industrial marketing_vizag steel

VIZAG STEELPresented By-

Samarth Bharal C005Ayushi Gupta C013Prasham Jain C015Suyash Jain C016Shreya Khare C018Akshay Khatri C019Yash Kumar Mangal C025Shubham Neema C026Apurve Paharia C027

Group-4MBA Tech CS 4th yr, Div B

OVERVIEW:▪ India ranks 4th in the world ranking for production of steel and fourth

largest producer of crude steel in 2014-15 with 110 million tonnes (MT).

▪ India produced 66.8 million tonnes in 2010-11in comparison to China’s 626.7 million tonnes.

▪ About 50% of the steel produced in India is exported.

▪ Strongly globalised industry and emerging global competitiveness.

▪ Modern new plants & modernised old plants

▪ Huge Infrastructure demand.

▪ Rapid urbanisation.

▪ Lot of Niche Players

PLAYERS IN THE INDUSTRY▪ Tata Steel: Wire rods, bars, and steel flats.

▪ Jindal Steel & Power: mild steel slabs

and sponge iron.

▪ JSW Steel: gamut of steel products .

▪ Essar Steel: sponge iron, steel and

iron ore pellets.

▪ Rashtriya Ispat Nigam Ltd: liquid steel.

▪ Bhushan Power & Steel Ltd: iron Ore

Beneficiation.

▪ Lloyds Steel: corrugated sheets and

steel coils.

▪ Steel Authority of India Limited: steel

and iron.

5

VIZAG STEELType Public Sector

Industry Steel Manufacturing-PSU-Rashtriya Ispat Nigam Limited

Operations Pan India

Annual Capacity 4.2 million tones

Markets South Asia, South-East Asia, China, Japan, Taiwan, North America, South Africa

Certifications ISO: 9001:2000, ISO 14001, ISO 27001, OHSAS 18001-best in world

Project Customers L&T, GMR, GVK, Gammon India, BG Shirke, Simplex Construction

Industrial Users TATA Motors, Maruti Suzuki, General Motors, Caterpillar, Cummins

6

STEEL PRODUCTS

Product Application

Hot Rolled • General engineering applications• Steel for automotive applications• Steel for boilers and pressure vessels• Steel for shipbuilding• Specialty steel for wheels and long members

Cold Rolled • Automotives• Packaging industry• White goods• Furniture• Precision tubes• Electrical laminations• Porcelain enamelling

Burnt to Shape • Yellow goods• Pre-engineered buildings• Boilers and heat exchangers• General engineering• Wind energy

7

Product Applications

Galvanised • Construction – steel framing, false ceilings,sandwich panels, ducting, decking, purlin, HVAC applications• White goods – refrigerators, deep freezers, washing machines, • Automotive – auto internal components, bus bodies• Furniture – office equipment• Containers – grain silos, drum & barrels, crash guards / hand rails

Color Coated Sheets

• Construction and Infrastructure – industrial roofing and cladding, cold storage and warehouses, airports, atria in malls, showrooms, false ceilings• White goods – refrigerators, display freezers, washing machines• Automotive – bus bodies, railway coaches, luxury coaches

Plates • Wind mills• Yellow goods and mining equipment• Boilers and pressure vessels• General fabrication and engineering• Defence, Line pipes, Railways, Shipyards, Construction

8

Products Description

Special Steel Wire Rod Coils, Rounds and billets, Case Hardening Steel, Cold Heading Steel, Electrode Steel, Spring Steel, Bearing Steel, Free Cutting Steel

Structurals Angles, Channels, Beams

Re-Bars Constructional, Re-bars with corrosion resistant element

Plain Round Forging / Bright Bar (Medium Carbon, High Mn Steel), Spring Steel, Case Hardening Steels

VIZAG STEEL PRODUCTS

9


Flat Products Hot Rolled, Cold Rolled, Metallic Coated, Direct Rolled, Tubes, Pre-finished Steels, Packaging Steels, Electro Plated Steels, Electrical Steels, Narrow Strip

Long Products Sections, Special Profiles, Rail, Wires, Wire Rod, Speciality Steels Bar, Rebars

Construction Products Structural Steel, Floors, Walls, Roofs, Modular, Building Components

Agriculture ImplementsBearings

TATA STEEL PRODUCTS

10


Pipes • Oil and gas• Sour gas• Water pipes• Construction

Chequered Plates • Industrial flooring• Grating over closed gutter / culvert• Structural applications

Factory Welded Beams • Power projects• Bridges• Construction• Real estate

ESSAR STEEL PRODUCTS

11

Thermo-Mechanically Treated (TMT) bars

Essar TMT

Tata Tiscon TMT

12

Parameters Vizag Steel TATA Steel ESSAR Steel

Diameter 8mm-36mm 6mm-25mm 8mm-32mm

Corrosion and Thermal resistance

High High High

Thermal ResistanceHigh Moderate High

Seismic Resistance High High Low

Price Range(per rod) Rs.202.1-1986.6 Rs.128-1958 Rs.184.71-1875.66

POLITICAL• Introduction of National Steel policy, to fill the gap between the demand and supply of the

steel• To increase the production up to million ton• Special incentives like cut in the duty, zero duty on imports, provision of the land and other

infrastructural facilities• With the growing industry the government has increased the sales tax from the 15%to 20%

where as 75% FDI (foreign direct investment) is allowed in the industry

ECONOMICAL

• Various foreign players are interested to invest in the country• Under the various economies schemes there is permission in advance licensing scheme

which allows the duty free imports of raw material for exports.• Facing the problem of the subprime crisis

SOCIO CULTURAL• Due to working conditions, people which are employed in the steel industry faces many

health problems which are incurable• No allowances are given to the employees• Industry is responsible for the development of rural sector which leads to the rise in the

standard of the living of the people

TECHNICAL• Traditional technologies are been used, no innovation is there• Basic technologies are used in the production process like basic arc, induction furnace

and electric furnace which are outdated in the nature• Vizag has CMMI level 3 Certification for software development and has improved

German technology

ENVIRONMENTAL• Leading industries are following the environmental acts which are declared by the governments,

though it is creating very bad impact on the environment• Many industries are using the pollution control equipment and energy saving equipment but that is

not sufficient in the nature• Vizag steel is developing the Ultra-Low Carbon steel where there will be reduction in the

environmental loss

LEGAL• Government is introducing the various rules and regulations of this particular industry• The government is about to paying the more attention in the health policies of the employees

which are working with the steel industry• Special health incentives and rules are introduced in the steel industry.

Barriers to entry(Medium):

• Capital Requirement : To set up 1mpta capacity of steel plant Rs 25- 30 bn

• High economies of scale, lower costs,R&D expenses,protection from new entrant for integrated steel plant

• Government Policy: Regulatory clearances,allocation of iron ore mines and land acquisitions.

• Low product differentiation: It does not fall under speciality goods.

• Switching cost for customers: psychology cost

PORTER’S FIVE FORCES MODEL

Bargaining power of suppliers: LOW

▪ Has integrated steel making capacity

▪ Mines:

Madharam Dolomite Mine (MDM) 31.03 million tones

Jaggayyapeta Limestone Mine (JLM) 130 million tones

Garbham Manganese mine (GMM) 7,03,760 tonnes

Saripalli Sand Mine (SSM) 3,20,000 tonnes.

Bargaining power of buyer(Low)▪ Provides core raw material to other industries▪ A market leader in long steel products

Major consumers of steel Percentage▪ Construction industries 61 ▪ Capital goods 11 ▪ Auto 08 ▪ Packaging 05 ▪ Durable 03 ▪ Others 12

Threat of substitutes(Medium to Low):

• Aluminium ,Plastic,Glass,Composite Material• Volkwagon has started using aluminium so as to reduce the cars weight by

1000 kg• Replaced in large volume• Aluminum cannot be replaced completely and the cost differential is also

very high• Subsitution more prevelant in mfg of automobiles and consumer durables

Industry Rivalry(Medium-High):▪ It is high in domestic steel industry as demand still exceeds the supply

▪ National Steel Policy has envisaged production to reach 140 million tonnes (mt) by 2019-20

▪ Average growth rate for past 15 years 7% pa

▪ Product is a commodity

▪ High Fixed cost

▪ High exit barrier : cost of closing down plants

SAIL; 8.2TATA; 4.6

JSW; 3.6

JSPL; 1.7

RINL; 8.4

Others; 73.5

Market Share

SAIL TATA JSW JSPL RINL Others 22

23

Strengths

▪ Strong Position in a High Growth Market.

▪ Strategic advantage of Shore based locations.

▪ Operational Efficiency.

▪ Diverse Customer Base Served through an Extensive Marketing Network.

▪ Experienced Management Team.

▪ Availability of land and layout for Expansion up to 20 Mt.

▪ Image as quality producer & value for money supplier.

▪ Committed workforce.

Weaknesses

▪ Lack of resources captive iron ore & coking coal mines.

▪ Single location company - Only long products, exposed to cyclic markets.

▪ Due for Major capital repairs and modernization

▪ Steep rise in Cost of production and fall in margins.

▪ High cost of servicing huge equity.

▪ Subdued international & sluggish domestic Markets

24

Opportunities

▪ Huge demand potential in view of the

projected growth.

▪ Encouraging signs due to huge

infrastructure spend planned in 12th Five

Year Plan.

▪ Projected growth in Steel consumption.

▪ Improved availability of Ports & logistics.

▪ Diversifying to new product mix like Axles

and Transmission line towers etc.

Threats

▪ Stiff competition further compounded by capacity expansion by competitors and entry of International players.

▪ Single type of product may adversely affect company's profitability.

▪ Price cut by Competitors.

▪ Increasing raw material prices & shift of value chain towards raw materials.

▪ Oligopolistic coal supply side.

▪ Single iron ore supplier - located in disturbance prone areas.

▪ Predominant secondary sector in long products.

▪ New materials, products or technologies could reduce the demand for steel products

25

RINL-VIZAG CUSTOMERS

Project Customers(25%) Industrial Users

NSIC/SSIC Retailers

DLDs/Rural Dealers

Export Customers

Source : https://www.vizagsteel.com/code/marketing_segments.pdf

26

In order to promote exports, RINL set up an International Trading Division and opened its first International Marketing Office (IMO), E-portal at World Trade Centre (WTO), Colombo,Sri Lanka.

Conducting workshops of Architects, Designers, Builder, Consultants etc. at Major Metros

Rural Marketing meets to promote “Steel consumption in Rural Areas”(70%)

Advertisements during important Sports Events, Seminars etc.

Making a Product Film in local languages and telecast through local Cable network

Making a CD consisting of Product Features and Contact Persons

RINL-Vizag Promotion

Workshops

Seminars

Brochure


27

Advertisements on Buses, Hoardings at Bus Stands, Airports, Railway Stations, Vantage points

Glow Sign Boards at Stockyards, Retailers, DLDs and RDs locations(around 450)

Product Campaign through newspapers, magazines

Participation in Exhibitions for displaying RINL’s Products

Printing of Product Brochures for Circulation amongst customers

RINL consider providing promotional material or reimburse cost of display board showing “RINL Vizag Steel – Pride of Steel” etc. once the Rural Dealer has dealt with minimum 50 T under RINL RDS.


28

DISTRIBUTION STRATEGIES

29

▪ Five regional offices located at Visakhapatnam, Chennai, Mumbai, Delhi and Kolkata.

▪ 23 branch offices and 22 stockyards.

▪ 128 retailers spread across the country.

▪ 96 district-level dealers

Managed by-

30

Regional Offices And

other divisions

Branch Sales Offices Stockyards Consignment Sales

Agencies

Rural DealersDistrict Level DealersRetailers

A holistic view…

31

• INVENTORY MANAGEMENTS• Reduction of inventory at the rate of 5%• Just in time

• TRANSPORT• Rail• Port

What is incoming…

32

Distribution Channels

Direct

Indirect

Stockyards

Industry Specific Distributers

Processing and Development

Distribution…

33

DIRECT CHANNEL Nature of the product requires

Continuing relationship between the seller and the buyer

Large size of the order makes direct selling and distribution economical

Customized products

Industrial Manufacture

r

Industrial Buyer

34

• Processed Steel• -> BARC, Defense MinistryMajor Projects

• Hot, Cold, Galvanized • -> L&TConstruction

• Hot, Cold• -> Maruti, Hyundai, TataAutomobile

• Hot, Cold , Special Steels• -> Godrej Interio, Sleek Kitchens. General Engg

• Hot, Cold, Wire Rods• -> Suzlon,Inox, Global winds Energy

• Hot, Cold, Wire Rods, Special Steels• -> BHEL, L&T, JCB Machinery

35

USING TECHNOLOGY TO ADVANTAGE ▪ New Product Development (NPD) using modern technology and

launching them in market ahead of competition has given leading edge to Vizag Sales & Marketing.

▪ Vizag Steel has used their new high tech facilities such as Quenching & Tempering in Plate Mill to develop high grade plates, first time in India substituting large imports.

36

STOCKYARD▪ Ensuring continuous production at full capacity.

▪ To facilitate economic rolling at the plant as per the plan and movement of materials in bulk from the plant to consumption centers.

▪ To store materials received from the plant and supply to consumers in convenient lots and in the mix required by them.

▪ To avoid waiting time

▪ To distribute material uniformly.

37

TYPE

S

Own stockyards

Stockyard with consignment agents

Stockyard with consignment sales agents

38

INDUSTRY SPECIFIC DISTRIBUTORS▪ Distributor

▪ Buyers: automobile, shipbuilding and construction

▪ Product line: Certain specific category of steel products

▪ Advantage: easy access across different geographic locations, cater to specific large orders

39

PROCESSING AND DISTRIBUTION▪ supplying custom made product is not feasible in view of small

quantities

▪ Buyers: small one time buyers

▪ Product line: highly customized products

▪ Advantage: cost cutting

41

COMPETITIVE ADVANTAGE• State of the Art Facility and Quality System.

• Product Line in accordance with market demand.

• Specialized / Customized Products.

• Experience of Selling to OEMs.

• Market Penetration, Targeting and Geographical Presence.

• Raw Material Procurement.

• Fuel and other sources of energy.

• Web Portal.

42

COMPETITOR’S ANALYSISVIZAG STEEL TATA STEEL ESSAR STEEL

• Cost reduction and increased productivity through advanced technology and improved processes.

• Production of value added and customized products to create niche markets

• Avoid inventory build-up and make production strictly market driven

• Focus is on the domestic market catering mainly to OEM segment by servicing them with all value added products customized to their requirement

• A special drive in the retail segment will continue by opening of state-of-the-art branded steel retail is the largest players in the private outlets with brand name “JSW Shoppe”.

• Attempt to cater the large market demand and achieve economies of scale.

• Pioneered the concept of steel retailing in the country through branded retail outlets – Essar Hypermart.

43

REFERENCES▪ www.vizagsteel.com/insiderinl/CITIZEN_CHARTER_OF_RINL.pdf

▪ https://www.vizagsteel.com/code/marketing_segment.pdf

▪ http://economictimes.indiatimes.com/

▪ Press releases: VSP RINL Marketing Dept.

▪ www.vizagsteel.com

▪ www.indiansteelindustry.com

THANK YOU