quality Steel.
3. To encourage and motivate these dealers who had placed emphasis
on achievement of company’s objective of retailing and reaching
materials to the doorstep of the user in the hinterland.

The total no. of exclusive dealers as on date is sixty eight, who have
been selected based on parameters such as past performance, facilities,
publicity and promotional undertaken by them to increase
Company’s Brand image etc.

25
Important For Dealer’s

1. AWARENESS: Effective product specific & segment specific, carefully

conceived promotional campaigns to targeted audience. E.g. the common
man should know why he should go for SAIL TMT only. Plus training
programmes for dealers.

2. APPEARANCE: This in the larger sense covers not only the aesthetic
part which plays a role in the retail, but also well defined and controlled
parameters on product quality aspects (intrinsic as
well as extrinsic) . E.g. for TMT it would include embossing, controlled wt
tolerance, length, method of bundling, tagging also. In addition it would
include more value added services.

3. ACCESSIBILITY: Which in the larger sense also includes not only

availability of full range of sizes for the retail buyer but also the end buyer
should know where and how to obtain the product with maximum
convenience. System for ensuring such delivery mechanism would be a
part of this aspect. It could
start from a toll free no. to guide the buyer. Presence of sound dealers in
every district and towns would be a step in this direction.

26
Global crude steel production reached 1220 million tonne in 2009, a decline of 8 per cent over
2008. China was the largest crude steel producer in the world with production reaching 567.8
million tonne, a growth of 13.5 per cent over 2008. India once again emerged as the fifth largest
producer in 2009 and recorded a growth of 2.7 per cent as compared to 2008, the only other
country in the top 10 bracket to register a positive growth during 2009. India also emerged as the
largest sponge iron producing country in the world in 2009, a rank it has held on since 2002. If
proposed expansions plans are implemented as per schedule, India may become the second
largest crude steel producer in the world by 2015-16.

RAN World crude steel production in Production (million

K 2009* tonne)
Country
1 China 567.8
2 Japan 87.5
3 Russia 59.9
4 US 58.1
5 India 56.6
6 South korea 48.6
7 Germany 32.7
8 Ukraine 29.8
9 Brazil 26.5
10 Turkey 26.3
Source: World Steel Association; *=Provisional

27
28
Global competition is heavy. SAIL's production of steel accounted for less than .
2% of the world's total production in 2007

Comparison of Steel Production Worldwide, 2007[9]

Tangs
Tata Wuha
Nipp Jua han Nu
JFE Steel Ans U n Iron
on ngs Iron co
Arcelo Steel PO Bao Limit han S & S
Steel u & r
rMitta (TYO SC stee ed - St Steel AI
(TYO Sha Steel (N
l (MT) :5411 O l (TAT Ben ee (SHA: L
:5401 gan (SHE: U
) ASTL xi l 60000
) g 00070 E)
-BY) 5)
9)
Crud
e
Steel
Prod 31. 28. 21 13
116.4 35.7 34 26.5 23.6 22.9 22.8 20.2 20
uctio 1 6 .5 .9
n
(mm
t)
Rank 1 2 3 4 5 6 7 8 9 10 11 12 19

29
India is the fifth largest producer of steel in the world. India Steel Industry has grown by leaps
and bounds, especially in recent times with Indian firms buying steel companies overseas. The
scope for steel industry is huge and industry estimates indicate that the industry will continue
will to grow reasonably in the coming years with huge demands for stainless steel in the
construction of new airports and metro rail projects. The government is planning a massive
enhancement of the steel production capacity of India with the modernization of the existing
steel plants

Industry Statistics:-

Government targets to increase the production capacity from 56 million tones annually to 124
MT in the first phase which will come to an end by 2011 - 12. Currently with a production of 56
million tones India accounts for over 7% of the total steel produced globally, while it accounts to
about 5% of global steel consumption. The steel sector in India grew by 5.3% in May 2009.
Globally India is the only country to post a positive overall growth in the production of crude
steel at 1.01% for the period of January - March in 2009.

Export:-

About 50% of the steel produced in India is exported. India's export of steel during April -
December 2008 was 64.4 MT as against 9.7 MT in December 2007. In February 2009, steel
export increased by 17% to 12.6 MT from 10.8 MT in the same month last year. More than 50%
of steel from India is exported to China. The Government's decision to reduce export duty on
iron ore lumps from 15% to 5% has given a major boost to the export of steel.

30
India is currently the fifth largest steel-producing nation in the world with
production of over 54 million tonnes (MT). However, it has a very low per
capita consumption of steel of around 46 kgs as against an average of 198
kgs of the world. This wide gap in relative steel consumption indicates that
the potential ahead for India to raise its steel consumption is high 

The demand for steel is denoted by consumption of finished steel. There

has been no decline in consumption of finished steel in the country during
the last three years. Data on consumption and production of finished steel
in the country during the last three years are given below:

the details of import of finished steel in the country during the quarter
April – June, 2010 are given below:

Finished Steel (in million tonnes)

Year Consumption Production
Quantit % change Quantity % change
y
2007-08 52.12 11.4 56.08 6.8
2008-09 52.35 0.4 57.16 1.9
2009-10* 56.48 7.9 59.69 4.4
Source: Joint Plant Committee (JPC); *=provisional

31
 Period Finished Steel Import ( in million tonnes )
April-June 2.76
2010*
April-June 1.52
2009*
% change 81.6
The Source: Joint Plant Committee (JPC); * = provisional
reason for increase in imports of steel is that the growth in consumption of
steel has been increasing at a much higher rate than the growth in
production. In the quarter April – June, 2010, production has grown at a
relatively lower rate of 3.7% than consumption which has grown at 12%.
India's steel demand maintained stable growth during the crisis and is
expected to grow by 13.9 per cent and 13.7 per cent in 2010 and 2011
respectively, after 7.7 per cent in 2009. In 2011, India's apparent steel use
will reach 71.6 million tonnes. 

YEAR CONSUMPTION
2004-05 35 KG
2007-08 44 KG
2020 155 KG

32
33
Indian Steel Industry (Key Data Analysis)

Quarter Year TTM

Compan Sales Net Market P/E Sales Net Sales Net

y Profit Cap Profit profit
Name
Steel 45 237507. 17582.5 245896.3 43756.8 3624.6 208399. 13247.6
7 9 7 1 4 4 2 3
Large- 28 159018 15267.2 156935.5 9.5 29669.9 3073.3 143586. 11736.8
steel 2 1 1 4 6 9 2

Industry Segment Analysis

34
TOP FIFTEEN FIRMS OPERATING IN INDIA (MARKET CAP WISE) :-

35
PRODUCT MIX:-

Item 2008- 2010-11

09
Semis 18.4 0
Rounds/Bars 10.2 23.3
Coated Products 2.8 4.8
CR Coils/Sheets 8.7 10.4
Structurals 5.5 15
Rly. Materials 8 7.4
HR Coils / Sheets 24.1 22.1
Plates 20.5 16.4
Product Distribution
Pipes
(2008-09)
0.5 0.6
21% 1% 19%
Semis
Rounds/Bars
Coated Products
10% CR Coils/Sheets
Structurals
Rly. Materials
HR Coils / Sheets
3% Plates
24% Pipes
8% 9%
6%

36
 Segment Growth (%)
Real Estate 12.6
Housing 12.1
Commercial 23.6
Infrastructur 13.8
e
Industries 24.4

Growth (%)

15%

28%
Real Estate
Housing
14% Commercial
Infrastructure
Industries

16%

27%

37
 …Key to Rural Reach

Dealership…
A Business established or operated under an authorization to sell or distribute a company’s goods
or services in a particular area.

Dealer…
Any person who carries on business in purchasing, selling, supplying, or distributing goods and
also includes contractor, company, co-operative society, broker, commission agent, auctioneer or
any other mercantile agent for the consideration of cash, commission and deferred payment.

• Most significant impact on convenience

• 5,500+ modern trade stores by 2010

• Accounts for 10% of India’s FMCG

• 30% of metro FMCG

38
 • To provide boost for ‘Faster Growth’

• Modern trade stores increasing at a CAGR of 15% in last 5 years

• To make Steel available at the closest possible proximity of user

• Branded Products… Popularise & Promote
• Reaching materials at customers’ site
• ‘Shahar Se Gaon Tak’
• Increase reach.
• Easy Transactions
• Convenience
• Smaller Lots
• Increase NSR
• Improve Visibility

STATUS……

Date
…May, 2008 region-wise performance

39
 TOTA
L 1,851 1,120 662 458 731

• Dealer’s margin
• Monthly incentives
• Yearly incentives
• 15 Days IFC or cash incentive thereof
• INR 100/tonne as promotional incentives

• 2 Years
• Extendable by a year
at-a-time

 Delivery at dealer’s go-down

 Backlit Boards
 MRRP Boards
 Banners
 Gifts
 Product Catalogues

40
 Masons’/Structural Engineers’ &
Architects’ Meet
 Technical Assistance
 TC
 Settlement of QC
 RTGS Payment
 Artworks for Press, electronic media, and outdoor advertisement

 Logistic bottlenecks
o Challenges in transportation
o Availability of all sizes
o Materials not reaching destination
o Unloading at Site
 Maintenance of MRRP.
 Popularise Steel usage.
 Promotional activities.
 Packaging/ Bundling.

41
 Supplies in small lots/bundles
 Frequent meetings with masons, Structural Engineers & Architects
 Visit of dealers to steel plants
 Dedicated transporters for Door Delivery
 Minimum two operating dealer in a district
 Maintain regular stocks of dealer items
 Wall painting…
Population >10,000: 11,618
Population >5,000: 69,135
 Hoardings…
Population >25,000: 3064
 Electronic…
Population >20,000: 1516
 Deep channel penetration
 Sophisticated and ethical service
 Regional marketing approach
 Rural centric marketing promotions by 2009…
Urban household expected to grow 4%
Rural household expected to grow 11 %

42
Singhi Brother’s :- Singhi Brother’s is a exclusive dealer of SAIL products in northern
zone of India. They started their dealership in year 2007. Mr. Navin singhi is responsible
for major decisions of this company. They progressed really well in this competition
market with the cooperation of SAIL.
His major requirements of products of SAIL are as follows:-
GP Sheets, GC Sheets, GP Coils, TMT Bars, Structural’s like Angles, Channels etc.
Demand of SAIL products are all over India. But they supply products only 2 eastern
region consumers of All over Bengal, Bihar, Grams of Urisa, Asam and other direct
consumers of Howrah & Kolkata. Now a days competition in the steel market is really
high. But Mr. Navin said that there is no direct competition of SAIL product with other
major players its because of the product difference of SAIL with the other player in
thickness, Quality and Brand value. He is satisfied with the quality of steel provided by
the SAIL & added yes the quality is much better than past years. As a Dealer his
primary target is to achieve minimum target of 5000 ton/year. SAIL provides different
type of advantage to its dealers. SAIL provides 15 days IFCI to its dealers & 30 days
IFCI to its exclusive dealer’s because still In India iron & steel industry hugely depends
on “vayada Byapar”. SAIL also provides Marketing support to its dealer’s & provide
Rs.100/Ton for the advertisement & marketing of its product & dealer’s.
But Singhi Brother’s spends Approximately around Rs.12,00000 for the advertisement &
promotion of products. In which around Rs.500000provided by SAIL.

SAIL provides Door Delivery to its dealer’s & expect the same from dealer’s also that
they’ll provide free door delivery to its consumer’s. In order to get the product Dealer
needs to place a Demand order almost 1 month before the delivery required. SAIL
collects all the products from different plants of Bokaro, Durgapur, Bhilai to its Dankuni
Stock yard. Then they inform the dealer’s that these products are available for the

43
dealer’s. then dealer have to pay for the required product & then in few days time
products are delivered to the doorstep of dealers.

But he has one complain with this system is that if in the few days gap of payment &
product delivery if product prices rise then they have 2 pay for the hike in price also.

He is happy with the SAIL, because he don’t need to make big efforts to SAIL products .
SAIL has its own loyal consumer base & market demand because this is the biggest steel
producer of India & have a good brand name. but still competitions in the market is
really tough & as a whole the market share is going Down 4 last few years. The closest
competitors of SAIL are TATA, RINL, JINDAL & BHUSAN Industries. He said
everyone knows the future prospects of Retail steel market of India. Future of retail
steel is really bright due to high growth rate of India & increasing demand of product in
construction segment. From Past years the market growth is approx 10%
But its expected to grow in much higher rate in near future.

He takes 600 tons of steel per month. In which he takes

GP SHEETS/GC SHEETS/GP COILS---------- 300 TONS/MONTH
TMT BAR---------- 250 TONS/MONTHS
STRUCTURALS------------50 TONS/MONTH

The Market demand is not constant, Its peak time is between the month December-May
& June-November the market demand is just normal or less than that. But this loss is
compensated in peak time. Still dear’s gets the profit margin of 1% of even less but still
its satisfactory.

44
TATA STEEL LTD. –

Tata Steel formerly known as TISCO and Tata Iron and Steel Company Limited, is the
world's seventh largest steel company, with an annual crude steel capacity of 31 million
tonnes. It is the largest private sector steel company in India in terms of domestic
production. It is part of Tata Group of companies. Tata Steel is also India's second-
largest and second-most profitable company in private sector . Its main plant is located
in Jamshedpur, Jharkhand. Tata Steel has set an ambitious target to achieve a capacity
of 100 million tonne by 2015. 
TATA Steel has an integrated steel plant, with an annual crude steel making capacity of
6.8 million tonne, located at Jamshedpur, Jharkhand. The crude steel production of
TATA Steel during the period April-December 2009-10 is 4.86 million tonne which is
higher by 18.6% over the production of 4.105 million tonne last year. The saleable steel
production was at a higher level during the period April-December 2009-10 (3.717
million tonne) compared to the corresponding period last year (3.310 million tonne).
As part of the Brownfield expansion project, TATA Steel has commissioned H Blast
Furnace in May 2008, Caster #3 in October 2008 at the steel melting shop #1 and up
gradation of Hot Strip Mill roughing mill as part of 1.8 million tonne growth plan to
reach capacity of 6.8 million tonne. TATA Steel is continuing with its programme of
expansion of hot metal and steel making capacity by 3 million tonne to reach 10 million
tonne.
 Crude steel capacity as on March 31, 2009: 6.8 million tonne (Jamshedpur works)
 Tata Steel has also envisaged massive expansion of its capacities through various
greenfield projects at Sarai Kala (Jharkhand), Kalinganagar (Orissa) and Bastar
(Chhattisgarh).

45
  PRODUCTS
 Hot and cold rolled coils and sheets
 Galvanized sheets
 Tubes
 Wire rods
 Construction re-bars
 Rings
 Bearings

 The products are targeted at automobiles, white goods, construction and

infrastructure markets.

BRANDS
46
In an effort to de-commoditize steel, the company has introduced brands like:

 Tata Wiron (wire rods for farming and fencing segment)

 Tata Steelium (cold rolled steel for auto ancillaries and the general
engineering segment
 Tata Shaktee (corrugated galvanized sheets for rural house builder
segments)
 Tata Tiscon (re-bars for individual house-builder semi-urban segment)
 Tata Pipes (pipes for individual house builder and farming segments)
 Tata Bearings (bearings for original equipment manufacturer and
replacement market)
 Tata Agrico (agricultural equipment for farming and construction
segment).

47
 Unlike SAIL, TATA has a different distribution channel. Tata appoints distributors not
dealers and a distributor has a territory under him.
A territory consists of several districts .Like in a district there are some distributors
appointed and every distributor operates from that district can appoint many dealers
in His district. It is the distributor who appoints the dealers and there are various
factors that are taken into consideration while appointing a dealer. Along with
financial status, business background, location is a very important factor. Before
appointing it is ascertained through a survey about the demand in that region and if
necessary then a dealer is appointed.
There are pros and cons to every distribution network but it is important for an
organisation to identify which is a viable option and which will bear fruits for the
organisation. For eg. few pros and cons of these distribution channels.

PROS OF TATA’S DISTRIBUTION CHANNEL

If a distributor is appointed then it is the distributor's responsibility to increase profitability and

sustainability thereby increase sales and revenues. A distributor will always think of his own
profit and thereby continuously thrive for increase in sale through the dealers. These
distributors will always appoint a dealer who is already in this business for a certain period of
time and would definitely not give a dealership who is naive in this field because a distributor
will always look into its own profitability.

CONS OF TATA’S DISTRIBUTION CHANNEL

There is personal rivalry or problems that lead to failure of customer retention. For Example
TATA'S distributor in Kolkata had appointed a dealer who has the maximum potential in this
sector and was a distributor for TATA for a long time but due to some personal grudges the
dealer left TATA'S dealership and presently dealing in the secondary market. Now this is not
only a loss for the Distributor but also for TATA.

48
TATA STEEL DISRIBUTION NETWORK

49
50
Tata Steel has redefined steel retailing in India through its retail value management
(RVM) initiative launched in 2002. The initiative has changed the dynamics of a
disorganised retail sector and proved that steel can be retailed in an organised manner.
RVM has pushed Tata Steel to the leadership position in branded steel with a pan-India
presence. Subsequently, during the last three years, the country has witnessed the
emergence of a large number of local brands, especially for reinforcing bars and GC
sheets.

Background

In 2003, Indian steel consumption was around 32 million tonnes per annum and it was
broadly classified as flat products (hot and cold rolled sheets and coils) and long
products (reinforced bars also referred to as rebars, structurals and wire rods).
Steel companies, both in the public and private sector, were targeting consuming
industries such as automotive, construction, durable appliances, packaging, LPG
cylinder making, fabrication, Railways and general engineering.
Though Tata Steel acknowledged the presence of millions of small retail steel
consumers in rural and urban markets, still it never thought that these groups could be
reached directly.

51
Only in 2000-01, structured retailing was identified as the key marketing and sales
initiative. Developing a retail network to reach this large number of consumers and
support it by brand building efforts was the first step.

Problems and opportunities

In urban and semi-urban areas, the consumers bought small quantities of steel for
building houses and volumes would vary from one to three tonnes. In the rural sector,
consumers needed galvanised corrugated sheets for roofing application and their
average requirement is 50-100 kg.
However, steel producers had no mechanism to reach this market located at the
hinterland of the country. As a result, a large number of intermediaries thrived as they
were meeting the demands of the small consumers.
In 2000, Tata Steel branded two products — reinforcement bars (rebars) for construction
in urban areas and galvanised corrugated (GC) sheets for roofing applications in rural
housing - for retailing. While the rebars were called Tata Tiscon, the GC sheets were
named as Tata Shaktee.
A two-tier channel structure consisting of distributors and retailers were set up.
Customer Account Managers within Tata Steel controlled the distributors, who in turn
managed the retail network.
However, the managers were hardly aware of the market dynamics. They had little
confidence in the ability of the channel to absorb additional volumes.
Distributors depended heavily on wholesalers as they had virtually no contact with the
retailers. As a result, the wholesalers controlled the market and dictated the prices.
The channel functioning was opaque and the system was riddled with speculative
trading. During month-ends the company faced tremendous demand for discounts.
Tata Steel did not have a comprehensive database to control the functioning of this
channel. So, it failed to assess the quality of the retail network in terms of its coverage
and capacity to absorb volumes.
Lack of control led to unethical practices at retail points. Some retailers used the Tata
Steel brand to increase footfalls but pushed other manufacturers' products.

52
The marketing initiative
To get rid of these problems, Tata Steel launched Retail Value Management (RVM) in July
2002. The purpose was to redefine the concepts of retailing in steel, upgrade the retail network
by focusing on each stakeholder in the value chain and to bring about transparency in retail
operations.

The RVM initiative was implemented by a special team comprising specified CAMs.
Each manager was made responsible for the sales of a particular territory.
Since each distributor and each CAM across the country was to be covered, the
initiative took around three years to complete.
The RVM team was asked to visit all points of the channel and the entire retail chain to
ensure products on offer are chosen by the consumer. On the other hand, the channel
had to develop the capacity and motivation to sell higher volumes as per the market

share objectives of the respective brands.

53
Analysis of results

During 2002-05, RVM initiative was successfully completed with 28 distributors of Tata
Shaktee and 21 distributors of Tata Tiscon.
The retail network was expanded to reach 3,500 retailers in Tata Shaktee and 1,100
retailers in Tata Tiscon. Since its launch in 2001, Tata Steel stated Tata Shaktee has
emerged as the largest selling GC retail brand at 27 per cent market share in the
country.
Jindals with a market share of 15 per cent is placed second.
Bhushan Steel with 12 per cent market share is third. In the rebars category (both
institutional and retail markets), Tata Tiscon has the highest sales in the country at
750,000 tonnes per year with the nearest competition at 700,000 tonnes per year.

54
JSW STEEL LTD. –

JSW Steel Ltd. is one among the largest Indian Steel Companies in India today with
capacity of 7.8MT. India’s second largest steelmaker, JSW Steel Ltd. consists of the most
modern, eco-friendly steel plants with the latest technologies for both upstream &
downstream processes. JSW Steel Ltd. has received all the three certificates:

ISO:9001 for Quality Management System

ISO:14001 for Environment Management System
OHSAS:18001 for Occupational Health & Safety Management System

JSW Steel, Vijayanagar Works :

JSW Steel is a 6.9 Million Tonne Per Annum (MTPA) integrated steel plant, having a
process route consisting broadly of iron ore beneficiation - pelletisation - sintering -
coke making - iron making through blast furnace, as well as Corex process which
entails steel making through the following process route: BOF-continuous casting of
slabs - hot strip rolling - cold rolling mills. The Brownfield expansion plan of the
Vijayanagar plant is in progress and is likely to be completed by 2010, with a total
installed capacity of 9.6 MTPA.

JSW Steel, Tarapur and Vasind Works :--

JSW Steel Tarapur and Vasind Works specialise in down-streaming facilities which
include: 1.0 MTPA cold rolling, 0.9 MTPA Hot Dip Galvanising (HDG), 0.1 MTPA

colour coating, 0.1 MTPA CRCA products and 0.3 MTPA hot rolled plates capacity.

55
Steps taken by JSW to capture retail market

JSW Shoppe is an exclusive steel outlet of the company and will have on display and
sale all the products of JSW Steel ranging from hot rolled to colour coated steels along
with long products.

JSW Steel has inaugurated its 4th JSW Shoppe in Mumbai on 22 march 2010. through
their authorized dealer K.Amishkumar Trading Pvt.Ltd at Ghatkopar (East).

J.K.Tandon, Director (Projects), JSW Steel, inaugurated the JSW Shoppe. He said that
"The concept of the Shoppe originates from the fact that we want customers to get the
right quality of product at the right price and at the right place. Shoppe is an effort to
create a customer friendly ambience. This interface with the customer will result in
creating a strong relationship based on trust and reliability with JSW steel. At JSW
Shoppe a customer can get everything in steel under one roof."

JSW Shoppe is an exclusive steel outlet of the company and will have on display and
sale all the products of JSW Steel ranging from hot rolled to colour coated steels along
with long products. It aims to provide a unique experience of buying steel products
through a branded distribution channel. This novel marketing initiative will go a long
way in creating brand awareness about JSW Steel’s superior product quality and will
ensure that the customers get full value for money.
By March end, JSW Steel will have Forty shoppes in North, Sixty-five in West, Eighteen
in East & thirty-nine in South Region.
JSW steel is in the midst of an exponential growth. Its steel plants in Karnataka and
Tamil Nadu together produce around 7.8 million tonnes of steel per annum. With steel
plants coming up in West Bengal and Jharkhand, JSW Steel aims to produce 32 million
tonnes of steel by the year 2020.

56
Highlights 2009-10 (Standalone)

• Crude Steel Output up by 61% to 5.987 million tonnes

• Saleable Steel up by 67% to 5.72 million tonnes
• Gross Turnover up by 28% to Rs. 19,457 crores
• Net Turnover up by 30% to Rs. 18,202 crores
• EBIDTA up by 55% to Rs. 4,806 crores
• PBT up by 316% to Rs. 2,820 crores
• PAT up by 341% to Rs. 2,023 crores
• Weighted average cost of Long Term Debt 8.02%
• Net Long Term Debt Equity Ratio 1.07
• Diluted EPS up by 367% to Rs. 105.94
• Equity Dividend: Rs. 9.50 per share

57
JINDAL STEEL & POWER LTD. –

Jindal Steel & Power Limited is one of the fast growing major steel units in the country.
Raigarh plant of JSPL has a present capacity of 1.37 MTPA sponge iron plant, 2.40
MTPA Steel Melting Shop (SMS), 1.0 MTPA Plant Mill, 2.30 sinter plant, 0.8 MTPA coke
oven and a 330 mega watt captive power plant. Capacity addition plan at Raigarh
Enhancement of the present steel capacity from 2.4 million tonne to 6.0 MT in a phased
manner by 2011 will incorporate:

 2.0 MT gas based Direct Reduced Iron (DRI) producing gas by coal gasification
 4000 cubic metre blast furnace
 3 MT steel melting shop with electric arc furnace route and thin slab caster.
 Hot strip mill (compact strip product technology)
 Cement plant to consume the blast furnace slag.
 4X135 MW power plant increasing the capacity to 840 Mega Watt (MW).

Jindal Steel and Power Ltd. has plans for expansion of its Raigarh plant to a capacity of
6.0 MTPA. It also has plans for two Greenfield projects in Orissa and Jharkhand with
proposed capacity of 6.0 MTPA each, in the first phase.

JSPL expanding horizons

Jindal Steel & Power Limited is setting up a 10 MTPA Pellet Plant at Barbil, Orissa
based on huge stocks of iron ore fines lying with various Iron Ore Mines in Orissa. The
first module of 5 MTPA is undergoing trial runs since January, 2010. This project aims
to conserve precious iron ore reserves of the country by converting unused fines into
pellets for usage in DRI production.

58
The Pellet Plant would be using producer gas derived from coal for its energy
requirement to keep its production cost contained and free from fluctuations of
petroleum based fuels. The Company has also commenced hot trials of its 0.6 MTPA
Wire Rod Mill at Patratu, Jharkhand where work on 1.0 MTPA Bar Mill is progressing
fast so as to commission this plant by October, 2010. Also the Company is setting up a
6 MTPA Steel Plant at Patratu.

59
ISPAT INDUSTRIES LTD. –

60
Ispat Industries Ltd. (IIL) has set up one of the largest integrated steel plants in the
private sector in India at Dolvi in Raigad district, Maharashtra, with a capacity to
manufacture 3 million tones per annum of Hot Rolled Steel Coils (HRC). The Dolvi
complex also boasts of an ultra modern blast furnace (set up by a group company Ispat
Metallics India Limited) capable of producing 2 million tones per annum of hot
metal/pig iron, 2 million tonne capacity sinter plant (newly commissioned) and a DRI
plant with a capacity of 1.6 MTPA. The integrated steel plant uses the Converter cum
Electric Arc Furnace Route (CONARC process) for producing steel. In this project, IIL
have uniquely combined the usage of hot metal and DRI (sponge iron) in the electric arc
furnace for production of liquid steel for the first time in India. For casting and rolling
of liquid steel, IIL has the state-of-the art technology called compact strip production
(CSP) process, which has been installed for the first time in India and
produces high quality and specifically very thin gauges of Hot Rolled Coil.

ESSAR STEEL LTD. (ESL) –

61
We are a fully integrated flat carbon steel manufacturer — from iron ore to ready-to-
market products with a current capacity of 8.6 million tonnes per annum (MTPA). With
our aggressive expansion plans in India, as well as Asia and the Americas, we aim to
achieve a capacity of 14 MTPA by 2011-12. Our products find wide acceptance in highly
discerning consumer sectors, such as automotive, white goods, construction,
engineering and shipbuilding.
Essar Steel is one of India's largest exporters of flat products, exporting to the highly
demanding US and European markets, and to the growing markets of South East Asia
and the Middle East.
A number of major client companies have approved our steel for their use, including
Caterpillar, Hyundai, Swaraj Mazda, the Konkan Railway, and Maruti Suzuki. Essar
Steel has acquired extensive quality accreditations. Our lean team gives us one of the
highest productivities and lowest manpower costs among steel plants internationally.
Distribution outlets: -
Essar Steel is the first steel company to set up an end user distrubution chain for steel
products under the brand name Essar Hypermart. It has a strong network of over 474
steel retail outlets. These outlets are conveniently located across the length and breadth
of the country to cater to the customized requirements of small and medium
enterprises.

The hypermarts offer a comprehensive range of flat steel products for a variety of
applications. Other product lines, like longs, structural, and tubular, are also being
developed to make Essar Hypermart a one-stop-shop for steel products.

Essar Steel, part of the diversified Essar Group, is planning to nearly double its retail
outlets that include both company-owned and franchise outlets and add third party
products in its stores, as part of its plans to focus more on retail sales.

62
The company, which has about 85 Essar-owned hypermarts and 300 franchisee-owned
outlets across the country, will be adding about 70 more hypermarts and 200 franchisee
outlets within a year. “Our initiative, the first of its kind in the domestic steel industry,
to have retail sales through company owned outlets has given us good results. Retail
sales at present account for about 25 per cent of our business,” Mr Vikram Amin, the
company's Executive Director (Sales and Marketing), said on Wednesday.
The primary objective of these outlets is to make available steel in smaller packages to
customers with quicker delivery, transparent pricing and customised quantities. The
hyper marts primarily cater to customers in the SME (small and medium enterprises)
segment, ranging from small manufacturers, local fabricators and engineering firms to
large corporations and construction companies.
Essar Steel has identified Andhra Pradesh as one of the potential markets in the
country, with plans to increase its network of hyper marts from the present five to six
and add about 15 Express marts (franchisee-owned outlets) in the State this year.
Andhra Pradesh accounts for about six per cent of Essar's total steel business.
In order to provide its retail customers with more choice of products, the company,
which mainly focuses on flat products, will be adding third party products such as
structural steel products, wire rods and pipes, in its outlets. Essar Steel plans to
complete the expansion of its Hazira plant from 4.6 million tonnes to 19 million tonnes
with an investment of $ 2.5 billion by 2010-end. “Even after the expansion, its retail
sales will have a share of about 25 per cent.

Strengths:

63
 1. Availability of iron ore and coal: India has abundance of iron ore, coal
& other raw materials required for iron & steel making. It has 4th
largest iron ore reserves (13 bn tons) in the world.
2. Abundance of quality manpower: It has 3rd largest pool of technical
manpower, next to United States & erstwhile USSR, capable of
understanding and assimilating new technologies.
3. Mature production base
4. Increased Demand

Weakness:

 Unscientific mining: SAIL is deficient in raw materials required by

the steel industry. Iron ore deposits are finite and there are problems
in mining sufficient amounts of it. SAIL's hard coal deposits are of
low quality

 Low Productivity: According to an estimate crude steel output at the

biggest Indian Steel maker is roughly 144 tonnes per worker per year,
whereas in Western Europe the figure is around 600 tonnes.

 Power shortages: Steel production in SAIL is also hampered by

power shortages.

 Inadequate infrastructure: Insufficient freight capacity and transport

infrastructure Impediments to hamper the growth of SAIL.
 Low R&D investments: There are inadequate investments in
infrastructure.
 Slow Decision Making
 Lack of advertisement
 Lack of investment

Opportunities:

1. Unexplored rural market: The Indian rural market remains fairly

unexposed to the multi-faceted use of steel.

2. Growing domestic demand: There is enormous scope for increasing

consumption of steel in almost all sectors in India.

64
3. Export Market Penetration: It is estimated that world steel consumption
will double in next 25yrs. Quality improvement of Indian steel combined
with low cost advantages will definitely help in substantial gain in export
market.

4. Consolidation: As global companies have realized the threat of excess

supply, they are looking at M&A (mergers and acquisitions) option to
retain market share and improve margins.

Threats:

1. Technological change: Technological changes force the industry

structure to change. In India where capital itself is costly, technological
obsolescence is a major threat.

2. Price sensitivity & Demand volatility: The demand for steel is derived
demand and the purchase quantity depends on end-use requirements.
The traders are price sensitive and buy when there are discounts.

3. Dumping of steel by developed countries: High quality products for

developed countries available for imports at competitive prices.
4. Threat From Substitute

5. Entry of big players like Arcelor Mittal, Jindal Steel etc.

6. Secondary market eating up a large market share.

We expect the demand for steel will continue to grow due to impressive growth in most
of the key sectors such as Infrastructure, Construction, Auto, Steel Tubes and pipes,
Transportation. The steel firms are also now getting orders from technology intensive

65
industries such as Petrochemicals, Fertilizers, Bangalore Metro projects and new
airports, which are being constructed in various part of the country. Now with
increased demand for oil in emerging countries, steel would be a key inputs to leverage
transportation so that oil can be transported cheaply over long distance. This will have a
positive impact on expected demand of steel related products (Tubes) in coming time.
With positive GDP, various government initiatives to bolster the demand and receding
recession in US and in EU, makes it an attractive sector.

The liberalization of industrial policy and other initiatives taken by the Government
have given a definite impetus for entry, participation and growth of the private sector
in the steel industry. While the existing units are being modernized/expanded, a large
number of new/Greenfield steel plants have also come up in different parts of the
country based on modern, cost effective, state-of-the-art technologies. Indian steel
players, now, concentrate on the global market as they know the trend of world market
of steel.
In India, there is high scope in retail
segment, in coming years the biggest challenge of Indian steel industry is to matches the
demand of Indian market. There is two types of retailing done in India, organized &
unorganized. Here the contribution of organized sector is only 5% where for
unorganized its 95%.this retail market is expected to grow about 12%per year. Retailing
is specially done by dealers, distributors, retail outlets. Higher the strength of
distribution channel helps to capture & penetrate large market share. So, most of the

steel companies try to strengthen their distribution networks. There is high opportunity
in the rural & urban market. The competition is growing day by day. In this situation
companies are targeting small consumers. SAIL got the largest distribution network but
the penetration of TATA is much more than SAIL network.

Finally, my project recommendation:-

66
More emphasis on BRAND Awareness, try to build a brand name for their product
unlike TATA did with product like TATA SHAKTEE, TATA TISCON etc.

More Advertisement required for building awareness of the products

Invest a huge amount in research and development in order to achieve the highest
degree of quality at the lowest price

Maintain the cost of raw materials as lowest as possible and to achieve the lowest cost
of final products

Export Market Penetration

It is estimated that world steel consumption will double in next 25 years. Quality
improvement of Indian steel combined with its low cost advantages will definitely help
in substantial gain in export market.

Packaging need to be improved as compare to competitors

WEB SITES USED:-

www.steel.gov.in
www.scribd.com/steel
www.sail.co.in
http://jpcindiansteel.nic.in
www.jpcindiansteel.nic.in

67
www.pib.nic.in.
www.steel.nic.in
www.newssteel.com
www.indianindustry.com
http://en.wikipedia.org/wiki/Sail
www.worldsteel.org
http://www.vizagsteel.com/
http://www.jsw.in/companies/company_JSWSteel.shtml
http://www.jindalsteelpower.com/
http://www.essar.com/section_level1.aspx?cont_id=eLiVfqUiZks=
http://www.ispatind.com/

ANNUAL REPORT (2009-2010) OF MINISTRY OF STEEL

ANNUAL REPORT (2009-2010) OF TATA STEEL
ANNUAL REPORT (2009-2010) OF SAIL

68