PREPARED FOR: MS.

MANJIRI DIGHE 

Steel industry is in its best position in last

decades  Demand expectations for steel products are rapidly growing.  Shares of steel industries are also in a high pace .  6th consecutive years of growth in supply and demand.  Many merger and acquisitions.  Steel production and consumption will be supported by continuous economic growth. 

Bokaro Steel Plant: Steel manufacturer.  Essar Steel: Producer of sponge iron, steel and iron ore pellets.  Jindal Iron & Steel: Producer of galvanized steel products.  Jindal Steel & Power: Manufacturer of mild steel slabs and sponge iron.  Steel Authority of India: Manufacturer of steel and iron.  Tata Steel: Producer and supplier of wire rods, bars, and steel flats.  Vizag Steel: Producer of pig iron and steel.

Indian Steel 
Till the 1990s the steel industry of India was regulated and controlled by government policies.  India has set a vision to be an economically developed nation by 2020. The steel industry is expected to play a major role.  After the economic reforms of the early 1990s, the Indian steel industry has evolved significantly to conform to global standards. Ideally, we should increase our steel production capacity ² we are a net importer of steel ² so that rather than exporting iron ore, we can add value to it. India should also look at investing in exploring new mines.

The major aspects that are expected to play a significant role in the growth of the steel industry in India are  Abundant availability of iron ore in the country  The country has well established facilities. The major sectors where consumption of steel is expected to grow in the coming years are  Construction  Housing  Ground transportation  Hi-tech engineering industries such as power generation, petrochemicals, fertilizers The potential for the growth of consumption of steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high which needs to be tapped efficiently.

Tata Steel 
Tata Steel, formerly known as TISCO is the worldµs sixth largest steel company with an annual crude steel capacity of 30 (MTPA)  It is the second largest private sector steel company in India in terms of domestic production. Ranked 315th on Fortune Global 500  Based in Jamshedpur, Jharkhand, India.  Through investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Holdings, Singapore.  Tata Steel has created a manufacturing and marketing network in Europe, South East Asia and the pacific-rim countries.  Tata Steel Thailand is the largest producer of long steel products in Thailand, with a manufacturing capacity of 1.7 MTPA.

Global Points of Presence of TATA STEEL

‡ ‡ ‡ ‡

Up to 1991, was the first steel company Price controls - an administered control of the economy. Not greatly innovative, not greatly business-minded Consultants used to say that Tata Steel was a dead company.

‡ The ten years from 1991 to 2001 ‡ Threw out the old furnaces and scrapped capacity. spent Rs. 10,000 crs. ‡ Towards the end of 2001, Tata Steel became one of the lowest-cost producers and one of the most modern companies in the world. ‡

Since 2001, Tata Steel started thinking of growth and globalization.

TATA Steel¶s Growth Strategy 
1990 - Company re-engineered its business processes established its cost leadership in a liberalized scenario and modernized its operations steel industry scenario changed dramatically in 2003 Company realized the need to grow in size and regional diversity to match global players In 2005, the Company made long term plans of becoming a 50 million tonne steel producer by 2015

Responsibility Centers
Revenue Center:± Output is measured in monetary terms. ± No formal attempt to relate input (i.e. expenses or costs) to output.

RUPEE EARNED 2008 - 2009

Expense Centers
Raw Material

Purchase of Power

Expence Center

Payments to Employees

Conversion Charges

Raw Material Consumed

Raw Materials consumption showed significant increase over the previous year mainly due to higher prices of Coal and Coke and also due to higher production resulting from the commissioning of µH¶ Blast Furnace as well as other facilities and operational improvements.

Payments to and Provisions For Employees

The increase of staff cost over is due to the revised wages, arrears and impact of change in discounting rate for valuation of employee benefits

Conversion Charges

Conversion charges increased by 22% over FY 08 mainly due to an increase in the conversion activities at the Long Products division as well as an increase in the conversion of tin coated products.

Stores And Spares Consumed

Stores consumption has gone up by 33% as compared to FY08 primarily on account of higher production which was due to the commissioning of µH¶ Blast Furnace as well as other facilities and operational improvements and an increase in the price of operational refractories in Steel melting shops.

Purchase of Power

There was an increase in expenses related to the purchase of power at the Jamshedpur Works during the year as fourth unit of Tata Power was shutdown for maintenance activities and the Company (Tata Steel) had to purchase power at higher rate from alternate sources. Increase in production, increase in sale of power to other consumers also led to higher purchase of power.

Other Expenses

Other expenses have gone up mainly due to consultancy charges, exchange fluctuation on raw material supplies, port charges due to increased exports, increase in brand equity payment, software development charges, packing charges due to increase in prices of steel packing materials and higher payments for contractual jobs.

Research And Development Centers
Research was carried out in the areas of raw materials including iron ore, coal, coke, ferro chrome and titania, blast furnace productivity, Steelmaking, product development, process improvement, coatings.

BENEFITS
± ± ± ± ± 8% ash in coal maintaining yield Complete benefi ciation of iron ore Improving blast furnace productivity Lowering phosphorus in Steelmaking Flat Products for automobiles

Some Major New Products Developed Through New Technology Absorption

± CBQ tubes and TFF tubes for two wheelers ± Tubes for hydro forming for Tata Motors Ltd. ± NANO Cars ± As drawn and As welded Prop. Shaft tubes for Ashok Leyland Ltd., Tata Motors Ltd. ± Thin wall exhaust tubes for Ashok Leyland Ltd., Tata Motors Ltd. ± Bright normalized tubes for Automobile application. ± St 45 grade of boiler tubes/pipes.

‡ Economic Value Added (EVA) is defined as the excess of Return on Invested Capital (ROIC) over weighted average cost of Capital (WACC); viz ‡ The EVA spread was 22.23% as compared to 23.54% in the previous year. The calculation of EVA spread is as follows:

Information Technology
± Implementing Supply Chain Management system using i2 for Flat Products. ± Migration of systems from IBM mainframe and shutdown of the mainframe will result in recurring savings of Rs. 4.5 crores p.a. ± Design and implementation of Simplified Drum Buffer Rope based Order Promising System for Wires and Tubes Division. ± Business process improvement for NatSteel Asia (Singapore), Tata Steel Thailand and Tata Steel (India). ± Implementing SAP at SIW (Thailand), Tata Bluescope and a Wires Division plant.

Internal Controls & Systems 
Company has place adequate internal control systems and procedures commensurate with the size and nature of its business.  The effectiveness of the internal controls is continuously monitored by the Corporate Audit Division of the Company.  Corporate Audit¶s main objective is to provide to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organisation¶s risk management, control and governance processes.

Objectives of Corporate Audit¶s
‡ Identify cation and management of Risks. ‡ Resources are acquired economically, used efficiently and safeguarded adequately. ‡ Significant financial , managerial and operating information is relevant, accurate, reliable and is provided timely. ‡ Improving management control, business targets and profitability, process efficiency and the organization¶s image, are communicated to the appropriate level of management. ‡ Employees¶ actions are in accordance with the Company¶s policies, procedures, Tata Code of Conduct and applicable laws and regulations.

SCM at TATA Steel
Objectives Optimize pre and post-production inventory levels Obtain greater efficiency from labor Obtain greater efficiency from equipment and space

Supply Chain Planning Processes
Material Requirement Planning Component Requirement Demand Forecasting Demand Planning

Production Plan

Supplier

Plant

Warehouse

Logistics

Retailer

Order Management

Fluxes

Coal

COKE Plant

Sinter plant

Blast Furnace

LD1

Continuous Billet Caster

LD2

Billets
Slab caster Merchant mill
Rebars

Wire Mill

Wire rods

Steelmakers are often faced with the following Questions:  Can we plan in advance but finally deliver only against Order?  Can we do this with minimal inventory?  Can we deliver 100% based on promise?  Can we both reduce the lead time & inventory simultaneously?

i2 Solutions for Tata Steel has enabled best practices including : 

Improved delivery performance to customer  Reduced manufacturing and inventory costs  Increased efficiency in supplier relationships  Optimised product mix  Reduced order lead time.

Out Bound Supply Chain 
Outbound supply chain was completely revamped. New Distribution Network was set up to cater mainly to rebars and GP/GC sheets, enhanced the reach for our products. Sales of Tata TISCON through this system was almost thrice compared to previous year.

Results of Effective SCM
Reduced inventory levels by 10-15% Reduced markdown & scrap by 10-15% Used resources10-20% more efficiently Improved delivery reliability by 95-95% Reduced outages to 0-5% Reduced cycle time by 10-20% Reduced transportation cost by 10-15%

Porter Five Forces Model  Entry barriers: High 
Capital Requirement Economies of scale Government Policy Product differentiation Global Steel majors Arcelor- Mittal & POSCO plan to enter Indian Steel Industry.

Porter Five Forces Model 
Competition: High Large producing countries like china influence global prices Branding is not common and there is little differentiation The 4 major domestic rivals are SAIL, JSW, ISPAT & ESSAR STEEL.

Porter Five Forces Model 
Bargaining power of suppliers: High 
It is low for the fully integrated steel plants ± Tata steel  Domestic raw material sources are insufficient, so import is essential  Globally, top 3 mining giants BHP billiton, CVRD & rio tinto supply nearly2/3 of the processed iron ore to steel mills and command very high bargaining power.  Tata Steel has forayed into Backward Integration.

Porter Five Forces Model 
Threat of substitutes: Low 
Plastics and aluminum pose a threat to Indian steel in one of its biggest markets ² automotive manufacture.  However, at present in India the high cost of electricity for extraction and purification of aluminum weighs against viable use of aluminium for the automobile industry.

Porter Five Forces Model 
Bargaining power of Consumers: Mixed 
High - automobiles, oil & gas, shipping, consumer durables & power generation sectors  Low ± small & retail consumers.

Strategic Business Units 
Bearings Division Ferro Alloys and Minerals Division Agrico Division Tata Growth Shop (TGS) Tubes Division Wire Division

Energy Efficient Operations at Tata Steel

Tata Steel Harvests Hydrogen

Implications of Hydrogen Harvesting
‡ Clean fuel source at low cost using waste heat & waste water. ‡ Useful in transport & other industries. ‡ Potential process of increasing revenue & added benefits in terms of carbon credits &patents. ‡ The gas can be used as a fuel in drying furnaces, reheating furnaces, ladle pre-heaters, captive power plants, etc. With this, consumption of coal and other fossil fuels reduces and CO2 emissions can come down by about 25kg / tone of steel.

Organization Structure

PEP @ TATA Steel

PEP focuses on :

3 Basic Fundamentals:

Component 1: Conventional Appraisal

3 Components

Self Appraisal Difficulties Major achievments Developmental needs

Objective assessment Assesment of KRA s fulfilment Done against concrete goals

Subjective assessment Decision making Managerial capabilities/traits

Component ii: Managerial Style Feedback

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