SUMMER TRAINING REPORT ON (A COMPREHESIVE STUDY OF MARKETING STRATEGY FOR THE SECONDARY PRODUCTS) AT BHILAI STEEL PLANT (AN INTEGRATED UNIT OF STEEL AUTHORITY OF INDIA LTD.) BY ( NIKHILESH YADAV) 2007-08 IN PARTIAL FULFILLMENT OF MASTER OF BUSINESS ADMINISTRATION DEGREE DISHA INSTITUTE OF MANAGEMENT AND TECHNOLOGY ,RAIPUR (C.G.) 1 CERTIFICATE This is to certify that Mr. Nikhilesh Yadav Of DIMAT, MBA Semester – II has successfully completed the summer training in partial fulfillment of requirement for the award of MBA Degree prescribed by the Chattisgarh Swami Vivekanand Technical University, Bhilai. This report is the record of authentic work carried out by the student during the academic year 2007 – 2008. (Pradip Singh) Internal Guide Director 2 DECLARATION I Mr. NIkhilesh Yadav hereby declare that this report is the record of authentic work carried byme during the academic year 2007-08 in Bhilai Steel Plant (BSP) An integrated unit of Steel Authority (SAIL) Bhilai, District Durg (C.G.) ( ) Signature of the student ( Nikhilesh Yadav ) Name of the student 3 ACKNOWLEDGEMENT I express my sincers thanks & regards to Bhilai Steel Plant, for giving me the opportunity to study on the topic “A comprehensive study of Marketing strategy for Secondary products at Bhilai Steel Plant.” First & foremost I express my heartily thanks to Mr. Nitin Deshpandey (Director DIMAT) my project guide Mr. Pradip Singh. I also thanks to Mr. Rama Raju MD (BSP), Mr. S.M. Singh (GM-HRD), Mr. Anil Sharma (DGM-HRD), Mr. S. Dubey (DGM-HRD), Mr. D.K. Jadhav (Sr. Mgr.-HRD), Mr. Namdev Barange (Training coordinator –HRD) V.T. Section. I also express my heartily thanks to Mr. S.R.Rai GM (M&SP) & Mr.Ramarao AGM (M&SP) for their kind guidance. I also express my sincere thanks to my coordinator Mr. S.S. Parida (M&SP) and all the heads of concerned sections of marketing department, Mr. Sanjay Jaswal, Mr. D.P. Viswakarma, Mrs. Susmita Dey, Mr.arindham jain (M & SP), Mr.Satpathy, Mr. R. Garga, and Mr. Devendra Srivastava, Mr. P.K. Sahu for their kind cooperation in this project work. And lastly, I would like to thank all my group members for their kind cooperations to complete this project work successfully. Date… NIKHILESH YADAV 4 EXECUTIVE SUMMARY During my eight weeks of summer training in the Bhilai Steel Plant, I have done project research work on “Study on Marketing & Sales analysis of Secondary Products”. The project report tells us about the secondary product section and the whole process, starting from collection of scrap to the lifting of material and its distribution. The initial part of the report tells about SAIL and importance & performance of Bhilai Steel Plant in the steel authority. It also tells about the contribution of Bhilai Steel Plant to Sail’s profit. The next part describes the procedure of selling & distribution the secondary product. And the major consumer of BSP in this field. It also throws light on use of secondary products for re-rolling mills as raw material and the process of re-rolling and its products. The finding of my study emphases the problem which I have observed. Such as refund of payment procedure, price list of material, which is not available in the stockyard, all the marketing decision relating to prime product are taken by the SAIL and carried out by CMO. In my opinion the organization is more concerned with larger order of steel products by ignoring the smaller orders of steel products. The exports policy of SAIL considers it secondary to domestic selling as it is a Govt. undertaking and first priority is given to domestic marketing. The conclusion deals with the objective of Bhilai Steel Plant to achieve sales analysis of secondary products. The last portion conclusion & recommendation to improve the functioning of marketing department of Bhilai Steel Plant. INDEX 5 Sr. No. Content Page NO. Chapter-1 Introduction 7 Chapter-2 Company Profile 22 Chapter-3 Product Profile 32 Chapter-4 Objective & scope of the project 41 Chapter-5 Research Methodology 43 Chapter-6 Data collection and interpretation 46 Chapter-7 Conclusion 61 Chapter-8 Limitation 63 Chapter-9 Recommendation 65 Chapter-10 Appendices 66 Chapter-11 Bibliography 70 6 CHAPTER -1 INTRODUCTION STEEL ATHOURITY OF INDIA LIMITED (SAIL) During struggle for independence, Pt. Jawahar Lal Nehru our first prime minister of independent India had a very clear vision about the role of steel in the 7 development of our nation. Although Tata Iron & Steel Co. 9TISCO) established in 1907 marking the beginning of Indian Steel industry followed by Indian Steel Corporation (1918) they were too small to meet the development requirement of a big country like ours. Therefore, in the first industrial policy resolution of the government soon after independence, government decided to establish steel plant in Public Sector only. However work could be started at faster pace in 1954 when. Hindustan Steel Limited was formed and the steel plants of 1 MT capacity of each were established with provision of further expansion at Bhilai, Rourkela and Durgapur with assistance from USSR, West Germany and UK respectively. Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is fully integrated Iron and Steel maker, producing both basic and special steel for domestic, construction, Engineering, Power, Railway, Automotive and Defense industries and for sale in export markets. Ranked amongst the top ten public sector companies in India in terms of turnover. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheet, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces Iron and Steel at four integrated plants and three special steel plants, located principally in the eastern and central religions of India and situated closed to domestic source of three raw materials including the Company's Iron Ore, limestone and dolomite mines. SAIL'S wide range of long and flat steel products are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organization (CMO) and the International Trade Division (ITD). CMO encompasses a wide network of 38 branch offices and 47 stockyards located in major cities and towns throughout India. With technical and managerial expertise and known-how in steel making gained over decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. 8 SAIL has a well-equipped Research and Development Center for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Beside SAIL has its in-house Center for Engineering Technology (CET) Management Training Institute (MTI) and Safety Organization at Ranch. Its captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all its plants and major units are ISO certified. Integrated Steel Plants :- Bhilai Steel Plant (BSP) in Chhattishgarh. Durgapur Steel Plant (DSP) in West Bengal. Rurkela Steel Plant (RSP) in Orissa. Bokaro Steel Plant (BSL) in Jharkhand. IISCO steel plant (IIS) in west Bengal. Special Steel Plants :- Alloy Steel Plants (ASP) in West Bengal. Salem Steel Plant (SSP) in Tamil Nadu. Visvesvaraya Iron and Steel Plant (VISL) in Karnataka. Subsidiaries:- Maharashtra Elektrosmelt Limited (MEL) in Maharastra. JOINT VENTURE : 9 SAIL has promoted joint venture in different areas ranging from power to e- commerce. NTPC SAIL Power Company Pvt. Ltd. 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 Durgapur and Rurakela Steel Plants which have a combined capacity of 240 MW. Bokaro Power Supply Company Pvt. Ltd. This 50:50 joint venture between SAIL and the Damodar Velley Corporation formed in January 2002 is managing the 302 MW power generation and 1880 tones per hour steam generation facilitates at Bokaro Steel Plant. Bhilai Electric Supply Company Pvt. Ltd. Another SAIL-NTPC joint venture of 50:50 basis formed in March 2002 manages the 74 MW power plant - II of Bhilai Steel Plant which has additional capacity of producing 150 tones of steam per hour. UEC SAIl information technology Ltd. This is 40:60 joint ventures between SAIL and USX Engineers & Consultants. "A subsidiary of the US Steel Corporation, promotes information technology in the steel sector. MetalJunction.com Private Ltd. A joint venture between SAIL and Tata Steel on50:50 basis, this company promotes e-commerce activities in steel and related areas. SAIL – Bansal Service Centre Pvt. Ltd. 10 SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel. North Bengal Dolomite Ltd. A joint venture between SAIL and West Bengal Mineral Development Corporation Ltd. on50:50 basis was formed for development of Jayanti Dolomite Deposit, Jalpaiguri for supply of Dolomite of DSP and other plant. Romelt - SAIL (India) Ltd. A joint venture between SAIL, National Mineral Development Corporation (NMDC) and Russian promotes for marketing Romelt technology developed by Russia for reducing of iron bearing materials, which is carried out with carbon in single stage reactor with the use of oxygen. Ownership and Management The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its ‘Navratna’ status, enjoys significant operational and financial autonomy. 11 BACKGROUND & HISTORY OF SAIL : A Rich Heritage: The Precursor SAIL traces its origin to the formative years of an emerging nation-India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialization of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954. The President of India held the shares of the company on behalf of the people of India. Expanding Horizon (1959-1973) Hindustan Steel Limited (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 plant were also transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to Kolkata in July 1956 and ultimately to Ranchi in December 1959. A new steel company, Bakaro Steel Limited was incorporated in January 1964 to construct and operate the steel plant at Bakaro. The 1 MT phases of Bhilai and rourkela Steel plants were completed by the end of December 1961. The 1MT phase of "Durgapur Steel Plant” was completed in January 1962 after commissioning of the Wheel and Axle plant. The crude steel production of HSL went up from 1.58 MT (1959-60) to 1.6 MT. The second phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela the Tandem Mill - was commissioned in February 1967, and the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS. Thus with the completion of the 2.5 MT stage at Bhilai 1.8 MT at Rurkela and 1.6 MT at 12 Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in1968-69 and subsequently to 4MT in 1972-73. Holding Company 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 Crs. was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durapur, "Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as an operating company. Since its inception SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Beside, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry. SALES RESIDENT MANAGER (SRM): There are four SRM’s located at the four integrated steel plants. The SRM acts as an interface between the CMO and the steel plant. The role of SRM are: To check the availability of materials in the plant and to oversee the increase in production. To make the final rolling plan. To dispatch material as per orders. To prepare demand forecast every month. 13 SAIL Today SAIL today is one of the largest industrial in India. Its strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets and a large pool of technical and professional; expertise. Having achieved the initial goal of laying the foundation for the industrial development of the country. SAIL took up the new challenge of facing the era of liberalized economy and the emerging competitive scenario in the Steel market on the eve of entering the new millennium, SAIL launched its Financial and Business restructuring program. The strategy includes a divestment of non-core activities, restructuring of marketing function and a focus on pruning cost of operation. The goal for the company is to emerge as one of the lowest cost producer in the global steel market. PRODUCT MIX : Product Wise Semis Blooms, Billets & Slabs Long Products Structurals Crane Rails Bars, Rods & Rebars Wire Rods Flat Products HR Coils, Sheets & Skelp Plates CR Coils & Sheets GC Sheets\ GP Sheets and Coils Tinplates Electrical Steel Tubular Products Pipes Railway Products Rails Wheels, Axles, Wheel Sets 14 Plant Wise Bhilai Steel Plant Blooms, Billets & SlabsBeams Channels, Angles,bars wire rods (tmt, plain& ribbed) plates, Rails & heavy structurals Pig Iron, Chemicals & Fertilisers Bokaro Steel Plant HR Coils & Sheets Plates CR Coils & Sheets GP Sheets & Coils/ GC Sheets Pig Iron, Chemicals & Fertilisers Durgapur Steel Plant Blooms, Billets & Slabs Joists, Channels, Angles Bars, Rods & Rebars Skelp Wheels, Axles, Wheel Sets Pig Iron, Chemicals & Fertilisers Rourkela Steel Plant HR Coils Plates CR Coils & Sheets GP Sheets/ GC Sheets Tinplates Electrical Steel Pipes Pig Iron, Chemicals & Fertilisers Salem Steel Plant Stainless Steel 15 THE SEVEN C’S OF SAIL Consistent Quality Committed Delivery Customized product Competitive Price Complaint Settlement Contemporary Products Culture of Customer Service 16 CENTRAL MARKETING ORGANIZATION (CMO) This is the marketing unit of SAIL. The CMO of the SAIL was formed in 1963. When public sector plants were managed by Hindustan Steel Pvt. Limited. It caters to the domestic market and is responsible for coordinated manner. The CMO undertakes marketing of materials produced by SAIL, plant through a distribution network of 43 Branch sales offices (BSO), stockyard, dockyards, consignment agents & extension counter spread all over country. Central Marketing Organization (CMO) most of its division have their headquarters at Kolkata and they report to the Executive Director of marketing at Kolkata, who in turn report to the Director headquartered at Delhi. However departments like transport & shipping, export and imports etc. report to Executive Director located at Delhi. MAJOR FUNCTIONS OF CMO : Marked Research Demand Assessment. segment prioritization, product planning, sales and after sales service etc. CMO has a network of sales and after sales service etc. CMO has a network of sales officer and stockyards within the country for purpose of distribution of materials from these outlets. The other aspect controlled by CMO are planning, customer service, transport & shipping data information system etc. The distribution of the Iron & Steel products is done by the CMO through 45 branches and stockyards located in all important steel consuming centers in the country. For administration purposes, the branches are grouped under 6 regions. The distribution through the stockyard is of the order of 69% & through due dispatches by the plant 31%. They adopt various schemes to see that the movement of the products is fast & customers are satisfied. 17 OTHER IMPORTANT FUNCTION OF CMO : CMO has got responsibility to sell Pig Iron. Mild Steel products manufactured by BSP, DSP, RSP & BSL having its Head Quarters at Ispat Bhawan. 40. Chowrangee Road. Calcutta- 71. CMO has got 43 branches spread throughout the country with stockyard for storing & selling Iron & Steel materials produced by plants. Each Branch is headed by a Branch Manager having other colleagues including Finance Executive to help Branch Manager in day to day operations. CMO has got transport & shipping department to handle the export-import consignment at different parts. These officers are at following places: (a) Kolkata (b) Haldia (c) Chennai (d) Vishakapatnam (e) Paradeep To co-ordinate about production & dispatch in different steel plant. CMO has got SRM offices at following places: (a) Bhilai (b) Durgapur (c) Rourkela To take care or the exports CMO has got office at New Delhi. There is separate fertilizers & chemical divisions to sell fertilizers & chemicals produced by the plants. 18 Marketing Management Group : This group is headed by marketing managers. Marketing managers are responsible for market strategy and planning interims of sales, market share & profitability in a specific market segment. Salem Steel Products Division : This division headquartered at Chennai by Salem Steel Plant. They have field office at each of the regional headquarters as well as major consumption centers. Marketing Services Division (MSD) : This division looks after the management is supported by a computer center where data on marketing operation throughout the county are processed on a regular basis to bring out periodical MIS report. The responsibility of designing & implementing road movement, handling contract system ect. is also with them. Commercial Division : This division deals with formulation of policies on distribution. This division also deals with parliament question on behalf of CMO. Application Engineering Group (AEG) : This division deals with application about selection of best suited raw material development of new products required by the market etc. It also undertakes technical inspection on behalf of the CMO wherever needed. The AE personnel are posted at each regional headquarters. 19 Fertilizers & Chemical Division : This division is headquartered at Kolkata and looks after distribution of Ammonium Nitrate products by Rourkela Steel Plant and ammonium Sulphate produced by all the steel plants. This division has got offices at field location where the demand for fertilizers is substantial. Market Research Group : This division undertakes assessment of demand for pig iron & steel product for long term perspective and advice management about the market. This division brings out periodic report covering various aspects of consumption market condition. Competitors activities etc. They have field repetitive for collecting and forwarding market intelligence on the new quarters. Transport and Shipping Department: The department of headquartered at Koltata and has branch offices at major port areas. This division is responsible for handling imports and export on behalf of SAIL. This division clears the goods imported on sale at the ports and forwards the same to various steel plants. Finance and Account Department : This department renders financial advice to the line managers as well as CMO headquarters and maintain the account of the organization covering home sales, transport and shipping exports, residual imports, internal audit etc. Special Project Division : This Division is headquarters at Delhi & reports the Director (commercial). This division deals with modernization of stockyards giving technical help and assistance to the stockyard in maintenance of handling equipment etc. The 20 department also deals with construction of office, building of central marketing organization and acquisition of construction of residential accommodation etc. Regional Offices of CMO : Northern Region Eastern Region Southern Region Western Region Northern Region Southern Region Agra Bangalore Allahabad Calgawan Chandigarh Chennai Faridabad Coimbator New Delhi Hyderabad Kanpur Cochin Easter Region Western Region Siliguri Ahmedabad Bhubaneswer Baroda Bokaro Bhilai Durgapur Bhopal Jamshedpur Goa Guwahati Indore 21 CHEPTER - 2 COMPANY PROFILE 22 BHILAI STEEL PLANT BRIEF DESCRIPTION OF BHILAI STEEL PLANT BRIEF HISTORY Bhilai Steel Plant (BSP) is a unit of Steel Authority of India (SAIL). Bhilai Steel Plant is a pulsating giant in the glorious Industrial context of India. It came into existence on 10th June 1957. BSP the functionary of SAIL is a symbol of lndo- Soviet Techno economic collaboration, and is one of the first three integrated steel plant set up by the Government of India to build- up a sound base for industrial growth of the country. The agreement was signed on 2nd February, 1955 for 1 MT production capacity; which rose to than 2.5 MT (1967). and then to 4 MT in 1988 production of Crude Steel Per year. On 4th February 1959 the President, Dr. Rajendra Prasad dedicated Bhilai to the Nation by inaugurating the Blast Furnace No. 1 for production. Since then Bhilai has never looked back and has steadily grown and modernized day by day. Bhilai has all along been giving special attention to the employment to the weaker section. Bhilai has contributed significantly to meet the Iron & Steel requirements of the country. The Steel Plant has 10 coke ovens batteries and 7 Blast Furnace. The Plant get its requisition of raw materials and necessary resources by various adjoining centers. The Iron ore is met from the captive mines of the plant which is situated at Dalil-Rajhara, the mechanized iron ore mines 100 kms south from BSP. Lime stones also come from the manual mines of Nadini about 25 kms to the North of the Plant. The need of Dolomite is fulfilled from the queries of Hirri in Bilaspur District. Steel plant requires various forms or energy, viz. electricity, fuel (solid, liquid & gases). steam oxygen, compressed air. chilled water, air blast etc. At Bhilai the main source of electricity is the CSEB grid from the NTPC korba Station, about 250 Kms. away. The Steel Plant has have their own capacity of generating electricity of 36 MW and 74 MW by power plant I & II respectively as the alternative source of power supply to meet emergency loads in case of 23 interruptions. There exist and extensive communication system at the work which include Auto Telephone Exchange dispatched Communication system, shop- floor loudspeaker system, gas and fire signaling and blocking system of the plant rail transport facilities etc. PLANT LAYOUT: The unit or the plant has been laid in sequential formation according to technological interrelationship so as to ensure un-interrupted flow of process material like coke. Slag etc and to minimize the length of various inter plant connection utilities and services. RAW MATERIALS: The plant owns and manages the mechanized and manual iron ore mines at Dalli Rajhara, Situated about 100 KM from Bhilai and Limestone mine at Nandini. ahout 25 Kms away from plant. The plant owns quarries at Hirri, Chhattisgarh (for Dolomite) Over a million tones of minerals of mines annually from the captive mines. SERVICES & UTILITIES BSP is an integrated Steel Plant which requires various forms of energy like electricity, Fuel (solid, liquid and gaseous) stream, oxygen, compressed air, chilled water, air blast etc. Electricity power is supplied by BESCL (Bhilai Electric Supply Company Limited) a joint venture between National Thermal Power Corporation and SAIL from Korba 250 Km away from Bhilai. Water supply comes from a well constructed system of water works of the state government - Tandula reservoirs, water from nearby rivers are brought to two huge water reservoirs ( Maroda Tank 1 & 2) through a well laid canal, 60 km long from BSP. The other utility gaseous liquid and solid fuels, chilled water, steam. Oxygen and compressed air are provided- at Plant by centralized utility services. There exists an extensive communication system at work place, which 24 includes an auto telephone exchange, dispatch communication system, gas and fire alarm signal, yeard communication and automatic signaling and blocking system of plant, rail transport facility and shop floor loudspeaker system. Export section : Bhilai Steel Plant has an export section to take care of the requirement of International Trade Division (ITD). The export enquiry received by International Trade Division are sent over to Bhilai for detail discussion. After the confirmation from Bhilai. International Trade Division initiates action on commercial settlement and enter into a contract with the foreign buyer. The work order then issued by International Trade Division is distributed to various agencies likes Purchase, Finance and GM Services. Soon after subsequent rolling takes place. After inspection is made the consignment is sent through railways to Vishakapatnam port for the loading into ship. In case of export to Nepal, The consignment is moved by wagon either to Patna, Kanpur or Bhilai for onward dispatch to the buyer in Nepal. MANAGEMENT Initially BSP was under the administrative control of the Ministry of Iron and Steel with powers delegated to the chief' of the Plant. Later Hindustan Steel Ltd. Controlled the management, which was formed on 19th January 1954 to manage Rourkela Steel Plant, Bhilai Steel Plant became the constituent of Hindustan Steel Ltd, With the formation of Steel Authority of India Limited (SAIL) 24th January 1973. In the organization of BSP the Managing Director (MD) is the top most authority responsibility for overall control. There are six Executive Directors in following manner: Executive Director Personal &Administration Executive Director Materials Management Executive Director Project Executive Director Finance & Accounts Executive Director Works Executive Director B.S.P. Director Medical & Health Servi 25 They have under them General Manager (GM), DGM, AGM, Sr. Manager & Manager. Also, GM (Marketing & Strategic Planning) reporting to MD directly has the sole responsibility on Marketing of various main products & secondary products through CMD and BSP. Employee strength of past three years Employees as on – 01/04/04 Executives Non – Exe. Casuals Total Works 2138 23811 7 25956 Gen. Admn. 555 2315 0 2870 Township&Me 307 3793 1 4101 d. Mines 169 3660 3 3832 Construction 113 258 0 371 Total 3282 33837 11 37130 Employees as on – 01/04/05 Executives Non – Exe. Casuals Total Works 2046 23340 6 25392 Gen. Admn. 586 2249 0 2835 Township&Me 338 3617 1 3956 d. Mines 147 3476 1 3624 Construction 117 242 0 369 Total 3234 32924 8 36166 Employees as on – 01/04/06 Executives Non – Exe. Casuals Total Works 1988 23041 4 25033 Gen. Admn. 657 2419 0 3076 Township&Me 331 3409 1 3739 d. Mines 148 3142 0 3290 Construction 116 206 0 322 Total 3240 32215 5 35460 26 THE QUALITY POLICY OF BSP Attaining market leadership through enhancing customer satisfaction. Achieving continual improvement in productivity, quality and salability of our products. Active involvement of all our people in achieving our goals, objective and targets. Adherence to a quality management system based on ISO :9001:2000 and its periodic review for continued effectiveness. ORGANIZATIONAL OBJECTIVE To enhance customer satisfaction through :- Improvement in productivity ad product quality. Skill enhancement of our people by competence, commitment and culture building. Production as per Customer Requirement. 27 ENVIRONMENT POLICY Bhilai Steel Plant committed to protect environment and shall strive to : 1. Introduce sound environmental management practices for minimizing pollution and its impact on air. water and land. 2. Conduct operations in an environmentally responsible manner for complying with legislation and regulations related to its environmental aspects. 3. Conserve and optimally utilize raw materials. energy. water and other resources. 4. Minimize waste generation and promote its recovery. Recycling and re- use. 5. Achieve continual improvement in environmental performance by setting and reviewing the objectives and targets periodically. 6. Enhance environmental awareness amongst employees and interested parties. 7. Communicate environmental policy to the persons working for or on behalf of the organization and make it available to public on demand. 28 ORGANIZATION STRUCTURE OF BSP : MD ED ED ED ED ED ED (P & A) (WORKS) (PROJECT) (MINES) (M M) (F & A) DIR. GM GM (M&HS) (VIG) (M&SP) GM DGM AGM SR.MGR. MGR. MGR. DY.MGR. ASST. MGR. JR.MGR. 29 FLOWCHART REPRESENTATION OF M & SP DEPARTMENT : GM DGM DGM DGM DGM MARKET DEVELOP MENT OUTSTATI Secondary CC ON M & SP products & OFFICER Fertiliz Plate BBM Export ers RSM, MM, & Slabs WRM, Pig. Iron Exe.1 Exe.1 Exe.1 Exe.1 Exe.1 Exe.1 Exe.1 Exe.2 Exe.2 Exe.2 Exe.2 Exe.2 Exe.2 Exe.3 Exe.3 Exe.3 Page 30 of 71 AWARDS & ACCOLADES Bhilai Steel Plant has excelled in all walks of life, be it technology, quality, environment or socio-cultural, some of the prestigious awards bugged by BSP are as follows: Prime-Minister Trophy for best Integrated Steel Plant in India - Won Seven times science its inception in the year 1992-93. National Energy conservation Award in the integrated steel sector won for 1994, 1996, 1998 & 1999. IIM National Quality Award winners in ferrous category during 1995-96, 1997-98 and 1999-2000. BIS Rajiv Gandhi National Quality Award won twice in recent years. 100 Golden Peacock National Quality Award won thrice in recent years. INSSAN award for employee suggestions six times in last seven years. SAIL paryawaran Awards for all the six times (this award was given from 1992-93 till 1997-98), for best environmentally managed Integrated Steel Plant. Several Paryawaran Awards have also been won by captive mines and SMS-I of BSP. Indo-German Green Tech. Environment Excellent Award for the year 1999-2000. Apart from the above award individuals group awards have been won time to time by BSP employees at National level in the field of Quality Circles, Management, Metallurgy, Sports & Cultural Activities, etc. Page 31 of 71 CHEPTER - 3 PRODUCT PROFILE 32 PRODUCT PROFILE Bhilai offers a rich and varied product mix to the domestic and international market by different ways. They are divided into two categories, which is PRIME PRODUCTS: These are the products which are intentionally produces Sale and to meet the requirement of the customers. For eg. Blooms, Billets, Channels, Angles, round Steel bars, Wire rod, Rail, Plate etc. PRODUTS OF BHILAI STEEL PLANT Production of last year: PRODUCT-MIX TONNES/ANNUM Semis 5,53,000 Rail & Heavy Structural 7,50,000 Merchant Products 5,00,000 (Angles, Channels, Round & TMT bars) Wire Rods (TMT, Plain & Ribbed) 4,00,000 Plates (up to 3600 mm wide) 9,50,000 Total Saleable steel 31,53,000 33 SECONDARY PRODUCTS: These are the defected or rejected material Due to the improper mixing of chemical Components or due to some lack in meeting customer requirement. Scrap generated inside Bhilai Steel Plant is also termed as Secondary Products. For eg. - Rejected slab, iron scrap, steel scrap, defective heavy blooms, defective billet cutting, rails cutting, and slag. SECONDARY PRODUCTS ( AN INTRODUCTION) Secondary products section started functioning after the commencing of Bhilai Steel Plant. The secondary product section of the marketing department is solely responsible for the selling of secondary products and by-products of BSP. All the defective or rejected items of this department except the rejected defective plates, sells scrap. The defective plates are sold by CMO (Central Marketing Organization) since December 2001. WHAT ARE SECONDARY PRODUCTS ? In the cause of manufacturing process, in every stage of production, always there will be certain Percentage of products which do not confirm to the standard quality, size and specification. Such products are termed as ‘Secondary Products’. Moreover, while shaping the prime products, both end and sides are cut. These cutting are also categorized as ‘Secondary Product’ in Bhilai Steel Plant as they are re-relloable. Following items are falls under the category of Secondary Products.: Defective heavy blooms Defective Billets cuttings Rejected Slabs Plate Mill side shearing 34 Defective Plates Rails Cuttings Rod Cuttings UTILIZATION OF SECONDARY PRODUCTS: The secondary products can be utilized in two ways: 1. By re-rolling of secondary products. 2. By selling secondary products PLANNING FOR SALE OF SECONDARY PRODUCTS : 1 Marketing recovery department (MRD) works out the question of different type’s of scrap available for on monthly basis. This is determined by ascertaining the local scrap stock at the beginning of the month. Scrap arising during consumption. The remaining quantity is considered for sale. A monthly report on availability of scrap is prepared by MRD and sent to marketing department. 2. Marketing department finalizes the plan for actual quantity of scrap to be sold in consultation with MRD. Mode of sale, terms and condition for sale, location and commercial aspects are finalized by marketing department. 3. The pricing committee as approved by Managing Director fixes the price of each type of scrap (Finance Department, Purchase department, R & D department, Market development department and Production department are the member of the pricing committee). 4. Marketing department obtain MD’s approval on price fixed by pricing committee 35 NECESSITY OF SELLING THE “SECONDARY PRODUCTS” : The net sales realization from all the secondary products, by- products and co- products of BSP is around Rs. 600 Cr. Which is quite more then many of the big industries. Out of this the steel scraps arising itself bring about Rs. 150-200 crores of money every year. Re-production of main product from these secondary products requires remolding it again for the required composition of the material as per the desired specification. By selling it to the different mills/traders/processors the plant earn about Rs. 4000 per tones of direct product then by reproducing it to the main product. Through the traders/processors/re-rollers, using these arising as a raw material for different finished products are making huge profit, the plant is also not losing anything. Profit is the aim of every business, and when the reutilization of these products for the finished products proves to be costlier, the management plans to sell it to the local market. 36 MARKETING OF SECONDARY PRODUCTS ; 1. The initial face of BSP due to the limited product of steel it is also observe that secondary products where dominated and there fore the specific marketing activities towards sales of secondary products was absent in fact it was uneconomical to have marketing activities during that period. 2. Due to new technologies its capacity has increased significance in late 90’s. 3. Due to change in economic scenario of India and companies policies towards earning profits has led to implement marketing policies for secondary products. 4. The marketing strategies adapted by the organization were giving rise to increase in competition between public sector unit & private sector companies. Due to this end users were having options to choose from following strategies has been adopted by the plant for marketing: 1. COMMITED DELIVERY. 2. COMPETITIVE PRICE. 3. QUICK COMPLAINT SETTLEMENT. 4. CULTURE OF CUSTOMER SERVICE. It may be mentioned here that the company’s profit consist of 10% turnover of secondary products for the last 2 years. SALES & DISTRIBUTION OF SECONDARY PRODUCTS : 1. SELLING OF SECONDARY PRODUCTS: This involves a direct marketing process. The management of BSP in consultation with the official of the marketing and strategic planning department work as group for the sale of these items. There are two methods of selling these re-rolling defective materials. (a) By auction sale. (b) By marketing department (fixed price) 37 (a) AUCTION SALE:- In this method the defective material from all mills is arranged in heaps of 100-150 tones to be sold by auction. Generally, auction sale take please once in a month. Representative from all the re-rolling mills turn up during auction and they bid for the available material. The raw material need of these mills is being met by the plant and the availability of the re-rollable have increased the re-rolling mills to develop very fast. The plant extended all type of facility and assistance to these small scale units which in turn give scope for more employment. Then the material is lifted on the term and conditions as mentioned in the tenders. (b) FIXED PRICE SALE: The re-rollable material is also sold through marketing department. The percentage of material to be sold by auction or by marketing department depends upon the management decision. There are different re-rollable materials coming from different mills that can be sold. The pricing of these materials is carried out by the pricing committee depending upon: 1. The price offered by the customers during auction sale. 2. The quantity to be sold. 3. The approval of the managing director. The customer approaches the department makes the payment in advance and lifts the material as and when it is made available to them. RICING POLICY OF SECONDARY PRODUCTS : The policy adopted by the marketing department for pricing of material is largely guided by the price offered by the bidder during the auction. The various factors taken into consideration while pricing the re-rollable items can be enumerated as follows: 1. Prices offered in the auction sale. 2. Quantity of the material to be lifted by the buyers. 3. Managing Directors approval. 38 MAJOR CONSUMER OF SECONDARY PRODUCTS : FEW CONSUMERS ARE : 1. RAYMOND CEMENT 2. GLOBAL TRADING COMPANY, HIRAPUR RAIPUR (CG) 3. D. P. BANSAL COMMERCIAL CO. LTD. , BHILAI (CG) 4. PEEKAY INDUSTRIES, GAZIABAD 5. COATS OF INDIA LTD. NOIDA 6. CHATTISGARH STEEL PRODUCT , URLA IND. EST. RAIPUR. (CG) 7. BALAJI STEELS, URLA , RAIPUR (CG) 8. LIGHT INDUSTRIAL AREA, BHILAI (CG) 9. TATIBANDH, RAIPUR (CG) 10. URLA INDUSTRIAL AREA, RAIPUR (CG) 11. KUMHARI (CG) 12. INDUSTRIAL AREA, RAWAN BHATA, BHILAI (CG) 13. SIMPLEX CASTINGS , BHILAI (CG 39 MARKETING PERFORMANCE OF SECONDARY PRODUCTS 2005-06 ITEMS QUANTITIES VALUE IRON SCRAP 84570 T 52.57 crs. STEEL SCRAP 98000 T 173.13 crs. DEF. & CUTTING 79865 T 250.57 crs. 2006-07 ITEMS ANTITQUIES VALUE IRON SCRAP 76197 T 43.93 crs. STEEL SCRAP 70525 T 133.76 crs. DEF. & CUTTING 105634 T 194.93 crs. 2007-08 ITEMS ANTITQUIES VALUE IRON SCRAP 32048.6 T 26.91 crs. STEEL SCRAPE 226750.4 T 548.04 crs. DEF. & CUTTING 178680.3 T 346.65 crs 40 CHEPTER - 4 OBJECTIVES AND SCOPE 41 OBJECTIVES OF STUDY : In Bhilai Steel Plant there are various section of marketing department. Since I have choose “Marketing Strategies for the secondary products at BSP”, my main objectives are : 1. Market study of secondary products is BSP 2. To know what is secondary products, why it is necessary to sell the secondary products. 3. To know the pricing of secondary products. 4. Ensuring timely dispatch of material products, scrap etc. to the potential customers. 5. To know the use of secondary product. 6. To know the others terms and conditions for marketing of secondary products. SCOPE OF THE STUDY : As discussed in above chapter related to steel industry in India, it is showing the increase in steel production every year as compared to previous year and hence it created interest for me to study the marketing & sales activities related to secondary products. Secondary products are nothing but scrap or defected material. In this cut throat competition organization should give importance to marketing in sales activities of secondary products, which alternatively add on to the profits of the organization, this study is mainly concentrating on identifying the area of importance and cost saving related to marketing of secondary products. Limitation of Study : 1. The study deals with only BSP point of view. 2. As the major customer of BSP products are not an individual person. It was very difficult to get formal feedback from them. 42 CHEPTER - 5 RESEARCH METHODOLOGY 43 RESEARCH METHODOLOGY Research can be defined as systematized efforts to gain knowledge. A research is carried out by different methodology, which has their own pros and cons. In this research work, I have collected information i.e. Primary and secondary data. As far as secondary data collection, I had used sources like company data (Past and existing), internet, company publications and some of the old project summaries with company. As far as primary data is concerned, I had done a structured questionnaire survey with users of secondary product i.e. small scale industries. The primary information collected from 50 different users. SAMPLING UNIT In the survey Bhilai and Raipur was chosen as the sampling unit. SAMPLING SIZE The sample size was 50 customers of different re-rolling mils & traders. SAMPLING TECHNIQUE The sampling technique used by the research for the study was convenience sampling. The sampling was taken from different places in chhattisgarh like Bhilai Raipur. 44 45 CHEPTER - 6 DATA INTERPRETATION 46 DATA ANALYSIS The primary data was collected by contacting users directly and requesting them about the information related to the questionnaire designed. Following are the major questions asked and data was sought from them. 1. When was your company established? (a) 1960-1970 0% (b) 1971-1980 10% (c) 1981-1990 30% (d) After 1990 60% (a), 0% (b), 10% (a) (b) (c ), 30% (c ) (d), 60% (d) Inference:- This graph indicated that most of the users of secondary products of steel industry have been established during 90’s. 47 2. What is your annual requirement of secondary product? (a) 0-2500 Tones 10% (b) 2500-5000 Tones 30% (c) 5000-10000 Tones 40% (d) Above 10000 Tones 20% 40% 35% 30% 25% 40% 20% Series1 30% 15% 20% 10% 10% 5% 0% (a) (b) (c ) (d) Inference:- This graph shows the annual requirement of secondary product is evenly distributed between 2500T to 10000T. The majority of the customers i.e. 40% of surveyed companies buy secondary products between 5000 to 10000T 48 3. How many years your company was purchasing from BSP? (a) Less than 2 years 0% (b) 2-5 years 10% (c) 5-10 years 60% (d) More than 10 years 30% (a), 0% (b), 10% (d), 30% (a) (b) (c ) (d) (c ), 60% Inference:- This graph indicate the since how long they are purchasing secondary products from BSP. Out of all surveyed companies, 60% companies purchasing the products from BSP since last 5-10 years. 49 4. Is your company purchasing secondary product from others companies, (other than BSP)? Yes 40% No 60% Yes, 40% Yes No No, 60% Inference:- This graph shows the companies also purchase sometimes secondary products from other companies. It is being interpreted from above data that 60% companies are purchasing products only from BSP 50 5. What is your opinion about the registration procedure of the company for getting secondary product? Easy 100% Hard 0% 100% 100% 90% 80% 70% 60% 50% Series1 40% 30% 20% 10% 0% 0% Easy Hard Inference:- This graph indicates that 100% customers are satisfied about the order registration procedure. 51 6. What mode your companies prefer to purchase material from BSP whether it is fixed price / tender? (a) Fixed Price 20% (b) Tender 80% (a), 20% (a) (b) (b), 80% Inference:- This graph shows that 80% companies prefer purchasing products by tender method. 52 7. Have you faced any difficulties doing business with BSP? YES 0% NO 100% 100% 90% 80% 70% 60% 100% Series1 50% 40% 30% 20% 10% 0% 0% Yes No Inference:- This graph shows that no company has faced any difficulties for conducting the business with BSP. 53 8. Are you satisfied with BSP’s sale policy of secondary products? (a) No 0% (b) Yes 95% (c) No comments 5% 95% 100% 90% 80% 70% 60% 50% Series1 40% 30% 20% 5% 10% 0% 0% (a) (b) (c ) Inference:- This graph indicates the any major draw back in BSP sales policy. 95% Customers are satisfied with BSP sales policy. 54 9. What is your opinion about distribution policy of secondary product? (a) Very good 0% (b) Good 95% (c) Fair 5% (d) No opinion 0% 100% 90% 80% 70% 60% 50% 95% Series1 40% 30% 20% 10% 0% 5% 0% 0% (a) (b) (c ) (d) Inference:- This graph shows about distribution policy of BSP. 95% customers are satisfied specifically with distribution policy of BSP. 55 10. Whether the products are made available every time whenever the payment is made in advance? (a) YES 100% (b) NO 0% (c) Can’t Say 0% 100% 90% 80% 70% 60% 100% 50% Series1 40% 30% 20% 10% 0% 0% 0% (a) (b) (c ) Inference:- This graph indicate that customer of BSP is served on priority if they pay in advance. 56 11. What is your opinion about pricing policy of BSP? (a) Good 20% (b) Satisfactory 70% (c) Dissatisfactory 10% (d) No opinion 0% (c ), 10% (d), 0% (a), 20% (a) (b) (c ) (d) (b), 70% Inference:- This graph indicates mixed reaction about pricing policy of BSP. 70% customers are satisfied with pricing policy of BSP. And also 10% customers are not happy with the pricing policy of BSP. 57 12. Kindly give your priorities to the following additional facilities you feel should be considered by BSP (a) Credit facility 25% (c) Infrastructural facility 5% (b) Discount 70% (d) Others 0% (d), 0% (c ), 5% (a), 25% (a) (b) (c ) (d) (b), 70% Inference:- This graph shows that most of the respondent i.e. 70% wish to have more discounts. 58 13. Is there any delay in getting the material? (a) Sometimes 20% (b) Always 0% (c) Never 80% 80% 80% 70% 60% 50% 40% Series1 30% 20% 20% 10% 0% 0% (a) (b) (c ) Inference:- This graph shows the customer’s opinion about delay for getting the Products. 80% customers replied that they have never faced any delay in getting the products. 59 14. Which kind of material you purchase from BSP? (a) Iron scrap 20% (b) Steel scrap 50% (c) Gram lated Slag 10% (d) Melting scrap 10% (e) Others 10% 50% 50% 45% 40% 35% 30% 25% Series1 20% 20% 15% 10% 10% 10% 10% 5% 0% (a) (b) (c ) (d) (e) Inference:-This graph tells that 50% of the customers are regularly purchasing steel scrap. 60 CHEPTER - 7 CONCLUSION CONCLUSION : This project contains the study of Marketing & sales analysis of secondary products. Secondary products are the scrap or defected material along with the finished products. 61 The study has received very interesting facts above the secondary products. Therefore from study & Analysis ( through questionnaire) I have concluded on following points. While study the history of SAIL (Sail authority of India limited). BSP is a part of SAIL. I also study history about BSP. It was established on 2 nd Feb.1955 with capacity of 1 MT. Now its production is 4MT per year.In my study I had a some objects, like that marketing of secondary product, it’s pricing policy & use of this product and also why necessary for selling it. Majority of the companies buy the steel scrab from BSP and also they buy Iron scrap, melting scrap etc. From the primary data collection we can conclude that most of the company who are using secondary products of steel company have been established during 90’s and their average consumption lies between 5000T to 10000T. Most of the surveyed companies are dealing with BSP since last 10 years and most of them buyers of secondary products from BSP only. The customer are satisfy with order registration process and companies policies in BSP, they also shown magurity preference of buying goods through tender process. Customer are also satisfy with payment & distribution policies of BSP. They have also felt that there are very few instances from delay. 62 CHEPTER - 8 LIMITATIONS 63 LIMITATION OF THE STUDY : Some data were confidential therefore were not available for analysis. TIME FACTOR:- Time factor was the chief limitation of study. Limited time was allotted for the study. COST FACTOR: Another major constraint was cost. The study involved Substantial cost and was beyond the affordability of theme INFORMATION FROM RESPONDENTS: Some biased response came from respondent and Finding stated in the report was based on the answers from the questionnaire. So the effect of misinterpretation and wrong answers may affect the outcome of the project. The research has focused his attention mainly in and around Bhilai. As the major customer of BSP products are not individual persons. It was very difficult to formal feedback from them. 64 CHEPTER – 9 RECOMMENDATIONS : 1. The pricing as well as the distribution policies should be framed by keeping in mind the requirements of the complete ranges of manufacture and only the bulk consumer. This will encourage the new re- rolling mills to approach BSP for the materials. 2. Ensure delivery of the material for which the payment is received in advance. 3. Alternatively, if the material is not available, the BSP authorities should not accept the payment so that the buyer can approach some other sources for producing the material and should not unnecessarily wait for the material, which is not available. 4. Many a times BSP is not in a position to supply the full quantity of material for which the payment has been received. In such cases, the refund of the excess amount should be thought a stream lined process so that it does not tack long time. 5. Prices list made available to the various re-rollers every month by BSP. 6. The material being sold by marketing department should accompany test certificate mentioning only the range of carbon content in it for which the customers are ready to pay reasonably higher prices. 7. Generation of secondary products must be tried to minimize which will help the BSP in optimum use of raw materials. 65 CHEPTER - 10 APPENDICES 66 QUESTIONNAIRE A comprehensive study of marketing strategy for secondary products at Bhilai Steel Plant Name ---------------------------------------------------- Address -------------------------------------------------- --------------------------------------------------- Contact No. --------------------------------------------- E-mail---------------------------------------------------- 1. When was your company established? (a) 1960-1970 (b) 1971-1980 (c) 1981-1990 (d) After 1990 2. What is the annual requirement of raw materials? -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 3. How many years you were purchasing from BSP? (a) Less than 2 years (b) 2 to 5 years (c) 5 to 10 years (d) More than 10 years 4. Is your company purchasing raw materials from others companies, other than BSP? (a)Yes (b) No If yes please specify---------------------------------------------------- ---------------------------------------------------- 67 5. What is your opinion about the registration procedure of the company for getting secondary product? (a) Easy (b) Hard 6. What mode your companies prefer to purchase material from BSP whether it is fixed price/ tender? ------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------- 7. Have you faced any difficulties doing business with BSP? ------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------- 8. Are you satisfied with BSP’s sale policy of secondary products? ------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------- 9. What is your opinion about distribution policy of secondary products? (a) Very good (b) Good (c) Fair (d) No opinion 10. Whether the material is available every time the payment is made in advance? (a) Yes (b) No (c) Can’t say 68 11. What is your opinion about pricing policy of BSP? (a) Good (b) Satisfactory (c) Dissatisfactory (d) No opinion 12. Kindly give your priorities to the following additional facilities you feel should be considered by BSP (a) Credit facility (b) Discount (c) Infrastructural facility (d) others 13. Is there any delay in getting the material? (a) Sometimes (b) Always (c) Never 14. What kind of material you purchase from B.S.P.? (a) Iron scraps (d) Melting scrap (b) Steel scrap (e) Others (c) Gram lated slag 69 CHEPTER - 11 BIBLIOGRAPHY 70 BIBLIOGRAPHY SAIL ANNUAL JOURNAL 2006-07 ANNUAL REPORT: BSP 2006-07 WORKING NOTES M & SP DEPARTMENT WEB SITE OF SAIL www.sail.co.in WEB SITE OF BSP www.bsp.com OTHER SITES: - www.google.com www.wikipedia.com 71
"A COMPREHESIVE STUDY OF MARKETING"