CHAPTER 1 INTRODUCTION

1.1

OVERVIEW OF THE INDUSTRY

Steel is the backbone of all industrial and commercial activities. Realizing this, computers planners have been formulating and updating annual plans for production of iron and steel .it is in this context that a number of steel plans were set up, are still being set up and the production capacities of the existing ones being expended. Bokaro Steel Plant (BSP) was the fourth in the row to be set up in public sector. Considering the huge investment in this venture, it was considered worthwhile to study its economic aspects including the benefits that have since accrued out of these. While SAIL and Tata Steel were the main producers, the latter being the only private player. In 1990, the Indian steel Industry had a production capacity of 23 MT. 1992 saw the onset of liberalization and the Indian economy was opened to the world. Indian steel sector also witnessed the entry of several domestic private players and large private investments flowed into the sector to add fresh capacities. With a current capacity of 35 MT the Indian Steel Industry is today the 8th largest producer of steel in the world. Today, India produces international standard steel of almost all grades/varieties and has been a net exporter for the past few years, underlining the growing acceptability of its products in the global market. Steel is a highly capital intensive industry and cyclical in nature. Its growth is intertwined with the growth of the economy at large, and in particular the steel consuming industries such as manufacturing, housing and infrastructure. Steel, given its backward and forward linkages, has a large multiplier effect. With capital investments of over Rs 100, 000 crores, the Indian steel industry currently provides direct/indirect employment to over 2 million people. As India moves ahead in the new millennium, the steel industry will play a critical role in transforming India into an economic superpower.

IRON AND STEEL INDUSTRY: AN OVERVIEW

In the world as a whole, iron and steel industry has witnessed rapid growth during last 100 years. In 1870the world steel production was merely 10 million tones (mt) which increased threefold to 28 mt in 1900 and over sevenfold to 73mt in 1920.Therafter in the next 60 years, the production increased about tenfold 717 mt in 1980; highest production 2

of 747mt was achieved in 1979.Due to recession, the demand of steel went down after 1979, particularly in technologically advanced countries. Though it has been steadily increasing since 1983, the production of steel has been regulated to suit the demand levels. The last decade saw the Indian steel industry integrating with the global economy and evolving considerably to adopt world-class production technology to produce high quality steel. The total investment in the Indian steel since 1990 is over Rs 19,000 crores mostly in plant equipments, which have been installed after 1990. The steel industry also went through a turbulent phase between 1997 and 2001 when there was a downturn in the global steel industry. The progress of the industry in terms of capacity additions, production, consumption, exports and profitability plateaued off during this phase. But the industry weathered the storm only to recover in 2002 and is beginning to get back on its feet given the strong domestic economic growth and revival of demand in global markets. In the world today new technologies continue to be ushered in to achieve further conversation of materials and energy to meet the diversified demand of better steel qualities, to exercise better process control, to preserve the environment, to remain competitive in costs and, in short, to cater to the challenging conditions of the world in progress. Apart from the spirit of innovation and mankinds constant endeavor to excel challenges offered by the changes in situations motivate the human efforts towards the technology development. A look at the world steel production shows as if it has reached its zenith. Although the picture may be so for the developed countries. While the consumption of the steel is stagnating in most of the developed countries, it is not the same for developing countries. While the consumption of steel is stagnating in most of developed countries, there has been continuing growth in steel consumption in developing countries. The per capita consumption of steel by the steel countries range between 350 kg and 700 kg; but, on the other hand, the developing countries, with the exception of a few, consume less than 50 kg per head (As in 1990s). It is, therefore, anticipated that with the passage of time, the

steel consumption of the developing countries will increase to facilitate much needed industrial and economical development of these countries.

ANALYSIS OF STEEL ACROSS THE GLOBE

The declining price trend after an unprecedented rise in Q1 of 2005 has taken sheen off the global steel market. However, there is a widespread perception that in the post Q2 of the current year the global price are bound to go up. Only this time the rise would be flattened and not abnormal. The domestic demand in Europe is steel low with industries production showing a downward trend forcing the major steel producer to call back the price hike announced earlier. The postponement of purchase by the buyers is likely to result in running down the current inventories. Data released recently indicate that EU has imported a total of 22.8 million tones including semis; which have gone up by 8 percent in 2004.The import of CR coil and coated coils were also higher than last year EU exports totaled 245 million tones in 2004. Area Prod in Jan-Mar 2005 (million tones) EU (25) Other Europe CIS N America S America Africa Middle East Asia/Oceania* China World *Excluding china Table 1 47.96 6.83 27.62 32.42 11.21 4.34 3.58 55.46 77.79 267.21 Prod in Jan-Mar 2004 (million tones) 48.13 6.94 27.67 32.32 11.18 3.91 3.27 54.55 62.82 250.79 -0.3 -1.6 -0.2 0.3 0.3 10.8 9.4 1.7 23.8 6.5 % Growth

300 250 200 150 100 50 0 production in jan-march 2005(million tones)

EU 25 other europe cis north america south america africa middle east asia/oceania china world

production in jan-march 2004(million tones)

EU 25 other europe cis north america south america africa middle east asia/oceania china world

% growth -0.3 -1.6 -0.2 0.3 0.3 10.8 9.4 1.7 23.8 6.5

Table 2

30 25 20 15 10.8 10 5 0 -0.3 -5 -1.6 -0.2 0.3 0.3 % growth 9.4 6.5 1.7 23.8 EU 25 other europe cis north america south america africa middle east asia/oceania china world

Flat price have fallen in North American market by $70-80 per ton in the last two month. The current HR coil price by US mills is pegged at $615 fob/t with CR price at $695 per ton. Compared to flat producer the long product market is relatively stable and there is no decline in the price of structural more due to fall in import volumes. China has also remove a 13 percent rebate on steel billet and slab exporter with effect from 1st April 2005 to enhance domestic availability this has led to price fall in April. The export rebate on bars and rods has been reduced from 13 to 10 percent from 1st May. Indian long product market is largely influenced by global price of semis. The CIS price of billets is currently running at $370gob/t; which is nearly at the same level as in March. There are reports that Russian steel producer are expending a major chunk of the equity participation in mills in other countries as a long term trading ventures. Crude steel production figure for 2005 released by HIS exhibits a growth of 6.5 percent in the first three month over the corresponding period in previous year. China remains the leading steel producer with growth touching 24 percent.

1.2

PROFILE OF THE ORGANIZATION

One of the leading steel producer of in the world and the largest steel maker of the country. SAIL occupies a prime place in the industrial scenario of India. SAIL, is Indias largest and one of the Worlds leading steel producer with a turnover of around Rs.16500 crores. Quality steel products from SASIL, have carved a niche for themselves in the global steel market. The company aims at making its global presence felt through export, joint ventures and alliance with internationally reputed steel markets. In a fast changing product market scenario, SAIL has lunched a new strategy for achieving a turnaround, which includes financial restructuring and business restructuring to focus on core business of making carbon steel and withdrawing from non-core and non-viable activities. Making employees focus on market requirement, ensuring greater involvement of plans in marketing initiative, achieving cost leadership through rigorous cost cutting drive and rationalizing manpower to bring down the total number of employees to competitive levels are some other facets of the strategy.

In the new millennium, there is a strong focus on SAILs business activities for customer satisfaction, adopting an approach for increased synergy between production capabilities and market needs and ensuring supply of customized products with shorter lead times. 7

SAIL has been progressively investing in technological up gradation of its plants and facilities for supporting costs reduction, improving product quality and yields, and for environmental protection. In the new millennium, the accent of SAIL has been to accelerated the process of change, adapt to emerging competitive business environment and excel as a business organization both within and outside India.

VISION OF SAIL
To be a respected world Class Corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.

MISSION OF SAIL
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 peoples lives.

BOKARO STEEL PLANT AT A GLANCE

DEVLOPMENT OF BOKARO STEEL PLANT
In September 1955 the Govt. of India decided to develop the Bokaro site for a steel plant. Accordingly, an initial provision of Rs. 3.75 cr. Was made and Hindustan Steel Limited (HSL) was asked to take up the preliminary work. HSL appointed M.N.Dastur &Co., the consultants, for carrying out the feasibility study. The feasibility report, submitted in

December 1959, recommended establishment of a 2 million-tone plant, which was accepted. M.N.Dastur & Co. was then commissioned to prepare a Detailed Project Report (DPR) in May 1962. The DPR envisaged 1.5 mt. Plants in stage 1st and 4 mt. Plants in stage 2nd. Again, on the basis of DPR, Hindustan Steel Works Construction Limited were appointed as civil contractors to undertake the site work. In order to arrange external started finance, negotiations Government of India with government of USA. Accordingly, it was agreed in January 1962 that technosurvey economic

would be made by US Govt. Agency for International Development (US AID). The report, submitted in December 1962 by US Steel Corporation, who was appointed by USA to conduct the survey, envisaged a 1.4-mt steel plant, increasing its capacity to 4 mt over of 10 years. However, there was sharp resistance in August 1963 for providing assistance to state aided project in India and that ended the scope for American finance. A global quest for financial aid by any other country was started which ultimately culminated in the USSR agreeing to finance the project. An agreement was signed with the Soviets on 25 January 1965 for rendering financial assistance and technical collaboration for establishment of Bokaro Steel Plant. In pursuance to this agreement V/o Tiazpromexport, Moscow, prepared a DPR for the diverse aspect of works at Bokaro between 1965 and 1969. Bokaro Steel Plant was originally incorporated as a limited company in Jan. 1964. But, after the information of Sail in 1973,m it become the wholly owned subsidiary of SAIL in terms of public Sectors Iron and Steel companies (Restricting and Miscellaneous Provisions Act, 1978). The Plant was conceived as the countrys first SWADESHI steel plant with build with maximum indigenization going into the going into the equipments, Materials and Know 9

how. Thus, this project has been a radiant shift from the earlier dependence on foreign sources for know-how and consultancy, design, and equipment, supervision, erection, etc. to almost a full measure of self-reliance. Its first of 1.7 million ton ingot steel commenced on 2nd October. 1972 with the commissioning of the third blast furnace. Except for minor units in cold Rolling mills, all units of 4 million-tons stages have already been commissioned as on date. The Plant is designed to produce flat products like Hot Rolled coils, Hot Rolled Plates, Hot Rolled Sheets, Cold Rolled coils, Cold Rolled Sheets, Galvanized (Plain & Corrugated) Sheets and Tin Mill Black Plates Linked with major raw materials sources, the supply of Iron Ore and fluxes is ensured from the captive mines of SAIL situated at Kiriburu, Meghataburu, Bhawanathpur and Kuteshwar. Some more leasehold for limestone/dolomite is being developed for meeting the future requirements. Washed coal supplied from different washeries at Dugdha, Kathara, and Giddi, ETC. and raw coals obtained from jharia coalfield. Thus, most of the coal requirements are met from nearby sources making Bokaro a coal-based steel plant.

ANNUAL RAW MATETIAL CONSUMPTION OF BOKARO STEEL PLANT

Raw material Lump Iron Ore Iron Ore fines Limestone for sinter plant Limestone for lime & dolomite shop Manganese Ore Dolomite for lime & dolomite shop Quartizite Coking Coal Ferro Alloys Bauxite Quartzite sand for foundries Maudling clays Muddling for thermal power plant Table 2 Consumption in 1.5MT stage 1240 2930 1185 443 140 57 90 3344 14.8 17 12.4 5.8 231 Thousand tones 4.0 MT stage 2164 5393 1906 1067 256 139 140 5573 34.8 40 29 9 372

10

PRICING POLICY
Bokaro Steel Plant is one of the largest integrated steel plants in Asia. BSL mainly produces Hot rolled sheets, cold rolled sheets, galvanized sheets, corrugated sheets etc. but in the production of these items, many valuable by products are generated. In order to maximize sale revenue and cut down the cost of main products, these by products are sold, but these by products being of high market value need special efforts and procedure for selling. Here the marketing department of BSL plays a major role. These by products generated in the process of converting coal to coke though of very high market value cannot compete with similar petroleum products in term of quality. As a by product selling company cannot become a market leader in those products when there is the presence of large units selling similar products as their main product so BSL cannot become market leader. BSL is not market leader in the field so its prices mainly depend upon the prices set by market leaders. BSL follows the prices set by the market leaders though there is other factors also which play a vital part in price determination. These factors are Dispatches of last three months. (a) Demand (b) Stock in hand Besides these factors the market forces decide the price and marketing department meet those prices. The main objective of the pricing policy of BSL is maximization of sales revenue. The objective is fulfilled by either increasing the prices when the demand is high or decreasing the prices when demand is low or giving some turn over discount on its products. The pricing committee takes all decisions relating to pricing policies.

DISCOUNT POLICY
Generally no discount is offered but in some cases when bulk sale and quick disposal is given preference then discount is offered. Currently only on ammonium sulphate discount

11

is offered. These discounts are termed as Turn over discount (TOD). On ammonium sulphate the discount is as follows 1000 to 1500 metric tone Rs. 200 per metric ton. <1500 metric ton Rs. 350 per metric ton The revenue maximization team reviews the decision related to pricing policies periodically. Revenue Maximization team meets once in a month and decides upon the various pricing criteria of different products of respective steel plants. It plays a major role in price fixation of different products.

CURRENT SCENARIO
The Indian steel industry also went through an extremely turbulent phase in the backdrop of a global economic slowdown revealing that the industry was now globally linked and was impacted by developments in international markets. As per the Ninth Plan (19972002) steel production targets the industry had started investing in fresh capacity. While the installed capacity of the industry went up to 35 MT, a slowdown in almost all industrial segments of the Indian Economy and depressed global demand resulted in mismatch between installed capacity and demand. This led to a crash in steel prices, which meant ever-decreasing price realization for all major steel producers. All major producers barring Tata Steel went into red and in 1999-2000 questions were being asked whether the steel industry would surivive. Fig 1. shows that the profitability of the Indian Steel Industry had eroded considerably during this phase. Fig. 2 shows the Return on Net Worth of Indian steel companies during this tough phase.

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1.3

PROBLEMS OF THE COMPANY

It has to create credibility in the public. It has to compete with the wide range of products that its competitors offer. It has to decide on the strategies to be adopted which will help to counter competition. It has to increase its no. of offices and also enhance its network of agents so that it can compete with other companies. It has to focus on providing effective training to its employees so that the customer base can be increased and moreover customer satisfaction can be ensured.

1.4

Competitors Analysis

Tata Steel Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) represents the countrys single largest, integrated steel plant in the private sector. The company has a wide product portfolio, which includes flat and long steel, tubes, bearings, ferro-alloys and minerals as well as cargo handling services. While in terms of size, Tata Steel ranks 34th in the world; it was ranked first (for the second time) among 23 world class steel companies by World Steel Dynamics in June 2005. Recent overseas acquisitions are Tata Steel buying Anglo-Dutch firm Corus for over 12 billion dollars With its plant located in Jamshedpur (Jharkhand) and captive iron ore mines and collieries in the vicinity, Tata Steel enjoys a distinct competitive advantage. The main plant at Jamshedpur manufactures 5 MTPA of flat and long products, while its recently acquired Singapore-based company, NatSteel Asia, manufactures 2 MTPA of steel across Singapore, China, Philippines, Malaysia and Vietnam. Corporate Catalyst India A report on Indian Iron and Steel Industry Steel Authority of India Limited (SAIL)

13

Steel Authority of India Limited (SAIL) is a leading Public Sector Undertaking (PSU) in which the Government of India owns about 86 per cent of equity. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. It is ranked amongst the top ten public sector companies in India in terms of turnover. They manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL have five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Companys iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. This gives them a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. Bhushan Power & Steel Ltd Bhushan Power & Steel Ltd., an ISO 9002 certified company, is a merged entity of Bhushan Industries Ltd., Bhushan Metallics Ltd. and Decor Steel Ltd. Bhushan Steel has a turnover of more than USD 540 Million and is a leading manufacturer of Flat, Round and value added products in Steel. Bhushan have 7 World class and state of art plants at Chandigarh, Derabassi, Kolkata and Orissa in India. A completely integrated plant is commissioned under Phase I in Orissa and Phase II is all set for take off. In Orissa plant, technology and equipments are procured from world-renowned Companies like Luirgi from Germany, ABB Ltd., SMS Demag, Siemens etc. It is selling its Value added range of products in Secondary Steel through a large distribution network in India (comprising more than 25 sales offices) and Abroad. 14

Jindal Steel & Power Limited (JSPL) Jindal Steel and Power (JSPL), part of the US$4 billion Jindal Organisation, has business interests in steel production, power generation, mining iron ore, coal and diamond exploration/mining. The current turnover of the company is over Rs. 30 billion and on a path of catalyzing economic development of the country through its contribution to the infrastructure sector. JSPL with its obsession for excellence, is increasing its portfolio of value-added products, bringing the worlds best to India and making an international mark. Production Capabilities expanded to serve the infrastnicture sector, catalysing economic, development and growth. JSPL has the integrated steel plant (as approved by Joint Plant Committee) at Raigarh in the state of Chhattisgarh, India. The facilities include worlds largest coal-based Sponge Iron Plant with a capacity of 1.37 million TPA using ten indigenously developed rotary kilns. The company has achieved complete backward Corporate Catalyst India A report on Indian Iron and Steel Industry

integration with its captive iron & coal mines making it one of the lowest-cost producers of sponge iron The steel making capacity has been expanded from 400,000TPA to 1.15 million TPA. JSPL today is the largest private sector investor in Chhattisgarh with a total investment of Rs.100 billion. JSPL has recently signed an MoU with the State Government of Orissa to set up a 2 million tonne steel plant with an investment of Rs.13.5 billion which would be expanded to 6 million tonne and another MoU has been signed with the State Government of Jharkhand to set up a 5 million steel plant with an investment of Rs.120 billion.

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ESSAR Steel Essar Steel Limited (the Company) is the flagship Company of the Essar Group and looks after the Groups interest in the steel business. The Company was incorporated in June 1976 under the name of Essar Construction Limited and was engaged primarily in core sector activities, including marine construction, pipeline laying, dredging and other port-related activities. In 1984, the Company ventured further into other core sectors mainly the field of exploration and development, drilling onshore and offshore oil and gas wells for Indian Public Sector oil exploration companies. In view of this the Companys name was then changed to Essar Offshore and Exploration Limited in May 1987. In August 1987, the Companys name was changed to Essar Gujarat Limited, to reflect its highly diversified business interest. In 1988, the Company made an initial public offer for its shares, which are now listed on Bombay Stock Exchange, National Stock Exchange of India and 2 other Indian Stock Exchanges. The Company diversified into the steel business in late 1980s with the purchase of an HBI manufacturing plant in Emden, Germany, which was dismantled and relocated to Hazira, on the west coast of India.

1.5

SWOT ANALYSIS
The SWOT analysis of the company refers to the strengths & weaknesses inherent

in the organization & the opportunities & threats faced by them from the environment, internal as well as external. This analysis is the foundation stone of the strategic planning process as well as short-term plans needed to attain the strategic objective of the organization. The analysis has been done in order to have a better understanding of the organization. The information given by the organization has been used to carry out the

16

analysis. The strengths, weaknesses, opportunities & threats identified are enumerated as follows: A) Strength: One of the largest and lowest cost producers of coal based sponge iron in the country. Total backward integration ensuring steady stream of profits Captive mining of iron ore and coal with coal washery facility Captive power generation B) Identifying projects and business opportunities. Expertise in project implementation at low capital cost and within the schedule time. Lowest cost producer of sponge iron (coal based in the country). Huge reserve of iron ore and coal in mines. The worlds longest rail developed in the factory brightens companys future outlook. Weakness: C) Domestic consumption of steel dependent on infrastructure spending by GOI. Opportunity: Forward integration into value-added Products, Rails & Universal beams will drive future growth. Association with NKK to create huge export potential for Rails. State of Chhattisgarh encourages the setting up of new power projects. The Governments policy to privatize the power trading leaves new opportunities opened for the company. Reduced availability of steel scrap (substitute for the sponge iron) will increase demand for the sponge iron. The increasing price of steel in the market will maximize the profitability of the company further. 17

D)

Threats: Sponge iron prices movements are dependent on international scrap prices, which fluctuate widely. The main competitors like SAIL, TISCO, MITTAL STEEL, JSPL etc. of BSIL.

E)

Challenges: The gap between demand and supply of steel is increasing. increased production. The

challenge before the company is to fulfill the customer needs through

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CHAPTER 2 RESEARCH OBJECTIVE AND METHODOLOGY

19

2.1

SIGNIFICANCE
The first & foremost step in any research work is to identify the problems or

objectives on which the researcher has to work on. Any Research has its own importance in any business organization . research shows the real fact about product as well as organization. The

Research is a

systematic and scientific investigation of any idea either precise or abstract from a continuous basis for learning , it could be either exploratory or descriptive. According to above definition research is a systematic and scientific investigation through which any organization try to find out its strength and weakness as well as opportunity and threat. As we know in the present era the business activities have become more complex and complicated due to modern technology, globalization and liberalization and in other hand today customer are highly conscious about products and brand . In recent time customers are not blind follower of a product. They are giving high priority to all feature like price, quality, innovative features etc. But after all this features brand becomes the inevitable parts of any product because it gives the complete identification of product so it is also the one most important part. My research work is highly focused on this issue, which is important for me as well as the organization. During research work I learnt retailers opinion about product and services . I learnt which factors affect the retailer to sale an individual product, this research gives me insight to understand the retailers problem as well their area of interest, in this I got the great experience about the market For company point of view I tried to find the serious drawback, which is highly, affected the sale of chocolates. I tried to find market share of SAIL which is itself important .I tried to find the sale figure of SAIL in term of rupees, due 20

to some hurdle I dont claim my

research work is 100% accurate because so many

factors was uncontrolled during the project .I tried to finish my research with 100% accuracy which is best available in market .

2.2

MANAGERIAL USEFULNESS OF THE STUDY

The research is a systematic investigation of any idea. The research is widely used

in the business world for analyzing & evaluation business policy as well as the analyzing & evaluates competitors activity and policy. The research is itself valuable. The research gives fact and figure, which is useful in planning. As it is obvious any business activity is based on to the 4 Ps of marketing viz. price, product, promotion, place all these Ps have its own importance and all are interrelated with each other but most importantly all the factor are independent in the nature. In any organization all factors are carefully formulated to gain a success in the market. It is very important for business analyst to evaluate the modern trend and market position. In the other hand it is vital for business operation to know the need and desire of customer. All the necessary information is received from market by research work. The study reveals many facts that have come up during my project and these facts can either be used as opportunities in exploring and expanding the business as well as can be used as safeguards against threats by the competitions. To prepare an effective marketing strategy a company must study it s competitors as well as its actual and potential retailer. A company should maintain good relation with their distributors and retailers keeping in view competitive orientation in todays global market. Company should neither put much emphasis on competitors positioning nor should it solely concentrate on its own products and policy. Rather it should find midway between these two extremes and adopt flexible policy. Companies should manage a good balance of declares retailer, consumer & competitors monitoring . The information will prove beneficial in taking proactive action for combating competition .the standing of the company and its competitors in the mind off the retailer in a vital factor in deciding the success of business the study also aims at finding out the

21

market share in term of their sale, product penetration demand etc which is adjusted by retailer. This information is good guide to management as it brings out the strength of the competition their product penetration, product demand their promotion policy, which gives an overview where the company needs to improve. This study basically aimed at providing the management desired vital information about the market situation.

2.3

OBJECTIVES OF THE STUDY

Steel Industries play a vital role in maximization of national income in every country like India. The objective of the project is to evaluate the contribution and performance of steel industries in India. This evaluation is also concerned with the competitiveness of Indian steel industries in foreign market. These evaluations are based on the kind of efforts that the Indian steel industries are making and generating desired results for maximum performance. The following are the objectives of my present study: To study the role of Indian Steel Industry in the contribution to National Income. To evaluate the present marketing strategy and key attributes help to enhance the efficiency of Steel Industry. To know the export capacity of Indian steel industry to enhance national income.

2.4

SCOPE OF THE STUDY

There are some of the following scopes of study: This study can be applied to find out an effective role of steel industries related to other economic sectors in India. From the present study we can know the market share of different Steel firms and accordingly formulated strategy to enhance it.

22

The present study can be extended to assess the present marketing condition of different Steel Plants.

The study can be used to design a proper product, price, place & promotional strategy for the by-products of different Steel Plants.

2.5 RESEARCH METHODOLOGY

The author has carried out a research which is both qualitative and quantitative in its support. The qualitative approach applies to both, descriptive and inductive forms of research. While as in case of quantitative approach, an extensive use has been made of the literature available to carry out a detail research on the nature of the problem. The author has chosen SAIL & TATA Steel as the target companies in particular. A combination of both primary and secondary resources have been used to achieve the aims and objectives of this report Primary data collection methods Sample size: Sample area: Sample unit: 100 NCR Delhi officials and employees of SAIL & Tata steel

Method of collection of data: Questionnaire method as well as interview method was employed to extract best results from the target respondents

Secondary Research
The secondary sources of data consists of books for an academic perspective, industry journals, magazines for competitive strategy, annual reports, government publications and views of other authors. Some of the secondary sources of information include

23

 Books Internet links Journals

Analysis
The results of the questionnaire were analyzed using graphs and charts and a trend on the internal working of the organization were marked out. This allowed reaching conclusions on the issue as to whether the internal operations of the organization are conducive for growth or not. The results of the interviews would allow us to go in-depth into the marketing policies of the organization and would allow us to link it to the future competitive position. Both quantitative and qualitative data analysis shall be done by using appropriate means which complies with both academic and professional standards.

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2.6

LIMITATIONS & DIFFICULTIES

In completing the study the investigator encountered number of difficulties. In such a short span of time it is very difficult to study the whole personnel functions or a/c of the organization. The impact of the marketing programme on organization is a continuous process. It is impossible to study the whole procedure within such a short span Apart from this there were lots of other problems encountered during the research work. The officials were very hesitant and reluctant to give interviews and answers to questions of investigators.

25

CHAPTER 3 CONCEPTUAL DISCUSSION

26

In this chapter the author has discussed and critically analyzed the literature related to competitive dimensions & advantages which are crucial in modern economic environment. The effective marketing strategies of SAIL to attain competitive advantage have also been discussed here. Techno-economic parameters, cost effectiveness, human resource management issues, Research & Development, environment management, public relations, cost competitiveness, quality competitiveness, all these issues in regard to steel sector in India have been discussed in length. This section also discusses the policies of marketing and strategic planning as well as the demand for steel and its relevance to national economy.

COMPETITIVE DIMENSIONS & ADVANTAGES ARE CRUCIAL IN MODERN ECONOMIC ENVIRONMENT

Given the choices that customers face today, how do they decide which product or service to buy? Different customers are attracted by different attributes. Some customers are primarily interested in the cost of a product or service, and correspondingly some companies attempt to position themselves to offer the lowest price. The major competitive dimensions that form the competitive position of a company include the following. Cost Make it cheap Within every industry, there is usually a segment of the market that buys solely on the basis of low cost. To successfully compete in this niche, a firm must be the low cost producer, but even doing this does not always guarantee profitability and success. Product quality and reliability Make it good. Quality can be divided into two categories: product quality and process quality. The level of quality in a products design will vary with the market segment at which it is aimed. Obviously, a childs first two wheeled bicycle is of significantly different quality than the bicycle of a world class cyclist. The goal in establishing the proper level of product quality is to focus on the requirements of the customer. Over-designed products with too much quality will be viewed as prohibitively expensive. Under-designed products, on the other hand, will lose

27

customers to products that cost a little more but are perceived by the customers as offering greater value. Process quality is critical because it relates directly to the reliability of the product. Regardless of whether the product is a childs first two wheeler or a bicycle for an international cyclist, customers want products without defects. Thus, the goal of process quality is to produce error free products. Delivery speedMake it fast. In some markets, a companys ability to delivery more quickly than its competitors may be critical. Seeing a need for speedy, reliable overnight delivery, FEDEX became a $15 billion company and the worlds large expedited delivery service. Delivery reliabilityDeliver it when promised. This dimension relates to the ability of the firm to supply the product or service on or before a promised delivery due date. For an automobile manufacturer it is very important that their supplier of tires provide the needed quantity and types for each days car production. Coping with changes in demand Change its volume. In many markets, a companys ability to respond to increases and a decrease in demand is an important factor in its ability to compete. It is well known that a company with increasing demand can do little wrong. When demand is strong and increasing, costs are continuously reduced due to economics of scale, and investments in new technologies can be easily justified. But scaling back when demand decreases may require many difficult decisions relating to laying off employees and related reductions in assets. The ability to effectively deal with dynamic market demand over the loan term is an essential element of operations strategies. Flexibility and new product introduction speedChange it. Flexibility, from a strategic perspective refers to the ability of a company to offer a wide variety of products to its customers. An important element of this ability to offer different products is the time required for a company to develop a new product and to convert its processes to offer the new product.

28

According to a report published in Times of India (2007) SAIL had received excellent rating for achieving targets set in the MOU with the Government for the year 2005-06. Considering the sustained growth demonstrated by the company during 2006-07, a similar rating is expected this year as well. During 2005-06, while maintaining capacity utilisation at 104%, the company focused on the production of finished steel, lower energy consumption and reduction in coke rate, increased production through the continuous cast (CC) route and improved the product mix during 2006-07.

Effective strategies of SAIL to attain competitive advantage

Despite the market remained buoyant, the rising steel production worldwide put tremendous pressure on availability of essential inputs like coking coal. Despite facing a severe coking coal crisis during the first half of 2006-07, however, the SAIL plants achieved all-time best performance by optimising operations and laying a thrust on value addition in downstream units such as production of finished steel, plates, rails, structural steel, etc., total finished steel production went up by 4 lakh tones to a record level of 9.28 million tonnes (MT), a growth of 5% over the previous year. The proportion of finished steel production in total steel went up to 84% during 2006-07 from a level of 80% achieved in 2005-06. The SAIL plants showed marginal increase in production of crude steel as well as saleable steel 21,000 tonnes and 4,000 tonnes respectively. The four main integrated steel plants of SAIL produced a record 7.53 MT of steel through the concast route during the year. This was 4% higher than the CC production of the previous year. As a result, the proportion of BOF-CC production went up to 64% of total crude steel production. In fact, 2006-07 save best-ever average capacity utilisation of continuous casting facilities at 125%. Production of value-added items like plates, bars & rounds and railway products recorded growth. Plate production at 2.12 MT was the highest ever, with a growth of 15% Bhilai steel plant also produced 864,00 tonnes of rails, the highest so far and 7% more than the production in 2005-06. The first consignment of 65-meter long rails welded into 130-meter panels was dispatched by BSP to the Indian Railways during the year. Production of wheels &axels by Durgapur Steel Plant at 29,000 tonnes was the highest ever and 38% more than that of 2005-06.

29

The long product plants also produced the highest-ever volume of 5.4 lakh tonnes of bar & rounds during the year recording a growth of 8%. A total of 6 lakh tonnes of structurals were produced by SAIL in 2006-07, 3% higher than the previous year and the highest so far. The three special steel plants of SAIL at Durgapuri, Salem and Bhadravati together produced 3.79 lakh tonnes of saleable steel, the highest ever and 27% more than their achievement of 2005-06, contributing substantially to the companys cumulative production performance. The total iron ore requirement of the SAIL plants was met from captive sources. The companys mines produced 19.83 MT of iron ore, the highest ever, during the year. The mines of Raw Materials Division in the eastern part of the country together produced nearly 13 MT of iron ore, showing a growth of around 1.2% over the previous year and setting a record. While all the RMD mines registered best-ever yearly output, Barusa Iron Mine deserves special mention for showing highest growth of 14.5% with a production volume of 1,341,000 tonnes. The special thrust laid by RMD during 2006-07 on quality enhancement measures and cost reduction resulted in better productivity and effective mitigation of the companys variable input costs. Among the various steps taken by RMD to enhance efficiency were better mine planning, development of mines in new areas, improved processing facilities, and replacement of old heavy earthmoving machinery with new equipment. Adoption of various cost cutting measures led to substantial savings. During 2006-07, SAIL became the first industrial enterprise in the country to wheel surplus power from one of its captive units to another through the national grid. Generation of power by the captive power units at 525 MW was also the highest ever, showing a growth of 6% over 2005-06

Techno-economic parameters
The following are the techno-economic parameters:Coke rate: Lowest ever rate of 536 kg/tonne of hot metal was achieved during the year, an improvement of 1% over 2005-06. Refractory consumption: At 16.7 kg/tonne of crude steel, was lowest ever, 9% lower than the consumption in 2005-06, due to significant increase in BOF lining and ladle life at all the plants. 30

Energy consumption: The SAIL plants together consumed only 7.28 giga calories per tonne of crude steel on an average, which was 2% lower than the previous year, in spite of the increase in production of value-added steel which consumes higher energy.

Cost Effectiveness
Economic Times states that the thrust on improving efficiency of cost management launched by SAIL during the downturn in the steel sector continued during the year 2005. New schemes were identified and existing schemes reviewed and revised to offset the impact of the sharp rise in input prices, particularly in the case of coking coal, Ferro alloys, etc., during the year, resulting in savings of about Rs. 130 crore. SAILs cost management endeavours once again received recognition at the national level. The Institute of Cost & Works Accountants of India adjudged SAIL as being the second best company in the public sector in India during 2005 in this parameter and presented the company its National Award for Excellence in Cost Management. SAIL had received the winners trophy last year for excellence in cost reduction during 2004.

Marketing Muscle
The consumption of finished steel in the country is estimated to have crossed the 33 MT mark during 2006-07 a growth of about 6% over the previous year. In line with the increased level of consumption, SAIL established a new domestic sales record of 10.3 MT, an increase of 8% over the achievement of the previous year. To ensure higher availability of steel in the domestic market, SAIL consciously contained exports at a minimum level during the year. The company shipped only about 4 lakh tonnes of steel during the year against 11 lakh tonnes in 2003-04. SAIL sold a total volume of 8.6 MT of finished steel during 2006-07 recording a growth of 8%. The major product categories in which sales growth took place were plates (32%), HR coils (8%), TMT (30%), wheels & axles (33%) and heavy structurals (20%). Supplies of rails to the Indian Railways increased by 5% over the previous year to 7.3 lakh tonnes, including long rails up to a length of 78 meters.

31

A thrust was given on supplying steel on priority to user segments of national importance such as government, PSUs (public sector undertakings) and state small scale industry corporations (SSICs). As a result, there was a 25% increase in supplies of SAIL steel to the government sector and 65% to SSICs. Along with 40% higher supplies to projects, SAIL was able to hike supplies to consumers by 17% during the year on an overall basis. During the year, all the branches, stockyards and offices of CMO were linked to a centralised database. This helped in online availability of data, consistent data integrity and seamless information flow across all applications, leading to increased efficiency in serving customers.

Human Resource Management

Around 4,700 employees separated from the company during FY 07, around 1,440 voluntarily. SAILs total manpower at the end of the year thus stood at around 127,000, showing a reduction of about 48,000 since 1998. The companys labour productivity grew by 4% to 142 tones/man/year in 2006-07. To equip employees with higher technical skills, SAIL has signed an agreement with Tata-Corus/UK and CAI/Austria for provision of specialised training. Sharing of prosperity with employees was a major management thrust during 2006-07. Among the initiatives taken in this regard were payment of wage/salary arrears for the period 1.1.1997 31.12.2000, restoration of earned leave encashment, enhancement in conveyance expenses, mining allowance, reimbursement of night shift expenses, enhanced incentive payments, etc. A rolling trophy was introduced to encourage management excellence amongst young managers of the company. A team from Bhilai Steel Plant lifted the inaugural Chairmans Trophy for Young Managers for the year 2004 from amongst 130 contesting teams across the organisation. Ten SAIL employees were selected by the Ministry of Labour for the nations highest awards recognising exceptional achievements of workmen for the year 2007. Three BSP employees will receive the Shram Vir shile 7 employees (5 from BSP and 2 from VISL) will receive the Shrem Shri title later this year.

32

Research & Development

The development measures at SAIL projects at SAIL focus on process improvement, cost competitiveness, product quality, product development and basic research for improvement in techno-economic parameters to increase capacity utilisation. Major initiatives aimed at cost competitiveness included: Improvement in lining life of converter to 2,000 heats in SMS-II at RSP including steel ladles at RSP & BSP by technological initiatives Raising productivity of DSP Sinter Plant to 1.36 tonnes/m/hr (peak 1.6 tonnes) Increase in BF productivity at RSP by process changes in furnace working from peripheral working, reversal off BLT matrix and other changes in charging system. Technological initiatives like hot charging of wheels, modification of ingot design, etc., helped in record production of wheels & excles at DSP Reduction in HSM roll spalling at BSL Measures to obtain increased campaign length and reduced roll consumption at BSL. Installation of automation of hot saws in BSPs Rail & Structural Mill

Product development efforts by RDCIS included the following: SAIL-HITEN 690 AR grade plates at BSP Spring steel at DSP High strength cold rolled steel (HSCR-35) at BSL. Steel noise barriers for roads/highways DMR-249 for Indian Navy warships

Environment Management
According to Annual Report of SAIL published in March 2007, SAIL is committed to providing a healthy environment in and around its steel plants. Over 2 lakh trees planted

33

in 2006-07 added further substance to the companys efforts in this direction. Around 13 million trees have been planted so far by SAIL at different plant/unit/mine locations. The SAIL plants/units maintained their thrust on controlling pollution during the year. Some of them even received awards for excellence in pollution control measures. They are: Gold award in metal sector for outstanding achievement in environment management for 2003-04 by Greentech Foundation/New Delhi to BSP and RSP Indira Gandhi Memorial National Award-2004 for Excellent Pollution Control Implementation Gold Award by International Greenland Society (IGS)/Hyderabad to BSP and RSP Indira Gandhi Memorial National Award for Excellent Environment and Ecological Implementation Gold Award by IGS to Barsua Iron Mine.

Public Relations
According to Annual Report of SAIL published in March 2007, to reinforce employee morale, internal communication activities were further strengthened. A planned approach yielded excellent results, with appreciative feedback from employees at all levels on the initiatives taken and themes selected to motivate, inform and instill pride in the workforce. Wide and focused communication through both print and electronic media strengthened the image of the organisation amongst the companys stakeholders and general public. Revival of the television ad campaign Theres a little bit of SAIL in everybodys life in the later part of the year, re-inforced the companys image as the industry leader in viewers minds due to its excellent recall value. Other campaigns such as the one highlighting SAILs turnaround as the most impressive in Indian industry, Steel Green and Steel in Need, SAIL in Deed were well received by the target audiences. A radio jingle in Hindi, Safetypin se flyover..., also generated popular response.

Cost competitiveness

34

According to Annual Report of SAIL published in March 2007, the following cost reduction measures are adopted in SAIL to gain competitive advantage:(a) Reduction in fixed cost through volume growth, reduction in manpower cost and financial charges; (b) Reduction in variable cost through technological interventions like elimination of ingot steel route, 100% Basic Oxygen Furnace and Continuous Casting, coke rate reduction via CDI/auxiliary fuel injection, and higher levels of process control computerization/automation, leading to enhancement of operating efficiency; and (c) By business process improvements such as streamlining of supplies of key inputs of steel making through higher utilisation of e-commerce, centralized procurement for select items, etc.

Quality competitiveness:
SAIL also emphasize on technology & input quality improvement across value chain; thrust on special quality steel and new products; improvement in process consistency and metal treatment; advanced online testing and quality control facilities; standardization/automation/process control & IT. Corporate Plan-2012 has considered the market growth projections assuming overall steel consumption at about 8% per annum. However, the growth trends and macro-economic indicators could lead to higher growth potential. Therefore, depending on the market growth, strategies of competitors, global economic scenario, government policies and resource availability, SAILs plans may be revised from time to time, and further growth in terms of volume, products, etc., may be aimed through Greenfield investments, acquisitions/mergers etc. The current plan provides the broad direction for SAIL to move forward and would be reviewed periodically.

Marketing Strategies Of SAIL

Sinha (2007) categorically states the clinical marketing strategies adopted by SAIL, according to Sinha (2007), the Steel being an industrial commodity it is very necessary to

35

maintain customer relationship for profitability and smooth running of company. SAIL adopts following practices for customer satisfaction. Procedure / process adapted to access current / future expectation of customers. It induces market research visiting customer premises attending to customer complaints. CMO has Market Management Group where specialists monitor changing demand pattern and development in each Market segment is carried on. It has posted market development officers at various locations that are its eyes and ears for monitoring current and future expectation of its customer. The Business-planning department is exclusively meant to study customer's changing demand scenario and assess current and future expectation. To understand customer needs seminars and workshops are also organized by

SAIL. Building Customer Relationship SAIL has adopted the philosophy of recognizing segment of the market and identifying key customer in segment and giving them preferential treatment. CMO sales executives have been trained to use direct selling as tool for building long lasting relationship with the customers. Easy access to customers to seek assistance makes proposals send comments and compliments.

Market Development
SAIL has valued customers group in identifying their specific needs specific to that group thus segmenting and developing market segment for our products. Major product modifications are done as per their specific needs of the Market segment thereby creating product differentiation packages.

JIT Delivery

36

JIT Delivery means just in time delivery. SAIL is able to make delivery just in time because it works in pre-planned manner; it takes order only after consulting the production units. So that the products car be delivered in right time.

Production According To Market Needs

SAIL is always in touch in market and tries to produce according to market needs. SAIL tries to produce quality products / new products which full fill the need of market.

Policies Of Marketing And Strategic Planning

SAIL has responsible function in the working of marketing department. All the risky developments, taking out solution to crippled situations, this section carries out product pricing and related activities, some of the programmes, policies and procedures are as follows :-

Positioning the product a value based place in customer mind.

Finalize annual sales plan and quantity, monthly, weekly, and daily rolling programme of Rolling mills in consultation with CMO and mills. This plan is based on the sales forecast receive from JPU SPL/ Iron and steel controller. Optimizing the product-mix by proper utilization of available stocks. Receiving Enquiries and complaints, cancellation of orders etc. Coordinating the works of mills and traffic department so as to maximize dispatches. Co-ordinations with CMO from stages of enquiry, for exports, Development of new qualities of steel. Implementation of suggestions received from the customers feed bock. Ensure customer satisfaction by meeting customers regularly; provide redressal to their problems and fulfillment of demand. development of new Profiles, sections, modification of product scheduling till the orders are completed. Periodical market surveys of products to analyze the market position.

37

GROWTH OF STEEL INDUSTRY IN INDIA

The Indian steel industrys onward journey in the recent time has been caused of great pride to all of us. The last four-year have seen the deregulated Indian steel industry performing at its peak level in almost all spheres. Steel production went up by 8 percent to reach a level of 33 million tones in2002-03 from 31 million tons recorded a year before. The domestic demand for steel also registered a growth rate of 6 percent and grew from 27 million toes in 2001-02 to 29 million tons in 2002-03. The most spectacular achievement has, however, been recorded in export performance. Export of finished steel from India increased by a whopping 37 percent from 2.7 million tons in 2001-02 to 3.7 million tons in 2002-03. In addition, significant improvement was noted in the exports of semi-finished steel, stainless steel and pig iron. All these favorable trends have been reflected in the improved profitability of the major steel markets in both the public and private sectors. The biggest success story has been that of TISCO, which has recorded an increase of 391 percent in its profit during this fiscal compared to the previous year. ESSARs balance sheet has been in the black after a long time, while other major steel markers nave reduced their losses significantly. The fact that such an improvement has come at the time of intense global competition and worrisome proliferation of non-tariff barriers in the development world, speaks volumes about the resilience, the innovativeness and, above all, the competitive spirit of the Indian exporters of steel. The dexterity, with which the Indian exporters diversified their destination markets, modified the composition of their export basket to suit the changing global demand profile, affected sizable reduction in production in production costs and adoption of state-of-the art technologies provides ample testimony to the maturity of this industry. From highly protected inward-looking industry of the pre-liberalization years it has matures into a modern and globally integrated industry in an astonishingly short span of time. The evolution of steel industry can be divided into three distinct phases. The first phase commenced with pioneering efforts of the lateJamsetji Nusserwanji Tata who laid the foundation of modern steel industry in India by establishing a steel plant at Jamshedpur 38

(Tata Iron and Steel Co.) in 1906 in the face of sever odds. Despite initial difficulties, the company underwent continuous expansion achieving 8% average annual growth rate of capacity during first 30 years. In 1918, the Indian iron and steel company (IISCO) was founded by British interests in Bengal. At first IISCO restricted it self to the manufacture of big iron primarily for export to Great Britain. In1926, The steel corporation of Bengal was formed which under took the construction of a steel mill adjacent to their blast furnaces. Another small plant at Bhadravati in Mysore was founded in 1918 to produce charcoal pig iron. In the mid thirties it added facilities to manufacture steel. In the context of development, which was taking place in the rest of the world, their efforts could be considered creditable. At the end of Second World War, India had a capacity if 1.5 million tones, 1 percent of the worlds production The second phase began immediately after independence. it was clear that if economic independence was to be achieved after political independence and low standard of living of masses was to be raised, a much more accelerated industrial growth was essential. For providing the infrastructure base, even in the First Five Year Plan, new steel plants were planned. It was decided to set up simultaneously three steel plants. An agreement was signed on 2 February 1955 with the Government of USSR for assistance in establishing one million tones steel plant at Bhiali. Germany agreed to assist in setting up a million tones steel at Rourkela and Britain offered to help in founding a million tones plant at Durgapur. However, efforts to obtain assistance from the USA to set up a plant in Bihar did not yield results. About the same time it was decided to expend TISCO and IISCO to a capacity of 2 million tones, 1 million tones respectively. Thus the Second Five Year Plan saw the most striking progress in steel industry. During this period different units in the steel plants were progressively commissioned increasing the installed capacity from about 1.5 to 6 million tones. In the Third Five Year plan, capacity of 3 public sector steel plants were further increased Rourkela from 1 to 1.8 million tones, Bhilai from 1 to 1.25 million tones and Durgapur from 1 to 1.1.6 million tones thus giving a six fold boost to the capacity existing at the time of independence. The third phase began with the decision to set up the fourth public sector steel plant at Bokaro. Right from the beginning Bokaro was conceived as Indias first steel plant with

39

indigenous equipment, material and technological know-how. The government of USSR offered technical and financial assistance and the inter governmental agreement signed on 25th January 1965 envisaged that Bokaro will have maximum Indian efforts. Presently, with the expansion of existing steel plant, particularly Bhilai upto 4 mt. expansion and Bokaro upto 4.7 mt expansion. There are 2 million ingot tones of mild steel plants, each at Vijaynagar in Mysore and Viskhapatnam in Andhra Pradesh and an alloy steel plant at Salem in Tamilnadu with a capacity of two hundred thousand tones of finished steel. Facilities have been provided for ultimate expansion of Bhilai Steel Plant to 7.5 million tones and Bokaro Steel Plant to 10 million tones, besides plans for expansion of other steel plant. India had to depend largely on foreign countries in regard to technology, equipment and consultancy service for its steel programme in fifties and sixties. In order to reduce this dependence, large capacity steel plant equipment-manufacturing unit was set up in Heavy Engineering Corporation in Ranchi. This was supported by other industries in public sector like Bharat Heavy Electrical Limited (BHEL), Mining and Allied Machinery Corporation Ltd. (MAMC), Bharat Heavy Plants and Vends Ltd.(BHPVL), Instrumental Limited (IL), Hindustan Machine Tools (HMT), Garden Reach Shipbuilders and Engineers Ltd. (GRSE), Jessops, Braithwaite and many other leading industries in public and private sector To ensure proper expertise for construction of steel plant the Hindustan Steel Works Construction Ltd. (HSCL) was set up. In the field of consultancy service Metallurgical & Engineering Consultant (India) Limited (MECON) and M. N. Dastur & Company (Dasturco) were developed. Efforts were also made to standardize major items of equipment thus providing the advantage of repeat manufacture by using the same design, documentation, engineering, thereby ensuring early deliveries and lower costs. The standardization of steel plant and equipment, however, did not mean freezing the technological levels as development in operational scales; sound maintenance and improvement in the preparation of inputs play vital roles. It was therefore, necessary to freeze the design at a certain stage of development and then improve on them. The

40

Japanese steel industry, which has made great stride, had also worked on this pattern in its earlier stages. The Indian steel industry has thus developed from a small capacity of 1.3 million tones of ingot steel in 1974 to 14.6 millions in 1988-89. Certain chance in strategy of development is called for in order to regain the quantum to growth without which the economic development would suffer.

41

CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

42

DATA ANALYSIS
PART-1 QUESTIONNAIRE ANALYSIS SAIL OFFICIALS
(1 for very poor, 5 for very strong) Q1. Which company do you think is the main competitor of your company? TATA Steel Jindal Steel Essar Steel

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 TATA STEEL JINDAL STEEL ESSAR STEEL SAIL 4 3 2 5 TATA STEEL JINDAL STEEL ESSAR STEEL SAIL

Fig. 1

43

Q2.

How would you rate your companies competitiveness in relation to the industry? Less Competitive Moderately Competitive Very Competitive

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Less competitive Moderately Competitive Very Competitive 5 5 TATA STEEL SAIL Less competitive Moderately Competitive Very Competitive

Fig. 2

44

Q3.

Do you think being a public sector company is a hurdle for the growth of the company? Yes No

70% 60% 50% 40% 30% 20% 10% 0%

yes no

yes no

SAIL 30% 70%

Fig. 3

45

Q4.

In your opinion is your company ready to expand overseas like other Indian steel companies? Yes No
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
yes no T AT A ST EEL 90% 10% SAIL 85% 15%

yes no

Fig. 4

46

Q5.

What affect do the government policies have on the company? Positive Negative

80% 70% 60% 50% 40% 30% 20% 10% 0%

posit ive negative T AT A ST EEL 65% 35% SAIL 80% 20%

positive negative

Fig. 5

47

Q6.

What affect will the opening up of the Indian steel sector will have on the future of your company? Positive Negative

80% 70% 60% 50% 40% 30% 20% 10% 0%

posit ive negat ive T AT A ST EEL 70% 30% SAIL 75% 25%

positive negative

Fig. 6

48

Q7.

In your opinion, which style of leadership does your company have? Autocratic Moderate Democratic
40% 35% 30% 25% 20% 15% 10% 5% 0%
Aut ocratic Moderat e Democrat ic T AT A ST EEL 30% 40% 30% SAIL 40% 20% 40%

Autocratic Moderate Democratic

Fig. 7

49

Q8.

How are the atmosphere and the environment at work? Very Tensed Tensed Moderate Relaxed Very Relaxed

40% 35% 30% 25% 20% 15% 10% 5% 0%

very t ensed t ensed moderat e relaxed very relaxed T AT A ST EEL 30% 40% 20% 5% 5% SAIL 35% 35% 15% 10% 5%

very tensed tensed moderate relaxed very relaxed

Fig. 8

50

Q9.

How would you rate the turnover rate in your organization? Very High High Medium Low Very Low

40% 35% 30% 25% 20% 15% 10% 5% 0%

very high high medium low very low T AT A ST EEL 30% 25% 20% 15% 10% SAIL 25% 20% 40% 5% 10%

very high high medium low very low

Fig. 9

51

Q10. Does the company offer you opportunities for growth and advancement of your career? Yes No

80% 70% 60% 50% 40% 30% 20% 10% 0%

yes no T AT A ST EEL 75% 25% SAIL 70% 30%

yes no

Fig. 10

52

Q11. According to you how is the culture of the organization? Conducive for growth Hinders Growth

70% 60% 50% 40% 30% 20% 10% 0%

conducive for growt h hinders growt h T AT A ST EEL 65% 35% SAIL 70% 30%

conducive for growth hinders growth

Fig. 11

53

Q12. What does your company think about its customers? Customer is king Customer is Important Customers are just Customers

70% 60% 50% 40% 30% 20% 10% 0%

consumer is king consumer is import ant consumers are just import ant T AT A ST EEL 60% 35% 5% SAIL 70% 28% 2%

consumer is king consumer is important consumers are just important

Fig. 12

54

Q13. Does your company reward you for your performance? Yes No Sometimes

80% 70% 60% 50% 40% 30% 20% 10% 0%

yes no T AT A ST EEL 75% 25% SAIL 70% 30%

yes no

Fig. 13

55

Q14. Does your company have a clear and defined future goal?

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

yes no T AT A ST EEL 80% 20% SAIL 85% 15%

yes no

Fig. 14

56

Q15. How clear are authority and responsibility relationships defined in your organization?

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

very clear very unclear cant say T AT A ST EEL 40% 30% 30% SAIL 45% 15% 40%

very clear very unclear cant say

Fig. 15

57

Q16. Do you own the shares of your company? Yes No

80% 70% 60% 50% 40% 30% 20% 10% 0%

yes no T AT A ST EEL 75% 25% SAIL 70% 30%

yes no

Fig. 16

58

Q17. If yes, then are you happy with the dividend payouts? 1 2 3 4 5

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

yes no T AT A ST EEL 85% 15% SAIL 90% 10%

yes no

Fig. 17

59

Q18. In your opinion how has been the performance of your companies stock in the recent past? 1
35% 30% 25% 20% 15% 10% 5% 0%
good very good sat isfact ory outst anding T AT A ST EEL 20% 30% 35% 15% SAIL 25% 30% 20% 25%

good very good satisfactory outstanding

Fig. 18

60

Q19. Would you invest money in your own companies stock? Yes No
70% 60% 50% 40% 30% 20% 10% 0%
yes no

yes no

T AT A ST EEL 60% 40%

SAIL 65% 35%

Fig. 19

61

Q20. The future is very competitive; do you think your organization is ready to face the competition? 1
70% 60% 50% 40% 30% 20% 10% 0%
yes no

yes no

T AT A ST EEL 60% 40%

SAIL 65% 35%

Fig. 20

62

PART-2 QUESTIONNAIRE ANALYSIS CUSTOMERS

Q1. Do you agree that the steel industry in India is witnessing an industrial and market boom? Yes -------------------------------------------------- 75 per cent No ---------------------------------------------------- 12 per cent Do not know/ Can not say -------------------------- 13 per cent

80% 70% 60% 50% 40% 30% 20% 10% 0%

Yes

No

Do not know/ Can not say

Fig. 21

Interpretation:
The above response reflects that the rolling steel industry in India is presently witnessing an industrial and a market boom.

63

Q2.

What factors contribute the most to the boom in this segment of market? Growth in infrastructure projects ---------------------- 26 per cent Liberalisation of the economy -------------------------- 50 per cent Special policy measures of the government ----------- 12 per cent Other factors ----------------------------------------------- 05 per cent Do not know/ Can not say -------------------------------- 07 per cent

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Growth in infrastructure projects Liberalisation of the economy Special policy measures of the government Other factors Do not know/ Can not say

Fig. 22

Interpretation:
The liberalisation of the economy is the key to the boom. In India demand is being driven up by mammoth infrastructure projects, like the construction of dams, ports, power plants, railways and motorways.

64

Q3.

What is the awareness of SAIL in steel market? Good ------------------------------------ 36 per cent O.K. -------------------------------------- 47 per cent Poor -------------------------------------- 11 per cent Do not know/ Can not say --------------- 05 per cent

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Good

O.K

Poor

Do not know/ Can not say

Fig. 23

Interpretation:
The awareness level in the market about the SAIL products is quite good.

65

Q4.

How do you see the export market of SAIL in the world steel market? Competitive in the world market ------------------------- 32 per cent Is in a survival state ---------------------------------------- 23 per cent Insignificant in the world market --------------------------- 12 per cent Do not know/ Can not say ---------------------------------33 per cent

35% 30% 25% 20% 15% 10% 5% 0% Competitive in the world market Insignificant in the world market Is in a survival state Do not know/ Can not say

Fig. 24

Interpretation:
The export market of SAIL (India), if we go by the views of the respondents, has a significant presence in the world export market.

66

Q5.

Do you agree that increase in SAILs export was one of the main reasons for the recent expansion in global of steel market? Yes -------------------------------------------- 67 per cent No ----------------------------------------------- 10 per cent Do not know/ Can not say -------------------- 23 per cent

70% 60% 50% 40% 30% 20% 10% 0%

Yes

No

Do not know/ Can not say

Fig. 25

Interpretation:
The industrial expansion of SAIL in terms of production and market is more or less driven by the export drive of the market in general and the industry in particular.

67

Q6.

Which are the major export markets of your company? The company exports more than 40 percent of its production to countries like China, Middle-East, Europe and the U.S. etc. The export growth is driven by in house development of low Nickel J series rolling steel. The company has also a strong presence in certain overseas markets for its thin cold rolled strips and coils for a variety of scientific and industrial usage.

68

Q7.

Do you agree that the Indian Steel market is growing at a fast pace and thereby attracts foreign investors and market leaders? Yes ------------------------------------------------- 86 per cent No --------------------------------------------------- 06 per cent Do not know/ Can not say ----------------------- 08 per cent

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Yes

No

Do not know/ Can not say

Fig. 26

Interpretation:
The fast growing Indian rolling steel market provided good market opportunities for rolling steelmakers, and attracted many domestic and foreign investors attention. It is a fact that the Indian rolling steel industry is being developed very fast in recent years.

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Q8.

What are the marketing strategies adopted by SAIL in both the domestic and international market? Product Expansion ----------------------------- Strengthening the export strategy -------------45 per cent 30 per cent

To create demand for our products -------------- 12 per cent Other measures ---------------------------------------02 per cent Do not know/ Can not say -------------------------- 01 per cent

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Product Expansion To create demand for our products Do not know/ Can not say

Strengthening the export strategy Other measures

Fig. 27

Interpretation:
The Steel makers are resorting to product expansion for strengthening their domestic and overseas market. Besides the above stated measure, the companies are also working in the direction of building a competitive marketing strategy and creating domestic demand for their products.

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Q9.

What are the impediments to improve the export potential of SAIL? Structural impediments ---------------------------------- 46 per cent Tariff related issues ---------------------------------------- 17 per cent Unstructured market ------------------------------------- 20 per cent Other factors ---------------------------------------------- 10 per cent Do not know/ can not say -------------------------------- 07 per cent

50% 40% 30% 20% 10% 0%

Structural impediments Unstructured market Do not know/ can not say Fig. 28

Tariff related issues Other factors

Interpretation:
India is a large and growing consumer of steel products, making it a net importer. India is struggling to fix a myriad of structural and performance problems that threaten its rolling steel industry: industry fragmentation, poor product quality, low labor productivity, an overly narrow product range (concentrated at the low, value-added end of the market), growing domestic demand and supply imbalances and obsolete plant and equipment. The industry remains grossly inefficient, technologically backward and unable to meet adequately the ever-changing needs of the market.

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Q10. How do you see the future of SAIL in India? Bright future ahead ------------------------------ 23 per cent Competitive --------------------------------------- 50 per cent Future is not good --------------------------------- 05 per cent Do not know/ can not say ------------------------- 22 per cent

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Bright future ahead Future is not good Fig. 29 Competitive Do not know/ can not say

Interpretation:
Despite an increase in production costs, SAIL has been successful in improving its operating profit per ton on an absolute basis, due to consistent improvement in productmix.

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CHAPTER 5 FINDINGS AND RECOMMENDATIONS

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Evaluation of Marketing Strategy of SAIL

Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create and exchange that satisfy individual and organizational objective. The marketing concept requires that customer satisfaction rather than profit maximization is the goal of the organization. In other words, the organization should be consumer oriented and should try to understand consumers requirement and satisfy them quickly and efficiently, in way that are beneficial to both organization and the consumer. This means that any research organization should try to obtain information on consumer need and gather marketing intelligence to help and satisfy these needs efficiently. Marketing research is a critical part of such a marketing intelligence system, it helps to improve management decision making by providing relevant, accurate and timely information. Every decision poses unique needs for information and relevant strategies can be developed based on the information gathered through marketing research. One of the major tasks in researching a market is to estimate its a current decisions hang on these estimates whether the market demand upon in future to justify the market entry. Once a company enters a market segment in order to allocate it resources effectively. Thus we can see that demand estimate is essential in carrying out three important functions: Analysis of market opportunities Planning of marketing efforts Control of marketing performance A market is a set of all actual and potential buyer of a product. The actual or, available market is a set of buyer who has interest and access to a particular market offer. If the organization is not satisfied with its current sales or has some expansion plans, it could try to attract a large percentage of people from its served market by promoting the

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product to available market. Untimely it could try to expend the potential market by launching the campaign to convert uninterested buyer into interested buyer. BY PRODUCT: In the steel industries we heated the coke we get some gas and tar product such as Ammonia, Tar, Benzene etc. These products are unwanted but we cant leave them vain. Because they are profitable as well as harmful for the environment and industries. So we go through the certain process and made some valuable product. Example: - When Bokaro heat the coke we get ammonia gas, we mix it in the sulfuric acid and made ammonia sulphate that use as a fertilizer with brand name RAJA. SECONDARY PRODUCT: In the process of making core project some defective come out. Because of some of break down and some mechanical default. We also get some scrap in the process of making cutting sheets. These secondary products are process from the beginning or sold through the auction and lot sale. For a nation that is economically strong, free of the problems of underdevelopment and plays a meaningful role in the world as befits a nation of over one billion people, the groundwork would have to begin right now. The Indian Steel Industry will be required and is willing to play a critical role in achieving this target. The findings from above data and interpretations thereof are as follows: With abundant iron ore resources and well-established base for steel production in the country, steel is poised for growth in the coming decades in India. Production has increased from 17 MT in 1990 to 36 MT in 2003 and 66 MT is targeted for 2011. In this way steel industry is contributing much in national income at a high pace. Steel will continue to have a stronghold in traditional sectors such as construction, housing, ground transportation, special steels will be increasingly used in hi-tech engineering industries such as power generation, petrochemicals, fertilizers etc. As the key attributes discussed above are very much in favor of steel industry. In budget 2004-05, the customer duty on non-alloy steel was reduced steel from 15% to 10% and on alloy steel from 20% to 15%. Further, custom duty on several raw materials

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used by the steel sector like non-coking coal, met coke and nickel has been reduced to 5% and on coking coal to zero. So government is also coming forward to make Indian steel industry a global hub. Marketing is one of the most dynamic fields in any business along with finance, production and operations, Human resource management and systems. Its orientation needs to be handled carefully as it is only through integration of marketing with other fields that makes an organization successful or face the odds. Indian steel industry is also concentrating on its marketing activities.

POLICY IMPLICATION
There are some steps need to be taken to help the Indian Steel Industry achieve its potential which is as follows: Steel is yet to touch the lives of millions of people in India. Per capita consumption of steel in India is only 29 kg and has to go a long way to reach consumption levels of around 400 kg in developed countries like USA and world average of 140 kg. There is a need to continue the current thrust on infrastructure related activities and extend them to rural India. Rural Indian today presents a challenge for development of the country and the opportunity to increase usage of steel in these areas through projects such as rural housing etc. Current shortage of inputs has pushed up the costs for the steel industry. Government should ensure that quality raw material such iron-ore and coke are available to the industry. With Ministry of Steel targeting an output of 100 MT of steel by 2020 there is an urgent need to develop raw material resources for inputs like iron-ore and coal within or outside the country. Countries like Japan have already taken similar steps to safeguard their industries. Adequate enabling infrastructure such as power, ports, roads, rail transport is prerequisite for the Indian steel industry to remain competitive.

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Government should not regulate prices and free market forces should prevail. Intervention by the Government is only a short-term solution to the issue of steel prices in the country. Once left alone, market dynamics will automatically ensure price corrections and determine the optimum price of steel. The Indian steel Industry is amongst the least protected in the world. While developed countries have put numerous tariff and non-tariff barriers on steel exports from the country, the domestic industry is exposed to cheaper imports from competing nations. As in case of other important industries, the Government should give reasonable levels of protection to the domestic steel industry, which is just starting to get back on its feet. Industry should be allowed to have a fair return on investment and contribute to the overall health of the Indian manufacturing segment. The steel industry has invested a capital of over Rs 90, 000 crores. CRISIL in a recent study has concluded that given the large exposure that banks and financial institutions have to the steel industry, a healthy steel sector is in the interest of the economy. Steel industry still continues to be unattractive for investors. Today, Indian producers employ world-class standards of technology. Steel from Indian finds growing acceptability in international markets. But despite this Indias share in world trade steel is a miniscule 2%. Given the capabilities of the Indian steel industry there is tremendous scope to increase this share further. While the steel industry will continue servicing the domestic demand there is a lot of untapped export potential with the industry.

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INDIAN 2020: A VISION FOR THE NEW MILLENNIUM

"We still have a number of persons in our country in SAIL, TISCO and other big and small steel plants who have the capabilities. They have the will to excel and transform the country, given a long term vision."

"We should be ready to compete in outside markets..If our steel industry gears up in about 3 to 4 years, Indian steel can be both in Indian and foreign markets. Our vision should be towards this." - By APJ Adbul Kalam and YS Rajan

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SUGGESTIONS
Suggestions To Enhance Efficiency Of Steel Industry in India
There is a need to continue the current thrust on infrastructure related activities and extend them to rural India. Rural Indian today presents a challenge for development of the country and the opportunity to increase usage of steel in these areas through projects such as rural housing etc. Current shortage of inputs has pushed up the costs for the steel industry. Government should ensure that quality raw material such iron-ore and coke are available to the industry. With Ministry of Steel targeting an output of 100 MT of steel by 2020 there is an urgent need to develop raw material resources for inputs like iron-ore and coal within or outside the country. Countries like Japan have already taken similar steps to safeguard their industries. Adequate enabling infrastructure such as power, ports, roads, rail transport is prerequisite for the Indian steel industry to remain competitive. Government should not regulate prices and free market forces should prevail. Intervention by the Government is only a short-term solution to the issue of steel prices in the country. Once left alone, market dynamics will automatically ensure price corrections and determine the optimum price of steel. The Indian steel Industry is amongst the least protected in the world. While developed countries have put numerous tariff and non-tariff barriers on steel exports from the country, the domestic industry is exposed to cheaper imports from competing nations. As in case of other important industries, the Government should give reasonable levels of protection to the domestic steel industry, which is just starting to get back on its feet. Industry should be allowed to have a fair return on investment and contribute to the overall health of the Indian manufacturing segment. The steel industry has invested a capital of over Rs 90, 000 crores. CRISIL in a recent study has concluded that given the large exposure that banks and financial institutions have to the steel industry, a healthy

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steel sector is in the interest of the economy. Steel industry still continues to be unattractive for investors. Today, Indian producers employ world-class standards of technology. Steel from Indian finds growing acceptability in international markets. But despite this Indias share in world trade steel is a miniscule 2%. Given the capabilities of the Indian steel industry there is tremendous scope to increase this share further. While the steel industry will continue servicing the domestic demand there is a lot of untapped export potential with the industry.

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APPENDIX

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APPENDIX
PART-1 QUESTIONNAIRE SAIL OFFICIALS
(1 for very poor, 5 for very strong) Q1. Which company do you think is the main competitor of your company? TATA Steel Jindal Steel Essar Steel Q2. How would you rate your companies competitiveness in relation to the industry? Less Competitive Moderately Competitive Very Competitive Q3. Do you think being a public sector company is a hurdle for the growth of the company? Yes No Q4. In your opinion is your company ready to expand overseas like other Indian steel companies? Yes No Q5. What affect do the government policies have on the company? Positive Negative Q6. What affect will the opening up of the Indian steel sector will have on the future of your company? Positive Negative

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Q7.

In your opinion, which style of leadership does your company have? Autocratic Moderate Democratic

Q8.

How are the atmosphere and the environment at work? Very Tensed Tensed Moderate Relaxed

Q9.

How would you rate the turnover rate in your organization? Very High High Medium Low

Q10. Does the company offer you opportunities for growth and advancement of your career? Yes No Conducive for growth Hinders Growth Customer is king Customer is Important Customers are just Customers

Q11. According to you how is the culture of the organization?

Q12. What does your company think about its customers?

Q13. Does your company reward you for your performance? Yes No Sometimes

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Q14. Does your company have a clear and defined future goal? Q15. How clear are authority and responsibility relationships defined in your organization? Q16. Do you own the shares of your company? Yes No Q17. If yes, then are you happy with the dividend payouts? 1 2 3 4 5 Q18. In your opinion how has been the performance of your companies stock in the recent past? 1 Yes No Q20. The future is very competitive; do you think your organization is ready to face the competition? 1 2 3 4 5 2 3 4 5 Q19. Would you invest money in your own companies stock?

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PART-2 QUESTIONNAIRE CUSTOMERS

Q1. Do you agree that the steel industry in India is witnessing an industrial and market boom? Yes -------------------------------------------------- 75 per cent No ---------------------------------------------------- 12 per cent Do not know/ Can not say -------------------------- 13 per cent Q2. What factors contribute the most to the boom in this segment of market? Growth in infrastructure projects ---------------------- 26 per cent Liberalisation of the economy -------------------------- 50 per cent Special policy measures of the government ----------- 12 per cent Other factors ----------------------------------------------- 05 per cent Do not know/ Can not say -------------------------------- 07 per cent Q3. What is the awareness of SAIL in steel market? Good ------------------------------------ 36 per cent O.K. -------------------------------------- 47 per cent Poor -------------------------------------- 11 per cent Do not know/ Can not say --------------- 05 per cent Q4. How do you see the export market of SAIL in the world steel market? Competitive in the world market ------------------------- 32 per cent Is in a survival state ---------------------------------------- 23 per cent Insignificant in the world market --------------------------- 12 per cent Do not know/ Can not say ---------------------------------33 per cent

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Q5.

Do you agree that increase in SAILs export was one of the main reasons for the recent expansion in global of steel market? Yes -------------------------------------------- 67 per cent No ----------------------------------------------- 10 per cent Do not know/ Can not say -------------------- 23 per cent

Q6. Q7.

Which are the major export markets of your company? Do you agree that the Indian Steel market is growing at a fast pace and thereby attracts foreign investors and market leaders? Yes ------------------------------------------------- 86 per cent No --------------------------------------------------- 06 per cent Do not know/ Can not say ----------------------- 08 per cent

Q8.

What are the marketing strategies adopted by SAIL in both the domestic and international market? Product Expansion ----------------------------- Strengthening the export strategy -------------45 per cent 30 per cent

To create demand for our products -------------- 12 per cent Other measures ---------------------------------------02 per cent Do not know/ Can not say -------------------------- 01 per cent Q9. What are the impediments to improve the export potential of SAIL? Structural impediments ---------------------------------- 46 per cent Tariff related issues ---------------------------------------- 17 per cent Unstructured market ------------------------------------- 20 per cent Other factors ---------------------------------------------- 10 per cent Do not know/ can not say -------------------------------- 07 per cent Q10. How do you see the future of SAIL in India? Bright future ahead ------------------------------ 23 per cent 86

 Competitive --------------------------------------- 50 per cent Future is not good --------------------------------- 05 per cent Do not know/ can not say ------------------------- 22 per cent

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BIBLIOGRAPHY

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BIBLIOGRAPHY
1. Brealey R, Myers S, (2003). Principles of Corporate Finance, Seventh Edition, New Delhi, Tata McGraw-Hill. 2. Johnson G, Scholes K, Whittington R. (2005). Exploring Corporate Strategy Text and Cases. 7Th Edition, Harlow England. FT Prentice Hall. 3. Mehta, SR, Business World, 2007, volume-2, issue-iv 4. Shroff, Pesi, 2005,India Today, issue dated 15th June 2005 5. Pandhe M K, 2007, Business Today, issue dated 1st August 2007 6. Porter, E M, (1985) Competitive Advantage, Creating and Sustaining Superior Performance. USA, the Free Press. 7. Wharton (1997) Wharton on Dynamic Competitive Strategy New York, John Wiley & Sons, Inc 8. ICFAI Press, Journal on Industry, Feb 06, Volume-2 9. Das SN, Business & Economy, Jan 06, Volume-1 10. Hindu, Survey Of Industry, 2006

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