A TERM PAPER

ON
BSRM Steel

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 Executive Summary
Supply Chain management (SCM) means managing the supply of inbound and
outbound goods and services in the most cost effective and time sensitive way. This
can be done by designing a strategic route plan for the quickest possible pick-up
and delivery regimen, from the appropriate suppliers, for all points throughout the
assembly line, in order to achieve cost and time related efficiency levels. Then
optimum operational smoothness can be guaranteed giving a business an edge
over competitors in marketing goods and services by introducing goods and
services quicker than established trend.

Bangladesh Steel Re-rolling Mills (BSRM) is one of the largest groups of companies
operating in Bangladesh. At BSRM, the consumer is at the centre of business. Here
people operate in a high speed environment and under tremendous pressure, so
they need the strength of mind to make quick decisions, often basing them on
limited information. They also need to be open to innovative solutions that can
improve their processes and balance supply and demand while minimizing working
capital.

BSRM supply chain is there to ensure uninterrupted supply of plan and materials
to manufacturing, finished goods to customers, indirect goods and services to all
through integrated supply chain management of logistics and sourcing at optimum
cost while ensuring customer satisfaction.

Supply chain department of BSRM is the heart of all the business activities. From
procurement of raw materials to deliver the product to the ultimate consumers is
under the supply chain functions. This report basically focuses on the supply chain
strategies practiced by BSRM. . There are an imitable supply chain strategies and
functions which will be role model for every local & multinational company.

The goal of a supply chain should be to maximize overall supply chain profitability.
Supply chain profitability is the difference between the revenue generated from
the customer and the total cost incurred across all stages of the supply chain.
Supply chain decisions have a large impact on the success or failure of each firm
because they significantly influence both the revenue generated as well as the cost
incurred. BSRM follows world’s standard supply chain strategies where we can’t
find any inaccuracy or inconsistency. But there are some basic observations that
can be taken into the consideration for further improvement.
Today’s shared knowledge and collaborative abilities of BSRM and is supply-chain
members are the results of transparency in information sharing. The clear visibility
in material ordering, production planning, inventory supply and management does
lead to significant improvements in the overall performance of the supply chain of
BSRM

Background

Bangladesh Re-Rolling Mills (BSRM), after hearing this name people starts to
visualize an organization which has several characteristics. One of them is it sales
of Steel products, besides this it has a very attractive working environment and it
is of the gigantic steel manufacturer in Bangladesh. This is the largest steel
product producer and manufacturer in Bangladesh after its close competitor. The
BSRM Group of Companies traces its origins and inception to a set of 4 small
manual rolling mills in Nasirabad, Chittagong. The mill produced reinforcing bars
and structural sections.

As a student of Masters of Business Administration, it was required to submit a

project paper to enrich our knowledge level and to gain some practical
experiences. We are proud to state that we have got the opportunity to do our
project paper of the course Business Marketing on BSRM. All of these helped us a
lot to learn the new concepts, to gain practical experiences and to know the
corporate cultures.

The basic purpose of this experience is to expose the student to the real business
situation and accustom his or her with the practice of modern business world. This
exposure is very rewarding for one self to see how things move and to find the gap
and as well as the similarities between theoretical knowledge and practical
operations. It is one of the giant steps which will help us in corporate career.

GROUP PROFILE

Background of the Group

The BSRM group was established in 1950 in steel business under the splendid initiates of five brothers
(African Origin) of a single family. Later on, the business concerns under of this group were run by the
families of late Mr. Akberali. Since its inception, the Group is involved only in the steel sector. The family
has been successfully running the group for the last 55 years and regarded as the best managed steel
units in the country. The group is also the largest contributor to the national exchequer under the steel
sector and also having largest set up in the country considering its integration in all areas of steel
industry.

History

Building the Nation since 1952

The BSRM Group of Companies traces its origins and inception to a set of 4 small manual rolling mills in
Nasirabad, Chittagong. The mill produced reinforcing bars and structural sections. The mill gradually
expanded, adopting new technology by setting up a cross country European mill in 1987 which included
a wire-rod mill. In 1996 the group added a captive billet making plant to ensure a steady supply of
quality billets for its rolling mills. A pilot cold rolling mill to manufacture ribbed high strength wires was
installed in 2006. Finally in 2008 a state-of-the-art DANIELI built rolling mill, incorporating technological
features such as:

Horizontal / Vertical housingless stands.

Multiple slit rolling for sizes 14 mm to 8 mm.

Stepless DC drives for accurate speed control, for tension free rolling.

A large “Quench and Temper” facility for up to 75 tons/hr. production of 500 Mpa strength bars.

The new rolling facility is one of the largest in the region, producing world quality bars conforming to all
major international standards.
 Milestone & Achievement

Milestone - 1987

The four old manual mills were scrapped and an automatic billet-based rolling mill was installed with
continuous up gradation. The two highway bridges over the rivers Meghna and Gumti, the Chittagong
Airport, the KAFCO Fertilizer factory, most of the country’s large prestigious projects and many high-rise
buildings in Bangladesh were then built with BSRM bars.

Achievement - 1996

A captive billet-making plant was commissioned, under the name of Meghna Engineering Works. Cost-
saving Technology - 2006The first and only ribbed wire cold-rolling plant in the country started
operations using European technology to make 500 Mpa yield strength wire reinforcements in sizes
4.5mm, 5.7mm and 7.1mm, significantly reducing construction costs.

Industrial Analysis

Steel is a basic raw material for infrastructural development and multiple other
uses. The demand for steel will inevitably grow in line with the country’s economic
and infrastructural development. Major buyers of mild steel and re-rolled products
include individuals, government and institutional buyers (developers). The
government’s infrastructure building activities is an important source of demand.
The demand of MS rod in Bangladesh has been increasing day by day and expected
to increase at the rate by 8% due to the economic and infrastructural development
of the country, expansion of urbanization and booming construction of shopping
mall, market, real estate and other construction for industrial purposes.
Construction of bridge as well as public awareness and preference is increasing for
quality building materials to ensuring safety and better building construction;
more particularly, in recent time to save from earthquake. Due to growing
consciousness among buyers and the generic nature of the products; new
manufactures with efficient and high quality technology will dominate over the
existing players using old technology, because of their quality and price advantage.
There are approximately 300 re-rolling mills in Bangladesh. Except some, most of
the projects use crude technology resulting in production of low quality steel bar.
The domestic consumption of rods/ bars as a whole is met through local production
fully. This steel re-rolling sector continues to be a predominantly fragmented one,
with a few well-known established mills controlling about one third of the entire
market and many more small scale manual operators controls the rest. As the
larger producers expanding their capabilities and take advantage of economies of
scale- smaller mills will find it harder to compete with the larger firms. Under the
above scenario, smaller mills will have have to face serious market competition in
future. Currently, they are
Bangladesh Steel Re-rolling Mills 35%
questioned in terms of
BSRM
quality. As the larger mills
Kabir Steel Re-rolling Mills KSRM 16% consolidating their
positions, the smaller
Rahim Steel 10%
companies which are
already Ratanpur Steel Re-rolling Mills 12% high-cost players, will
find it RSRM increasingly difficult to
complete. Most steel
re- GPH Ispat 5%
rolling mills in
Anwar Ispat 15% Bangladesh depend on
scrap, leading to lower quality
rods Others 7% used in the market.
Very few re-rolling mills use
billets as raw materials. The
reasons for this is generally available regularly locally.

However, the price of scrap and billets during FY 2008 broke the record of the
past. Leaders of the steel and re-rolling industry urged the government to free the
import of old scrap ships and vessels from the control of certain vested groups to
reduce the cost of scraps and building materials. In comparison to the previous
records of import, one must say that the steel industry of the country is passing
through one of its worst times in history. Steel is a basic sector of any industrial
economy. Except re-rolling of the scrap steel, Bangladesh lacks this very basic
ingredient of heavy industry. And without heavy industry, the slogan of
industrialization sounds hollow. The idea of developing a viable steel sector
appears implausible seeing that Bangladesh has no iron ore as one of its mineral
resources. But absence of ore does not disqualify a country from becoming a
producer of steel and steel-based commodities.
 Market Scenario of the Steel Industry

BSRM always has a solid reputation in the local steel market as one of the oldest
establishments producing the quality rods available in the country. This has
enabled BSRM to command the premium prices and still retain the largest market
share in a highly fragmented industry with so many players. Following are the
main competitors of BSRMS:
 In the steel industry, BSRM is operating as a subsidiary of the market leader in Re-
rolling industry, experienced management team, State-Of-The-Art Plant, Quality
products, sound infrastructural arrangement and sound debt servicing history of
the Group. The first of its kind in the country, BSRM was set up to produce plain
bars for the construction industry. Since 1952 it has started its journey and has
always been in the leading position in the market.

Attaining the 35% of the market share of steels re-rolling industry, BSRM is in the
leading position. The nearest competitors are KSRM, Rahim Steel, RSRM, GPH
Ispat, and Anwar Ispat all consecutively holding 16%, 10%, 12%, 5%, and 15%. The
rest 7% is of other companies.

Ratanpur Steels and Rerolling Mills (RSRM), is a Chittagong-based

manufacturer. The RSRM was launched as a manual low-grade rod producer in
1984. But the company, which uses scraps to produce billets, overhauled its
manufacturing plant late last year to produce 75-grade MS rod. Currently it holds
12% of the market share in steel re-rolling industry.

Rahim steel mills co. (pvt.) Ltd., backed by the energy and experience of its
entrepreneurs, has made a name for it self in the field of steel making and is now
one of the leading Quality steel manufacturing company in Bangladesh. It holds
10% of the current market share in this industry at present.

Anwar Ispat, a sole concern of Anwar Group in Bangladesh, currently possess

15% of the market share in steel re-rolling industry. Anwar Ispat Limited is
amongst the leading re-rolling mills in the country. Use of most modern fully
automatic re-rolling mill and high quality imported billets assures that the produce
meets international quality parameters. Anwar Ispat specializes only in ‘Graded’
products, 40 Grade and 60 Grade High Strength Deformed Bars (HSD-Bars), which
are superior to general bars / rods.

Porter’s Five- Factor Theory

 Financial Projection
The BSRM Group has been managing seven sister concerns, among which, six
companies are at present in operation. All the sister concerns of the Group are
private limited companies with a net asset base of Tk. 4216.34 million as per un-
audited balance sheet at the year 2007. Against the above net assets, the company
has non-current liabilities of Tk. 2377.41 million and resting an equity amount of
Tk. 1934.94 million. The above equity amount consists of share capital of Tk.
806.09 million and reserve of Tk. 1132.85 million. The group has also three loosing
concerns namely Karnafully Engineering Works Limited, BSRM re-cycling
industries Ltd. and BSRM Wires Limited. The above financial position represents
4.32 times leverage of the group based on un-audited financial statements. The
group has outstanding bank liability of Tk. 3,039 million as term loan/project loan
and Tk. 2,449 million as working capital loan from about 18 commercial bank and
financial institutions. All the group liabilities are unclassified status, as reported by
the company.

Product Line and Price

SL# Product Name Product Size Ex-Factory Chittagong

01 DEFORMED BARS Xtreme-500W 8 mm TK.45,000

DEFORMED BARS Xtreme-500W 10 mm to 25 mm TK.45,000

DEFORMED BARS Xtreme-500W 28 mm to 32 mm TK.45,500

02 DEFORMED BARS (GR-400) 8 mm TK 45,000

DEFORMED BARS (GR-400) 10 mm to 25 mm TK 45,000

DEFORMED BARS (GR-400) 28 mm & 32 mm TK.45,500

DEFORMED BARS (GR-300) 8 mm TK. 44,000

DEFORMED BARS (GR-300) 10 mm to 20 mm TK. 44,000

03 DEFORMED BARS (GR-75) 7 mm TK.53,000

DEFORMED BARS (GR-75) 5.7 mm TK. 55,000

DEFORMED BARS (GR-75) 4.5 mm TK.55,000

04 M.S.ANGLE 38X38X 3, 4, 5 & 6 MM TK.49,000

M.S.ANGLE 50X50X 4, 5& 6 MM TK.49,000

M.S.ANGLE 63X63X 5& 6 MM TK.49,000

M.S.ANGLE 75X75X 5 & 6 MM TK.49,000

M.S.ANGLE 75X75X 8 & 9 MM TK.49,000

M.S.ANGLE 90X90X 6 MM TK.63,000

M.S.ANGLE 90X90X 8 MM TK.63,000

M.S.ANGLE 100X100X 6 MM TK.63,000

 M.S.ANGLE 100X100X 8 MM TK.63,000

M.S.ANGLE 100X100X 10 MM TK.63,000

05 M.S.CHANNEL 100 X 50 X 5 MM TK.51,500

M.S.CHANNEL 75 X 40 X 5 MM TK.51,000

M.S.CHANNEL 125 X 65 TK.66,000

M.S.CHANNEL 150 X 75 TK.66,000

M.S.CHANNEL 200 X 75 TK.69,000

M.S.CHANNEL 250 X 82 TK.69,000

M.S.CHANNEL 300 X 90 TK.70,000

06 WIRE ROD(Commercial) 5.5, 6, 6.35 & 8 mm TK.51,000

WIRE ROD(WR-8) 5.5,6 & 6.35 mm TK.57,000

07 I. BEAM 150X150 TK.73,000

I. BEAM 100X100 TK.68,000

I. BEAM 150X75 TK.68,000

I. BEAM 198X99 TK.68,000

I. BEAM 200X100 TK.68,000

I. BEAM 200 X 200 TK.68,000

I. BEAM 248X124 TK.68,000

I. BEAM 298X149 TK.68,000

I. BEAM 300 X 150 TK.68,000

 I. BEAM 450X200 TK.72,000

I. BEAM 400X200 TK.72,000

08 RAIL 60 Ib TK. 68,000

09 SHAFT 40 mm Tk. 48,000

SHAFT 46 mm Tk. 48,000

SHAFT 52 mm Tk. 48,000

Standard & Quality

Reinforcing steel production is a major industrial segment in every country of the
world. It is generally produced to national standards specification. As international
trade has grown in volume and scope the demand for a material specification
across major national standards has grown. The Geneva based International
Standards Organization (ISO) under the guidance of the World Trade Organization
(WTO) played a pivotal role in the internationalization of material standards. Today
the European Community nations follow common material specifications for
thousands of items and reinforcing steel is no exception. Standardization of
products to national and international specifications serves three useful purposes.
First, it simplifies the exchange of goods as buyers and sellers have a common
specification. Further, legal enforcement of contract specifications becomes easier
and transparent. Most important the design profession can prescribe material
specification as per well-defined norms which are available in the area.

The international standard for reinforcing bar specification is ISO 6935. It has
been adopted by the national reinforcing steel standards of the entire European
Community of nations as well as Russia and all the CIS nation states. In Asia India,
China and Japan along with the ASEAN nations has adopted the ISO based
standards for steel and many other material standards as well. Bangladesh
adopted the standard in 2006. The strongest motivation, for this move is to remain
globally competitive, by making a product for both the domestic and international
market. It is worth mentioning that many of the nations adopting the ISO based
standard are in the high seismic category.
Chemistry of ASTM and ISO Standards

Chemical Composition ASTM A 615 ISO 6935

Grade 60 Grade 500W

Carbon % No limit 0.24% Max

Manganese % No limit 1.65% Max

Silicon % No limit 0.60% Max

Phosphorous% 0.06% Max. 0.06% Max

Sulphur % No limit 0.06% Max

Carbon Eqv. No limit 0.51% Max

ASTM and ISO compared

For a long time the US national standard ASTM 615 reinforcing steel specification
was most widely used in many parts of the world including Bangladesh. One of the
reasons for the widespread use of ASTM 615 reinforcing steel was that it could be
easily manufactured using simple and relatively inexpensive equipment and
technology.

ASTM 615 is an open chemistry specification, the mechanical properties are

defined, the test procedures are relatively straightforward but the chemical
composition of the steel are not specified. The yield strength is derived by
increasing the carbon content of the steel, but this increases fragility as well.
Practicing engineers will recall the common site experience of ASTM 615 Grade 60
bars breaking while bending. The open chemistry specification was a further
reason for the widespread adoption of the ASTM 615 specification as raw material
(billets) from a variety of sources could be used to manufacture ASTM 615 Grade
60 bars. This is reflected in the wide variation of the mechanical properties of the
ASTM 615 Grade 60 steel. In our country old demolished structures, such as
anchor chains and propeller shafts of ships and railway rails are used to make
ASTM 615 Grade 60 reinforcement.
In stark contrast ISO 6935 standard has a highly restricted chemistry where the
principal alloying elements such as carbon, manganese, silicon which affects the
mechanical properties of steel and several other trace elements which have
deleterious effects on steel property. The logical consequence of a restricted
chemistry reinforcing steel means the raw material [billet] has to be custom made
for the purpose. The chemistry of both the standards are compared below:

Both the ISO and ASTM standards steel have various strength categories. These
enable structural engineers to use steel as per design and service requirement.
The strength categories ASTM and ISO standards are compared below for easy
reference. The ASTM standard follows the traditional US customary units for
stress which is pounds per square inch or psi. The ISO standard follows the System
International or SI units for stress which is indicated in Pascal. One million Pascal
is abbreviated to MPa. For easy conversion 1 MPa = 145 psi.

As the demand for economy and cost control in the construction industry has
raised worldwide the demand for high strength steel reinforcement and high
strength concrete. All buildings and structures in the developed world and in the
Middle East and in the ASEAN region are designed and built on Grade 500 steel
only. The reason is not only economy but better performance of the structure under
conditions of earthquakes and storms.

Economic consideration

Traditionally construction in Bangladesh has relied on Grade 400 strength steel for
all types of construction. The scenario changed rapidly with the introduction of
Grade 500 steel last year by BSRM Steels Ltd. As the use of Grade 500 steel
reduces steel consumption by up to 15 per cent compared to Grade 400 steel the
introduction was an instant success. Many of the country's top developers and
designers of high rise buildings switched to Grade 500 for the inherent economy in
the use of this grade of steel.

Competitive Advantage
The world is going toward progress. Establishments are gradually becoming large
and strong. To keep pace with this forward-movement and to make constructions
cost-effective, bold, long-lasting and safer, next generation rod is required.

This rod is called ‘Grade 500’ rod. This ‘Grade 500’ rod is heavily used in
construction works all over the world specially Europe, Malaysia, Thailand,
Singapore, Middle-east and India. Now BSRM has brought that similar kind of rod
that is available in every district of Bangladesh.

To meet the demand for quality and standard rods in construction works, BSRM
has established an automatic rolling mill having production capacity of 3,75,000
ton per annum using European technology.

1. Cost-effective Design:

The minimal strength of Xtreme-500W is 500MPA (72,500PSI). It is

20.8% s5tronger than 60 Grade Bar. Eventually, this rod is required
15%-20% less than 60Grade Bar in construction works.

2. Cost-effective Establishments:

Xtreme-500W can be welded easily. Hence to join column and found

beam, rod is not wasted. Usually splice of the bar have to be kept 20D
during joining the column. But welding requires only splice of 8D. It is
calculated that welding saves rod of Tk.70-80.

3. Safer Design:

The flexibility and elasticity of Xtreme-500W is much greater than

other rods due to limited carbon as per international and BSTI
standards. The elongation and elasticity of this rod is greater than
that of 114-rod and so it can be bent easily. Hence, during the
fabrication in construction works, there is no possibility of cracking or
breaking. It is unique in protecting earth-quake. It is capable to face
shaking and shock loading. BSRM is the country’s only rod
manufacturer that use sophisticated European Technology to produce
rod of international standard.

4. Safer Establishments:

Xtreme-500W can be welded. It can protect sheering easily since the

box of welded bar becomes bold. Its shape can’t be changed during
putting concrete or shake. So BSRM’s Xtreme-500W is free from these
weaknesses.

5. Financial Savings:

Unlike other rods, Xtreme-500W is free from artificial dust or mill

scale and it creates firm joint with concrete in addition to .25%
savings in weight. There is no alternative to use Xtreme-500W for
making your dreamed home long-lasting and to reduce costs in
constructions or to protect yourself losses.

Exposures in Backward Linkage of Steel Re-Rolling

As mentioned earlier, the group is involved in the manufacturing of Billet, the basic
raw materials of MS rod production and also in scrap processing business. The
billet manufacturing plant under the Meghna Engineering Works(“MEW”)
established in the year 1953 as a Kodali plant and was also producing cast iron and
pipes at that time. Eventually in 1994 this industry was closed and a new steel
melting shop was established there. The production capacity of MEW has
increased to about 10,000 M. Ton per month from 5,000 M. Ton per month earlier,
which was enough to meet the demand of BSRM. The increased capacity was due
to commissioning of the following two projects:

132/33 KV 41 MW sub station (the largest private sector sub station at Khulshi
feed bulk power to different projects of the group).
A 16 ton induction Furnace has been installed with the existing facility.

Again the company also planned to increase additional 3000 capacity per month by
replacing its two 8 Ton capacity furnace into 16 Ton furnace to meet the increased
billet requirement of the group.

Though, BSRMS presently imports the basic raw materials, however, the group is
also implementing another billet manufacturing plant of 152,000 M. Ton capacity
per annum by 2009, which will help for smooth delivery of billet for the group. The
Group management has decided to set up the above modern billet manufacturing
plant namely “ BSRM Iron and Steel Co. Ltd.” of 1,52,000 M. Ton capacity per
annum with an estimated project cost of Tk. 2560 million. Accordingly 20% cost of
the furnace cost, percentage of payments for Continuous Casting Machine, Ladle
Refining Furnace, new 80 MVA Transformer etc. has been already been remitted
through the Islami Bank Bangladesh Limited. This plant is estimated to be
established by 2009.

Planning Process
Planning department in BSRM is responsible for the overall planning for the
organization. Integration in the planning process is the major activity for the
success of the overall organizational flow. Planning process starts from the field
level of the market. Here the demand forecasting was made by the marketing
department. According to the yearly demand forecast send by the Depot’s the top
planning team take the step for Demand planning, which is the ground for
production plan.

Business Development Branches

Demand Planning

Sales & Operational Planning (S&OP)

Production plan

Raw Material Planning Indirect Material Planning

Commercial Planning

Final Production Planning

Detail Production Process

Production of high-tensile rebars and other

deformed-type long products for concrete
reinforcement is a key issue for countries
where the construction of buildings and
infrastructures is growing. This type of
product is even more important for
geographical areas with high seismic activity.

The ideal answer to these needs is the most

advanced technologies for low-cost production of high-tensile commercial steel
long products. The Danieli QTB, processes, installed at the BSRM Steels Ltd rolling
mills, is the most efficient available today to produce these types of steel.

A fast growing building and infrastructure construction activity characterizes the

economy of Bangladesh which means increasing demand of high-tensile rebars and
other deformed-type long products for the concrete reinforcement.

The typical basic arrangement for such a plant foresees a rolling mill for
production of high-tensile deformed bars in straight bundles.

The new rolling mill, that started rolling its first bars in early March 2008, has
introduced the latest long product hot-rolling technologies for the first time in
Banglagesh, making this plant the most advanced and highly-productive rolling
mill in the whole area.

The state-of-the-art bar mill, fed by a 75-tph pusher-type reheating furnace

(supplied by BENDOTTI), is basically composed of 18 SHS stands, QTB on-line
rebar quenching & self-tempering system, automatic cooling bed and finishing
facilities for straight bars production.

Fig 3 - B.S.R.M. Rolling mill layout

The mill is designed to produce 8 to 38-mm-dia quenched and self tempered

deformed bars for reinforced concrete, at rates of up to 75-tph. The Danieli supply
also included a complete water treatment plant for the new rolling mill.

Electricals, automation system and process control for the rolling mill and auxiliary
plants are from Danieli Automation.

Plant description and highlights:

The mill is entirely made up of the latest

generation Danieli heavy-duty SHS
housingless-type rolling stands, arranged in
H and V sequence for twist-free rolling at
the roughing and intermediate/pre-
finishing area.

The last portion of the finishing mill,

arranged in H-H sequence, is specifically designed for the slit rolling process for
production of smaller size deformed bars.
 Fig 4 - SHS stands in operation at BSRM mill

The multi-strand slitting system, performed at the finishing mill, grants high output
rates, enabling to reach the full reheating furnace nominal capacity even with the
smallest rebar size range.

This system is a combination of special roll pass

design and designated guide equipment to shape and
longitudinally separate the incoming rolled stock into
two, three or four individual strands, then
simultaneously rolled down to the final rebar size at
the finishing mill stands.

The new mill slit rolls on 4, 3 and 2 strands, for

production of 8-mm, 10-mm, 12 and 14-mm-dia
rebars, respectively, at speeds of up to 12.5 meters
per second.

Fig 5 - 4 strand slitting operation

A multi-strand QTB line is provided at finishing stand delivery side, for on-line
rebar quenching and self tempering.

This is a significant technological step-forward that will make possible production

of on-line treated high-tensile/wieldable rebar’s for the first time in Bangladesh.

The straight bars production outlet includes

dividing shear for multiple-length bars at
cooling bed entry, 66-m-long automatic
walking beam type cooling bed with
associated feeding and delivery devices, bar
cut-to-length system with stationary cold
shear, automatic bundling, weighing and
collecting facilities. Fig 6 –
Rebars on cooling bed at BSRM mill
 COMPANY ANALYSIS

Infrastructural Set-up
The plant is a pioneering project in the steel industry of Bangladesh with the latest
available State-of-The-Art Technology. The main infrastructures includes- Factory
Building and Shed, Re-rolling Mills (furnace exit area, rolling stand, QTB, cooling
bed, binding and bundling area), Furnace, EQT Crane, Sub-station, Water
Treatment Plant, Laboratory (Universal Testing Machine, Wielding Machine etc),
Workshop, Compressore, Diesel Generator, Other Electrical installation,
Administrative Office. It has own arrangement of electrical installation for about 5
KM from the nearest 33 KV substation to ensure the continuous power supply. The
complete re-rolling mills with water treatment plant were supplied and
commissioned by Danielli Group of Italy, one of the three largest suppliers in the
metal industry worldwide. And the furnace was supplied by another Italian
company namely “Bendotti”. It is producing Xtreme branded Thermo Mechanically
Treated (TMT) bars, a new generation bar with lower carbon content and greater
wielding ability than the standard 60 grade deformed bars, which are currently
available in the local market.

Procurement Strategy
The company will produce its raw materials mainly from International market as
well as from its sister concern “Meghna Engineering Works Limited”. It adopted a
policy to maintain inventory of “Billet- the basic raw materials”, both in stock and
on pipe line, ofr at least equivalent to three months production requirements,
through alternative arrangement to reduce the single source dependency. Due to
high price volatility of Billet in the international market, the company always faces
a market force to adjust with its pricing of finished products. The existing high
quality re-rolling mills are always facing severe competition in price adjusting with
the international market especially due to availability of low quality products in the
local market. On the above ground, the Group has decided to establish backward
linkage industry to ensure large quantity of billet supply for BSRM Steels Limited.

D i st r i b u t i o n S t r a t e g y
The group has well established distribution channel all over the country,
subsequently the same channel will also be used for BSRM products. It has three
types of distribution network as: Factory- Dealer- End Users, Factory- Retailers-
End Users, and Factory- End Users. Its country wide 80 dealers are the key
channel to reach to the consumers. In addition, the company’s own six sales depots
at Dhaka, Comilla, Sylhet, Bogra, Khulna and Moulavi Bazar works as the market
stimulating agent and works as part of the channel. To cater the need of the
growing demand, the company has a plan to increase its dealership outlet and
already 80 dealer arrangement has been made.

Marketing Strategy
The company is moving towards mass market with a comprehensive marketing
plan under it dynamic marketing team. It has also appointed renowned
professional marketing company namely Unitrend Limited to develop brand image.
Its existing product line has already availed sound market image in view of its high
quality with consistence efficiency. To further upgrade the corporate image as well
as brand image, it reshaped its brand name as “BSRM Xtreme”- to substantiate its
new quality as well as higher strength.

The entire marketing campaign entails complete 360 degree communications plan,
embracing television, print media and bill boards throughout the length and
breadth of the country. The media effort if further complemented by the Company’s
own arrangement of extensive workshops at the upazila headquarters level to
educate customers on the benefit of using steels from reliable and proven source.
It also arranges professional seminar for the engineering community, conducted by
the top teaching faculty of the country’s leading engineering university, on the
proper and safe use of its new generation products. The main feature of Xtreme
Bars is that it will save 15% in steel costs as compared to Grade 60 deformed bars.

Goodwill Trust
As BSRM is the first steel industry in Bangladesh and operating since 1950 it has a
market goodwill which is also another source of trust among the participants of the
supply chain. BSRM follows transparent information sharing systems thus provide
greater empowerment to the partners which is enhancing factor of trust.

As the level of trust between the supplier and the dealers are high it also shows
that the interdependence among the supply chain partners is also high. According
to the above curve we can identify the relationship by means of level of trust and
interdependence we can say that the relationship between the parties are
relational contracting.

Technical Analysis:
In last one year BSRM share price is given below:

Here we looking form given chart share price is same behave from last year to this
year, as company fall share value December to May and June to September share
value randomly rise. At last 03 September, 2013 share price was open 74.2 Tk. and
close 75.6 Tk.
The analyst looks for patterns, whether trading is taking place in an upward flat.
In a downward market the analyst look for the trough which can be identified only
after reversal of the downward pattern after confirmation on of the reversal the
investor by.

Comparison between Two companies (BD Thai Aluminum vs. BSRM)

In BD Thai Aluminum share price of last month is up and BSRM still share price is
down.

C O N CL U S I O N

The demand for steel is expected to continue to rise at a greater rate in the future
in the line with the country’s economical development and requirement for
infrastructure, despite a bit slow down in recent months in the real estate sector.
However, BSRM continues to be a dominant player in the market and market share
remains above 35%.

The experience of preparing the project is a lifetime experience for us. Through
this we got to learn the real business scenario. We have learned how a company
like BSRM manages its supply chain to achieve the company goal.

S u m m a r y O b s e r v a t i o n s an d R e c o m m e n d a t i on s
According to the above observations we like to enclose the following
recommendation for the improvement:

Expansion of forward and backward linkage through long term planning.

As the new competitors are entering market with improved capacity BSRM should
be concern about capacity expansion.

Should minimize the dependency on imported raw material.

Maintain collaborative network for raw materials import thus use effectiveness in
purchase strategy.

Arrange a utility management team as early as possible for continues operation.

Huge market exposure is required to penetrate the market to limiting the fixed
cost burden.

Always keep eye on development of innovative technology.

References

Biswas, Dibakar. Assistant Manager, Business Development. BSRM.

Rahman,Anwar. Manager S&D. BSRM

Chopra & SMeindl.(2002) Supply Chain Management, 3rd Ed. New Delhi: Pearson Edu. inc.

Cravens. David. W & Piercy. Nigel F. (2003) Strategic Marketing, 7 th Ed. Mcgraw Hill Higher Education

Dwyer.F,Robert & Tanner Jr. Jone F. (2002) Business Marketing, 2 nd Ed. Mcgraw Hill Higher Education

Kotler, Philip. (2003) Marketing Management, 11 th Ed. Pearson Edu. inc

Laaksonen.Toni, Pajunen. Kalle and others(1998) Co-evolution of trust and dependence in customer–
supplier relationships

Sheu.Jiuh-Biing & Hu.Tung-Lai (2009) Channel power, commitment and performance toward sustainable
channel relationship

Siu & Walsh (August 2008), Country Report: Bangladesh, UK, Economist Intelligence Unit.
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