To find market potential for Tata Steel Processing and Distribution Limited in Flat Steel products in Bangalore Region, Degree thesis for Marketing. Gandhi Institute of Technology and Management
dgshkumar.1989
dgshkumar.198928 May 2017

To find market potential for Tata Steel Processing and Distribution Limited in Flat Steel products in Bangalore Region, Degree thesis for Marketing. Gandhi Institute of Technology and Management

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Collected information on flat steel requirement in manufacturing plants of three different industrial areas of Bangalore
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identifying market potential for flat products in bangalore region

TATA STEEL PROCESSING AND DISTRIBUTION LTD

A report submitted in partial fulfillment of the requirements of

Major Internship (Class of 2012-14)

BY

D. GURUSAI HARIKUMAR (1225112214)

MBA-CLASS OF 2012-14

GIM-GITAM UNIVERSITY, VIZAG

Under the esteemed guidance of

Dr. M.S.V. Prasad

Associate Professor

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GITAM Institute of Management, Visakhapatnam

2012 - 2014

DECLARATION

I hereby declare that this project work entitled “IDENTIFYING MARKET POTENTIAL

FOR FLAT PRODUCTS IN BANGALORE REGION” is my own effort done under the

guidance of our faculty guide Dr. M.S.V. PRASAD and our company guide. Mr.

TANGIRALA SRINIVAS. This report or a part of this has not been submitted for the award

of any other degree of either this university or any other university.

D. GURUSAI HARIKUMAR

(1225112214)

2

CERTIFICATE

This is to certify that the summer internship project entitle “Identifying market potential

for flat products in bangalore” a bonafide work of “D.GURUSAI HARIKUMAR”, is

original and has been done under my supervision in partial fulfillment of the requirement

for the major internship for the period of 70 days from Jan 2014 to Apr 2014. This report or

a part of this has not been submitted for the award of any other degree of either this

university or any other university. I am pleased to say that his performance during the

period was extremely good.

Place: Faculty Guide

3

Date: Dr. M.SV. Prasad

GIM GITAM University

Visakhapatnam

ACKNOWLEDGEMENTS

At the outset, I would like to thank TATA STEEL PROCESSING AND DISTRIBUTION

LTD for giving me an opportunity to do this project in this organization.

I am grateful to my company guide Mr. TANGIRALA SRINIVAS for all his guidance,

helpful hints and valuable suggestions during the course of this project.

I am deeply indebted to my faculty guide Dr. M.S.V.PRASAD for coordinating the project

work and giving me all the valuable guidance and for his constant inspiration. This project

could not have been possible without his help.

I would also like to thank all the staff members of TATA STEEL PROCESSING AND

DISTRIBUTION LTD for their constant support especially Mr. K. Sai Krishna (Project

Approver) and all the people who directly and indirectly helped me during the course of the

project.

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Last but by no means the least I would like to convey my special thanks to our principal Dr.

K.SIVA RAMAKRISHNA, program coordinator Mr. LEBEN JOHNSON and GIM for

giving me the opportunity to work on this project.

D. GURUSAI HARIKUMAR

(1225112214)

TABLE OF CONTENTS

Acknowledgements

List of Tables

List of Illustrations

Summary

CHAPTER-1 The Concept……………………………………………………..9

1. Objectives and Limitations………………………………………………………….11

CHAPTER-2 Research Design / Methodology…………………………………12

CHAPTER-3 Industry and Company Profile…………………………………....14

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3.1 Steel Industry in India………………………………………………………………..15

3.2 Brief History of Steel Sector in India………………………………………………..16

3.3 Industrial Sectors depending on Steel Industry………………………………………...17

3.4 Major Players of Steel Industry……………………………………………………....18

3.5 About Tata Steel Processing and Distribution Ltd…………………………………...19

3.6 Product Details……………………………………………………………………….22

3.7 List of Customers…………………………………………………………………….23

3.8 SWOT Analysis……………………………………………………………………....26

CHAPTER-4 Interpretation of Data……………………………………………………………27

CHAPTER-5 Findings, Conclusions and Suggestions………………………………………....34

ANNEXURE…………………………………………………………………………………....36

BIBLIOGRAPHY……………………………………………………………………………....38

Summary

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The history of steel making in India can be traced way back to 400 BC when the Greek emperors recruited archers from India who used steel tipped arrows. The Iron Pillar of Qutub Minar in Delhi did not rust till today which baffles the scientists. The Sun Temple in Konark is yet another marvel where for the first time in the history of civilizations, steel structures were used.

The revolution in Indian steel industry was brought by the establishment of Bengal Iron Works (BIW) at Kulti near Asansol in West Bengal. BIW was established by Joshua Marshal Heath in 1830. It initially produced 40 tons of pig iron per week. Later the volume of production increased to 40,000 tons in 1900 and it was acquired by Indian Iron and Steel Company (IISCO) in 1936.

The steel industry got modernized with the establishment of Tata Iron and Steel Company (TISCO) on August 27, 1907 with a production unit in Jamshedpur in Jharkhand which produced 120,000 tons of pig iron in a year. The Indian Steel industry grew to further heights with a policy review in 1948 in the parliament which allowed the establishment of heavy industries in India taking all the strategic industries under government control thereby accepting the concept of mixed economy.

This resulted in the establishment of public sector firms like Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL),etc. IISCO was later merged into SAIL. Apart from public sector firms private sector firms also came up like Malavika Steel Ltd, Jindal Vijaynagar Steel Ltd, etc.

Presently, due to the wide presence of steel using manufacturing units, Tata Steel Ltd and Ryerson Tull came together to cater to the needs of these manufacturing industry players to establish a company called Tata Ryerson Ltd who established expertise in steel processing and distribution. Later Tata Ryerson Ltd became a subsidiary of Tata Steel Ltd and came to be known as Tata Steel Processing and Distribution Ltd (TSPDL). TSPDL has expertise in the production of steel sheets, plates, blanks an reinforced bars of various thicknesses and widths according to the requirements of the companies.

My project,“ Identifying market potential for value added products in Bangalore Region” was chosen in consultation with the company guide and the faculty guide to study the market potential of TSPDL in Bangalore region to find out the monthly steel requirements of manufacturing companies and their issues & problems regarding the services of TSPDL, so as to improve the business of TSPDL further.

My basic role in the company is as a sales executive and the methodology used to collect information is survey.

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LIST OF TABLES

Table 1 Market Data

Table 2 Area-wise Analysis

Table 3 Segment-wise Analysis

Table 4 Sub Segment-wise Analysis

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LIST OF FIGURES

FIG 1 SSC OPERATION PROCESS

FIG 2 OPERATION OF INDIAN SSCs

FIG 3 AREA-WISE REQUIREMENTS

FIG 4 MATERIAL-WISE REQUIREMENTS

FIG 5 SEGMENT-WISE REQUIREMENTS

FIG 6 SUB SENMENT-WISE REQUIREMENTS

FIG 7 SEGMENT-WISE ANALYSIS

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FIG 8 SUB SEGMENT-WISE ANALYSIS

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CHAPTER-1 The Concept

1. Objectives and Limitations

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The Concept

The project is on, “Identifying Market Potential for flat products in Bangalore Region.”

This project would give an insight on the already existing and future market share as well as market potential of Tata Steel Processing and Distribution Ltd in Bangalore in comparison with other major steel supplier firms like JSW, SAIL, JSPL, etc. and the reasons behind it.

The study is based on the raw information obtained directly from the market by conducting a market survey and the company’s annual sale data. A comparative analysis of both the market data and the company’s annual sale data is done to determine the market penetration of TSPDL. Suggestions to increase the market penetration of TSPDL can be given.

Purpose/Need for Study

In present scenario, steel sector is expanding rapidly because of the increasing needs and demands of people. Industrial sectors like Automobile, General Engineering, Infrastructure and Power depend heavily on the steel sector for their ever increasing raw material requirements. Companies introduce new innovative products every day to meet the needs and demands of customers so that they can make the lives of customers comfortable.

This project will help Tata Steel Processing and Distribution Ltd to know the market penetration in Bangalore region. By using this report, the company can formulate strategies to increase their customer base by providing good quality material and service.

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OBJECTIVES

• To study market potential of steel- Flat Products (HR/HRPO/CR). • To derive TSPDL’s present percentage share of sales with respect to area, product or material. • To derive present percentage share of sales in HR.

LIMITATIONS

• The survey was limited to 66 companies. • Some of the companies did not reveal their steel requirement information because of quality,

price and delivery issues. • Some purchase managers didn’t give information because of their busy schedule. • Some companies maintained that the information is confidential.

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CHAPTER-2

RESEARCH DESIGN/METHODOLGY

RESEARCH DESIGN/METHODOLOGY

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SOURCES OF DATA

Primary Data: Primary data is the original data collected from the market through a market survey.

Secondary Data: Company’s annual sales information.

Population: Industrial Areas in Bangalore, • Bommasandra Industrial Area • Dobbaspet Industrial Area • Aarohalli Industrial Area • Haritha Industrial Area • Doddanakundi Industrial Area • Narsapur Industrial Area • Veerasandra Industrial Area • Peenya Industrial Area • Hosakote Industrial Area • Doddaballapur Industrial Area

Sampling Technique: Stratified Sampling Samples Selected: Bommasandra, Hosakote and Peenya Industrial Areas Survey Method: Tabular Survey

Format of table attached in annexure.

METHOD OF ANALYSIS

Comparative analysis of original market information and annual sales data of company is done to find out the percentage of share of sales.

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CHAPTER-3:

INDUSTRY AND COMPANY PROFILE

3.1 Steel Industry in India

3.2 Brief History of Steel Sector in India

3.3 Industrial Sectors depending on Steel Industry

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3.4 Major Players of Steel Industry

3.5 About Tata Steel Processing and Distribution Ltd

3.6 Product Details

3.7 List of Customers

3.8 SWOT Analysis

INDUSTRY AND COMPANY PROFILE

3.1 Steel Industry in India:

Modern age of steel industry started in India in 1907 with the establishment of Tata Iron and Steel Company at Jamshedpur by Dorabji Tata, son of Jamshet Nusserwanji Tata. It is the first integrated private sector steel company in Asia. After independence, many public sector companies producing steel are established under the nationalization of important industries policy of the then Nehru Government, which lead to the establishment of Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Limited (RINL). These are the major public sector steel producers which control the market.

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Before liberalization of Indian Economy, some of the legislations of the Industries Act, 1951 were amended in 1956 to allow private sector in Steel Sector of India. This lead to the establishment of companies like Jindal Vijaynagar Steel Ltd which later became JSW Steel , Kalinga Steel which later got incorporated as Mid-East Steel Company (MESCO),Malvika Steel Ltd which was acquired by PSU giant SAIL, Essar Steel, etc.

After liberalization, many foreign companies entered India like POSCO Steel of South Korea, Arelor Mittal of United Kingdom, etc. Many steel processing companies were established to cater to the demands of manufacturing companies of automobile, general engineering, infrastructure, white goods and power & electrical industries. Some of them include Tata Ryerson Ltd, a joint venture between Tata Steel Ltd and Ryerson Tull, now Tata Steel Processing and Distribution Ltd who caters to the steel requirement of various value added steel goods manufacturers. Others include MSP Steel, Essar Steel, JSW Steel, etc.

The present capacity of Indian Steel Industry is 72.2 Million Tons, thus making India fourth largest steel producer in the world. This might increase in the coming years as many steel companies are in the mode of expansion, so there is a possibility of becoming the largest steel producer in the world. Steel industry in India also contributes to the exports of the country.

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3.2 Brief History of Steel Sector in India:

The Steel Industry in India started with the establishment of Bengal Steel Works at Asansol in West Bengal in 1830s by Joshua Marshall Heath. This company later expanded and established another steel production unit in Chennai. After 1900s, Bengal Steel Works got acquired by Indian Iron and Steel Company (IISCO).

The modern era of Steel Industry in India started with the establishment of Tata Iron and Steel Company’s Jamshedpur plant in 1907 by Dorabji Tata. Tata Iron and Steel Company became the largest steel producer in 1900s despite increase in taxes by the British Government in India. TISCO with the help of Americans achieved a lot of goals like becoming largest steel producer in the entire British Empire.

In 1948, Nationalization of heavy industries and strategically important industries started. Repeated unsuccessful attempts were made to nationalize TISCO. Despite all the pressures, Tata grew as a conglomerate and expanded to other industries as well.

In 1956, some amendments were made to the Industries Act of 1951 allowing private sector players in the steel industry. This lead to the establishment of Jindal Iron and Steel Company, Jindal Vijaynagar Steel, Malvika Steel, Kalinga Steel, etc.

In 1973, Hindustan Steel Limited, earlier IISCO got nationalized to form Steel Authority of India (SAIL) with the initial capital of Rs 2000 crore.

In 1991, liberalization of Indian economy opened the doors for foreign players allowing them to construct new steel plants in India. Some of the foreign players include POSCO Steel of South Korea, Arcelor Mittal of UK, etc.

In 2006, Tata Steel Limited acquired the Anglo-Dutch steel maker Corus Steel for $7.6 billion which is larger than the value of Tata Steel itself. This acquisition made Tata Steel the world player in steel production.

These are some of the important milestones in the history of Indian steel industry.

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3.3 Industrial Sectors Depending on Steel Industry:

Industrial sectors which depend on the steel industry include automobile, general engineering, infrastructure, power and white goods.

Automobile Sector:

Steel sheets, rods, blanks, plates and brackets are used in manufacturing automobile components and body. There many companies who manufacture components for OEMs like Tata Motors, Ashok Leyland, Maruti Suzuki, Hero Moto Corp, Honda Motors, TVS Motors, etc. These companies use a lot of steel in its various forms. The annual steel consumption of automobile industry in 2012 was 19 Million Tons. Some of the major players include Tata Auto Components Ltd (TACO), Sandhar Technologies, etc.

General Engineering Sector:

Steel is used in the manufacturing of industrial products, fabrication products, food processing equipments, material handling equipments, etc. Some of the important players in this sector include United Fabricators, Maini Material Movement, Buhler, Ferrum Extreme Engineering, etc.

Infrastructure:

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Steel is used in the manufacturing of construction equipments and construction structures. Some of the important players in this sector include Geodesic Techniques Pvt Ltd, Alfeni Metarc Pvt Ltd, United Motors and Heavy Equipments Pvt Ltd, etc.

Power:

Steel is used in the manufacturing of power plant equipments, solar panels and solar water heaters. Some of the important players in this include ABB, Anu Solar Power Pvt Ltd, Tata Power Solar Systems Ltd, etc.

White Goods:

Steel is used in the manufacturing of consumer durable products like washing machines, refrigerators, pump sets, etc. Some of the important players in this sector are LG, Whirlpool, Standard Pumps, etc.

3.4 Major Players of Steel Industry:

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The major players of steel industry in India include Tata Steel Ltd, Jindal Steel and Power Ltd, JSW Steel, SAIL, Vizag Steel (RINL), Essar Steel, Bhushan Steel, etc.

Tata Steel Ltd:

Tata Steel Ltd is the largest steel producer in the private sector. It has expertise in the manufacture of sheets, plates, blanks and other flat metal products. Also it manufactures metal rods and reinforced bars. Tata Steel caters to the steel requirements of automobile, general engineering, infrastructure, power and white goods (consumer durables) sectors. Some of the prominent customers of Tata Steel include TVS Motors, TAFE, Honda Motors, Tata Motors, etc.

Jindal Steel and Power Ltd:

Jindal Steel and Power Ltd have the largest product portfolio in flat products of steel as well as it has expertise in the production of longest rails in the world and large size flange beams. JSPL has presence in the power sector also, where it has power generation capacity of 12,140 MW. JSPL’s steel production capacity is 14.3 MTPA. It caters to the needs of automobile, infrastructure, general engineering and many other sectors.

JSW Steel:

JSW Steel is manufacturers of high-end, value-added steel. Nearly 40% of products are high value added products. JSW Steel exports steel to over 100 countries in the world. JSW operates steel plants in Maharashtra, Karnataka and Tamilnadu with an installed capacity of 14.3 MTPA. Two production units each of 10 MTPA are in construction in West Bengal and Jharkhand. It has the largest market share in Bangalore as well as in South India.

SAIL:

SAIL is a Maharatna company of the Indian public sector. It has expertise in the production of hot rolled and cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloys. It has an installed capacity of 90MTPA. It also exports steel to USA, African countries and many other countries in the world.

Vizag Steel (RINL):

Vizag Steel is a Navratna company of the Indian public sector. It has expertise in the production of high quality steel products. It is the first integrated steel plant to be set up in the coastal areas. It has the installed production capacity of 6.3 MTPA. The company’s corporate entity is Rashtriya Ispat Nigam Limited (RINL).

These are some of the most prominent steel producing companies present in India.

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3.5 About Tata Steel Processing and Distribution Ltd:

Tata Steel Processing and Distribution Ltd is a 100% subsidiary of Tata Steel Ltd. It processes the raw steel obtained from steel plant in Jamshedpur according to customer requirements. It plays a crucial intermediary role between Tata Steel Ltd and the end user providing processing, inventory management and distribution services. It supplies steel in the exact quantity in the exact form and at the exact time at which the customer wants, thereby reducing time to make the steel usable and add value to it.

Tata Steel Processing and Distribution Ltd uses pre-processing techniques like slitting, shearing, cutting to length, pickling & oiling, plate burning, roll forming, bending, etc. The sophistication of service centre depends on the material requirements of the clients.

Tata Steel Processing and Distribution Ltd has mainly two business models, viz. , Vendor Service Model (VSM) and Non Vendor Service Model (NVSM). In VSM, TSPDL caters to the requirements of the customers of Tata Steel Limited. In this business model, processing, inventory management and distribution services are provided by TSPDL in return for some service fee given by the parent company, Tata Steel Ltd. In NVSM, TSPDL caters to the requirements of its own customers, that is, it does not act as intermediary but as an immediate supplier. The VSM business of TSPDL accounts for 70-80% of revenue while NVSM accounts for only 20-30%.

Tata Steel Processing and Distribution Ltd was earlier a joint venture of Tata Steel Ltd and Ryerson Tull Inc, earlier subsidiary of Inland Steel Inc (till 1996) of North America, now an independent company. Tata Steel Ltd formed a joint venture with Ryerson Tull in 1997 to establish steel servicing centers to process, inventory and distribute steel. The joint venture came to be known as Tata Ryerson Ltd. In 2009, Ryerson Tull sold their equity stake to Tata Steel Ltd, thus leading to the formation of Tata Steel Processing and Distribution Ltd.

Tata Steel Processing and Distribution Ltd in its VSM business has important clients like Honda, TVS and TAFE in Bangalore region, while NVSM business includes Neel Auto Pvt Ltd, Fluid Dynamics Pvt Ltd, etc.

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FIG 1 SSC OPERATION PROCESS

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The above figure gives idea about the step by step process followed at TSPDL, in order to convert bulk lots from TSL to processed steel rolls, plates and sheets.

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