1

TOPIC A PROJECT UNDERTAKEN IN STEEL AUTHORITY OF INDIA LTD. (SAIL)

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER IN MANAGEMENT STUDIES BY DEVENDRA BABURAM YADAV/ MMS 1180 TO

ORIENTAL INSTITUTE OF MANAGEMENT, VASHI, NAVI MUMBAI.

ACKNOWLEDGEMENT The summer training programs are designed to give the practical knowledge of corporate world. Training is usually meant for such vocations where advanced theoretical knowledge is to be backed up by practical experience on the job and it is because of this reason that summer training programs are designed. So, that the future manger must be ready to take the future responsibilities. I express my sincere gratitude to my industry guide Mr. A R Mohanty , (AGM (M-FP) & BM), Mr. Ritesh, Senior Manager (M) & RMO, STEEL AUTHORITY OF INDIA LIMITED, for his constant guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible. I would also like to thank the entire team of STEEL AUTHORITY OF INDIA LIMITED, for the constant support and help in the successful completion of my project. Also, I am thankful to my faculty guide PROF Yusuf Khan, DIRECTOR PROF. Dr. J S Tiwari of my institute, for their continued guidance and invaluable encouragement.

DECLARATION

I Devendra .B. Yadav Roll No. 1180 student of MMS 1st Year is hereby to certify that this project work titled DEALERSHIP ANALYSIS carried out by me , in partial fulfillment of the requirements of the program is an original work of mine under the guidance of Industry mentor Mr. A R Mohanty , (AGM (MFP) & BM) Institute mentor Yusuf Khan I further declare that it is not a reproduction from any existing work of any person and it has not been submitted to any other university or institute for the award of a degree or diploma or any other similar title of recognition.

(Students signature) Date .. July 2011

CERTIFICATE

This is to certify that Mr. Devendra. B. Yadav Roll no.1180 is a full time bonafide student of Oriental Institute of Management and pursuing Masters Of Management Studies (MMS). The project report Title Dealership Analysis is completed by him under the guidance of , in the partial fulfillment of the requirements for the award of the degree of Master in Management Studies of Mumbai University is an original work done.

______________________ (Signature of Director) Oriental Institute of Management Vashi , Navi Mumbai 400703

PREFACE
Its a thing of massive gratification for me to do my summer training in SAIL and present this project on topic Dealership analysis of dealer satisfaction of different products and Services. Survey measure the reach of company product to the dealers which ensures the product and services reach among customers and its market share. The project attempts to find out the dealers satisfaction of SAIL in comparison with other brands. In this project attempts to find out present situation and reason behind the drop and suggest measures to overcome it.

CONTENTS
1. INTRODUCTION OF STEEL INDUSTRY
a) b) c) d) HISTORY GLOBAL STEEL INDUSTRY IN INDIA MAJOR PLAYERS OF STEEL OF STEEL STEEL INDUSTRY INDUSTRY

PUBLIC SECTOR
PRIVATE SECTOR

e)

MARKET SHARE OF LEADING PLAYERS IN IRON & STEEL

INDUSTRY f)SWOT ANALYSIS OF STEEL INDUSTRY g) FACTORS HOLDING BACK STEEL INDUSTRY

2. INTRODUCTION TO SAIL
a) HISTORY OF SAIL b) JOINT VENTURES OF SAIL c) MAJOR PRODUCTS OF SAIL d) PRODUCTS AND APPLICATIONS e) MAJOR UNITS OF SAIL f) SWOT ANALYSIS OF SAIL

3. RESEARCH METHODOLOGY
a) OBJECTIVE OF THE PROJECT b) SAMPLING DESIGN c) COLLECTION & SOURCES OF DATA d) ANALYSIS & DATA INTERPRETATION

e) FINDINGS ON THE SURVEY f) LIMITATIONS g) RECOMMENDATION

4. 5.

BIBLIOGRAPHY ANNEXURE

EXECUTIVE SUMMARY
Any company which is successful is because of their reach among customers which is possible through the effective tools through which a company communicates and attracts its customer. Sail is most famous brand and has a sophisticated place and market leader position in the mind of customer. This is due to its strong brand image. The attempt behind this project was to find out the effectiveness of SAIL as a brand and its competitor position, so that company would be able to find out its lagging area and can focus more effectively to target more and more customers or dealers and to communicate them more easily.

1)

INTRODUCTION
Steel is crucial to the development of any modern

economy and is considered to be the backbone of human civilisation. The level of per capita consumption of steel is treated as an important index of the level of socioeconomic development and living standards of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flows and income generation. All major industrial economies are characterised by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development. Steel industry was in the vanguard in the liberalisation of the industrial Sector and has made rapid strides since then. The new Greenfield plants represent the latest in technology. Output has increased, the industry has moved up i n the value chain and exports have raised consequent to a greater integration with the global economy. The new plants have also brought about a greater regional dispersion easing the domestic supply position notably in the western region. At the same time, the domestic steel industry faces new challenges.

Some of these relate to the trade barriers in developed markets and certain structural problems of the domestic industry notably due to the high cost of commissioning of new projects. The domestic demand too has not improved to significant levels. The litmus test of the steel industry will be to surmount these difficulties and remain globally competitive.

a)

HISTORY OF STEEL

Steel was discovered by the Chinese under the reign of Han dynasty in 202 BC till 220 AD. Prior to steel, iron was a very popular metal and it was used all over the globe. Even the time period of around 2 to 3 thousand years before Christ is termed as Iron Age as iron was vastly used in that period in each and every part of life. But, with the change in time and technology, people were able to find an even stronger and harder material than iron that was steel. Using iron had some disadvantages but this alloy of iron and carbon fulfilled all that iron couldnt do. The Chinese people invented steel as it was harder than iron and it could serve better if it is used in making weapons. One legend says that the sword of the first Han emperor was made of steel only. From China, the process of making steel from iron spread to its south and reached India. High quality steel was being produced in southern India in as early as 300 BC. Most of the steel then was exported from Asia only. Around 9th century AD, the smiths in the Middle East developed techniques to produce sharp and flexible steel blades. In the 17th century, smiths in Europe came to know about a new process of cementation to produce steel. Also, other new and improved technologies were gradually developed and steel soon became the key factor on which most of the economies of the world started depending.

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b)

THE GLOBAL STEEL INDUSTRY

The current global steel industry is in its best position in comparing to last decades. The price has been rising continuously. The demand expectations for steel products are rapidly growing for coming years. The shares of steel industries are also in a high pace. The steel industry is enjoying its 6th consecutive years of growth in supply and demand. And there is many more merger and acquisitions which overall buoyed the industry and showed some good results. The subprime crisis has lead to the recession in economy of different countries, which may lead to have a negative effect on whole steel industry in coming years. However steel production and consumption will be supported by continuous economic growth. CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRY The countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i.e. 419m ton, Japan

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accounts for 9% i.e. 118

m ton, India accounts for 53m ton and

South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth.

Country Wise Crude Steel Production

Country Crude Production CHINA JAPAN UNITED STATES RUSSIA SOUTH KOREA F.R.GERMANY UKRAINE BRAZIL INDIA ITALY (mtpa) 272.5 112.7 98.9 65.6 47.5 46.4 38.7 32.9 32.6 28.4 Steel

c)

STEEL INDUSTRY IN INDIA

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Steel has been the key material with which the world has reached to a developed position. All the engineering machines, mechanical tools and most importantly building and construction structures like bars, rods, channels, wires, angles etc are made of steel for its feature being hard and adaptable. Earlier when the alloy of steel was not discovered, iron was used for the said purposes but iron is usually prone to rust and is not so strong. Steel is a highly wanted alloy over the world. All the countries need steel for the infrastructural development and overall growth. Steel has a variety of grades i.e. above 2000 but is mainly categorized in divisions steel flat and steel long, depending on the shape of steel manufactured. Steel flat includes steel products in flat, plate, sheet or strip shapes. The plate shaped steel products are usually 10 to 200 mm and thin rolled strip products are of 1 to 10 mm in dimension. Steel flat is mostly used in construction, shipbuilding, pipes and boiler applications. Steel long Category includes steel products in long, bar or rod shape like reinforced rods made of sponge iron. The steel long products are required to produce concrete, blocks, bars, tools, gears and engineering products. After independence, successive governments placed great emphasis on the development of an Indian steel industry. In Financial Year 1991, the six major plants, of which five were in the public sector, produced 10 million tons. The rest of India steel production, 4.7 million tons, came from 180 small plants, almost all of which were in the private sector. India's Steel production more than doubled during the 1980s but still did not meet the demand in the mid-1990s, the government was seeking private-sector investment in new steel plants. Production was projected to increase

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substantially as the result of plans to set up a 1 million ton steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal, with Chinese technical assistance and financial investment.

d) MAJOR PLAYERS OF STEEL IN INDIA

PUBLIC SECTOR PRIVATE SECTOR

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

TATA STEEL LTD.

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ISPAT INDUSTRIES LTD. (IIL) RASHTRIYA ISPAT NIGAM LTD. (RINL)

JSW STEEL LTD.

HINDUSTAN STEELWORKS CONSTRUCTION LTD. (HSCL)

JINDAL STEEL & POWER LTD. (JSPL) ESSAR STEEL LTD. (ESL)

MECON LTD

FERRO SCRAP NIGAM LTD. (FSNL)

MSTC LTD.

PUBLIC SECTOR
STEEL AUTHORITY OF INDIA LIMITED (SAIL) Steel Authority of India Limited (SAIL) is a company registered under the Indian Companies Act, 1956 and is an enterprise of the Government of India. It has five integrated steel plants at Bhilai

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(Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand) and Burnpur (West Bengal). SAIL has three special and alloy steel plants viz. Alloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamilnadu) and Visvesvaraya Iron & Steel Plant at Bhadravati (Karnataka). In addition, a Ferro Alloy producing plant Maharashtra Elektrosmelt Ltd. at Chandrapur, is a subsidiary of SAIL. SAIL has Research & Development Centre for Iron & Steel (RDCIS), Centre for Engineering & Technology (CET), SAIL Safety Organisation (SSO) and Management Training Institute (MTI) all located at Ranchi; Central Coal Supply Organisation (CCSO) at Dhanbad; Raw Materials Division (RMD), Environment Management Division (EMD) and Growth Division (GD) at Kolkata. The Central Marketing Organisation (CMO), with its head quarters at Kolkata, coordinates the country-wide marketing and distribution network. RASHTRIYA ISPAT NIGAM LTD. (RINL) RINL, the corporate entity of Visakhapatnmam Steel Plant (VSP) is the first shore based integrated steel plant located at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August 1992 with a capacity to produce 3 million tonne per annum (mtpa) of liquid steel. The plant has been built to match international standards in design and engineering with state-of- theart technology incorporating extensive energy saving and pollution control measures. Right from the year of its integrated operation, VSP established its presence both in the domestic and international markets with its superior quality of products. The company has been awarded all the three International standards certificates, namely, ISO 9001:2000, ISO 14001: 1996 and OHSAS 18001: 1999. RINL was accorded the prestigious Mini Ratna status by the Ministry of Steel,

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Govt. of India in the year 2006 and the company is gearing up to complete the ambitious expansion works to increase the capacity to 6.3 mtpa by 2009. RINL has prepared a road map to expand the plants capacity up to 16 mtpa in phases. MSTC LTD. MSTC Ltd. (formerly Metal Scrap Trade Corporation Ltd.) was set up on the 9th September, 1964 as a canalizing agency for the export of scrap from the country. With the passage of time, the company emerged as the canalizing agency for the import of scrap into the country. Import of scrap was de-canalised by the Government in 1991-92 and MSTC has since then moved on to marketing ferrous and miscellaneous scrap arising out of steel plants and other industries and importing Coal, Coke, Petroleum products, semi finished steel products like HR Coils and export primarily Iron ore. The Company has also established an e-auction portal and undertakes e-auction of Coal, Diamonds and Steel Scrap and has developed an e- procurement portal in house FERRO SCRAP NIGAM LTD. (FSNL) FSNL is a wholly owned subsidiary of MSTC Ltd. with a paid up capital of Rs. 200 lakh. The Company undertakes the recovery and processing of scrap from slag and refuse dumps in the nine steel plants at Rourkela, Burnpur, Bhilai, Bokaro, Visakhapatnam, Durgapur, Dolvi, Duburi & Raigarh. The scrap recovered is returned to the steel plants for recycling/ disposal and the Company is paid processing charges on the quantity recovered at varying rates depending on the category of scrap. Scrap is generated during Iron & Steel making and also in the Rolling Mills. In addition, the

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Company is also providing Steel Mill Services such as Scarfing of Slabs, Handling of BOF Slag, etc. HINDUSTAN STEELWORKS CONSTRUCTION LTD. (HSCL) HSCL was incorporated in June 1964 with the primary objective of creating in the Public Sector an organisation capable of undertaking complete construction of modern integrated Steel Plants. HSCL had done the construction work of Bokaro Steel Plant, Vizag Steel Plant and Salem Steel Plant from the inception till commissioning and was associated with the expansion and modernisation of Bhilai Steel Plant, Durgapur Steel Plant, IISCO (Burnpur) and also Bhadravati Steel Plant. With the tapering of construction activities in Steel Plants, the company intensified its activities in other sectors like Power, Coal, Oil and Gas. Besides this, HSCL diversified in Infrastructure Sectors like Roads/Highways, Bridges, Dams, Underground Communication and Transport system and Industrial and Township Complexes involving high degree of planning, co-ordination and modern sophisticated techniques. The company has developed its expertise Erection, Equipment in the areas of Piling, Soil investigation, and Massive Pipelines, and foundation work, High rise structures, Structural fabrication and Refractory, erection, Technological structures including Instrumentation testing

commissioning. The company has also specialised in carrying out Capital repairs and Rebuilding work including hot repairs of Coke Ovens and Blast Furnaces and other allied areas of Integrated Steel Plant. MECON LTD.

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MECON

is

one

of

the

leading

multi-disciplinary

design,

engineering, consultancy and contracting organization in the field of iron & steel, chemicals, refineries & petrochemicals, power, roads & highways, railways, water management, ports & harbours, gas & oil, pipelines, non ferrous, mining, general engineering, environmental engineering and other related/ diversified areas with extensive overseas experience. MECON, an ISO: 9001- 2000 accredited company, registered with World Bank (WB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), African Development Bank (AFDB), and United Nations Industrial Development Organisation (UNIDO), has wide exposure and infrastructure for carrying out engineering, consultancy and project management services for mega projects encompassing architecture & town planning, civil works, structural works, electric, air conditioning & refrigeration, instrumentation, utilities, material handling & storage, computerization etc. MECON has collaboration agreements with leading firms from the USA, Germany, France, Italy, Russia, etc. in various fields.

PRIVATE SECTOR
The private sector of the Steel Industry is currently playing an important and dominant role in production and growth of steel industry in the country. Private sector steel players have contributed nearly 67% of total steel production of 38.08 million tonnes to the country during the period April-December, 2007. The private sector units consist of both major steel producers on one hand and relatively smaller and medium units such as Sponge iron plants, Mini Blast Furnace units, Electric Arc Furnaces, Induction Furnaces,

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Rerolling Mills, Cold-rolling Mills and Coating units on the other. They not only play an important role in production of primary and secondary steel, but also contribute substantial value addition in terms of quality, innovation and cost effective. TATA STEEL LTD. Tata Steel has an integrated steel plant, with an annual crude steel making capacity of 5 million tonnes located at Jamshedpur, Jharkhand. Tata Steel has completed the first six months of fiscal 2007-08 with impressive increase in its hot metal production. The hot metal production at 2.76 million tonnes is 4.6%more compared to the corresponding period of the previous year. The crude steel production during the period was 2.43 million tonnes which is marginally lower than the production of 2.45 million tonnes last year. The saleable steel production was at a lower level during the period April September, 2007 (2.34 million tonnes) compared to the corresponding period of last year (2.36 million tonnes). Tata Steel is continuing with its programme of expansion of steel making capacity by 1.8 million tonnes to reach a rated capacity of 6.8 million tonnes. The Project is reported to be moving ahead of schedule and is likely to be commissioned by May 2008 against the original schedule of June 2008. The Company has planned to take the capacity to 10 million tonnes by the fiscal year 2010. Tata Steels Greenfield projects in Orissa and Chattisgarh are progressing on schedule with placement of equipment order for Kalinganagar Project in Orissa and commencement of the land acquisition process. Jharkhand Project is awaiting announcement of Relief & Rehabilitation policy of the State Government.

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ESSAR STEEL LTD. (ESL) Essar Steel Holdings Ltd. (ESHL) is a global producer of steel with a footprint covering India, Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon steel manufacturerfrom iron ore to ready-to-market products. ESHL has a current global capacity of 8 million tonnes per annum (MTPA). With its aggressive expansion plans in India and other parts of Asia and North America, its capacity is likely to go up to 25 MTPA by 2012. Its products find wide acceptance in highly discerning consumer sectors, such as automotive, white goods, construction, engineering and shipbuilding. Essar Steel Ltd., the Indian Company of Essar Steel Holdings Limited, is the largest steel producer in western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadilla, Chattisgarh which has worlds largest slurry pipeline of 267 km to transport beneficiated Iron Slurry to the pellet plant, and an 8 MTPA pellet complex at Visakhapatnam. The Essar Steel Complex at Hazira in Gujarat, India, houses the worlds largest gas-based single location sponge iron plant, with a capacity of 4.6 MTPA. The complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel complex has a complete infrastructure setup, including a captive port, lime plant and oxygen plant. Essar Steel produces highly customized valueadded products catering to a variety of product segments and is Indias largest exporter of flat products, selling close to half of its production to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. JSW STEEL LTD.

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JSW Steel is a 3.8 MTPA integrated steel plant, having a process route consisting broadly of Iron Ore Beneficiation Pelletisation Sintering Coke making Iron making through Blast Furnace as well as Corex process Steel making through : BOFContinuous Casting of slabs Hot Strip Rolling Cold Rolling Mills. JSW Steel has a distinction of being certified for ISO9001:2000 Environment Quality Management System System, and ISO-14001:2004 18001:1999 Management OHSAS

Occupational Health and Safety Management System. The capacity as on 1.11.2007 stood at 3.8 MTPA and the capacity is likely to rise to 6.8 MTPA by 2008, and further to 9.6 MTPA by 2010 JINDAL STEEL & POWER LTD. (JSPL) Jindal Steel & Power Limited is one of the fast growing major steel units in the country. The Raigarh plant of JSPL has a present capacity of 1.37 million tonne per annum (MTPA) sponge iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA plant Mill, 2.30 sinter plant, 0.8 MTPA coke oven and a 330 Mega Watt captive power plant. During the year 2006-07, the company produced 1.19 million tonnes of sponge iron, 0.8 million tonnes of various steel products, 0.57 million tonnes of hot metal and 0.21 million tonnes of rolled products. The performance of JSPL during April-October 2007-08 was 0.68 million tonnes of sponge iron, 0.72 million tonnes of steel products (slabs/blooms/billets/rounds), 0.68 million tonnes of hot metal, 0.27 million tonnes of rolled products and 0.11 million tonnes of plates ISPAT INDUSTRIES LTD. (IIL)

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IIL has set up one of the largest integrated steel plants in the private sector in India at Dolvi in Raigad District, Maharashtra with a capacity to manufacture 3 million tonnes per annum of hot rolled steel coils (HRC). The Dolvi complex also boasts of an ultra modern blast furnace (setup by a group company Ispat Metallics India Ltd.) capable of producing 2.0 million tonnes per annum of Hot Metal/ Pig Iron, a 2.0 million tonnes capacity Sinter Plant (newly commissioned) and a DRI plant with a capacity of 1.6 million tonnes per annum. The complex boast of an ultra modern captive jetty which meets the plants requirement with regard to import of various raw material. In the coming years, after augmenting necessary infrastructure facility, it has planned to export the goods from the captive jetty. Further, the complex envisages adding a 110 MW captive power plant (which will use the Blast Furnace gas) in near future. The integrated steel plant is using the converter-cum-electric arc furnace route (CONARC process) for producing steel. In this project, IIL have uniquely combined the usage of hot metal and DRI (sponge iron) in the electric arc furnace for production of liquid steel for the first time in India. For casting and rolling of liquid steel, IIL has the state-of-the art technology called compact strip production (CSP) process, which was installed for the first time in India and produces high quality and specifically very thin gauges of Hot Rolled Coils.

d)

MARKET SHARE OF LEADING PLAYERS IN IRON AND STEEL INDUSTRY

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COMPANY

PRODUCTION STEEL MILLION TONNES)

OF MARKET (IN (IN TERMS)

SHARE

PERCENTAGE

SAIL

13.5

32%

TISCO RNIL ESSAR,ISPAT,JSWL OTHERS TOTAL

5.2 3.5 8.4 14.5 45.1

11% 8% 19% 30% 100%

e)

SWOT ANALYSIS OF THE INDUSTRY

Strengths 1. Availability of iron ore and coal 2. Low labour wage rates 3. Abundance of quality manpower 4. Mature production base Weaknesses

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1. Unscientific mining 2. Low productivity 3. Coking coal import dependence 4. Low R&D investments 5. High cost of debt 6. Inadequate infrastructure Opportunities 1. Unexplored rural market 2. Growing domestic demand 3. Exports 4. Consolidation Threats 1. China becoming net exporter 2. Protectionism in the West 3. Dumping by competitors

EXPECTED GROWTH The International Iron and Steel Institute(IISI) has fore casted that the steel demand will go of from 1.12 billion ton to 1.19 billion ton in 2008.And this will further increase in a higher rate up to 2010.In India the growth will be more prominent because of the growth in Real estate, Aviation, Manufacturing, Automobile sectors.

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f) FACTORS HOLDING BACK THE INDIAN STEEL INDUSTRY

The growth of the Indian steel industry and its share of global crude steel production could be even higher if they were not being held back by major deficiencies in fundamental areas. Investment in infrastructure is rising appreciably but remains well below the target levels set by the government due to financing problems.

Energy supply Power shortages hamper production at many locations. Since 2001 the Indian government has been endeavouring to ensure that power is

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available nationwide by 2012. The deficiencies have prompted many firms with heavier energy demands to opt for producing electricity with their own industrial generators. India will rely squarely on nuclear energy for its future power generation requirements. In September 2005 the 15th and largest nuclear reactor to date went on-line. The nuclear share of the energy mix is likely to rise to roughly 25% by 2050. Overall, India is likely to be the worlds fourth largest energy consumer by 2010 after the US, China and Japan. Problems procuring raw material inputs Since domestic raw material sources are insufficient to supply the Indian steel industry, a considerable amount of raw materials has to be imported. For example, iron ore deposits are finite and there are problems in mining sufficient amounts of it. Indias hard coal deposits are of low quality. For this reason hard coal imports have increased in the last five years by a total of 40% to nearly 30 million tons. Almost half of this is coking coal (the remainder is power station coal). India is the worlds sixth biggest coal importer Inefficient transport system In India, insufficient that serious has freight been capacity to and a transport becoming infrastructure increasingly long inadequate economic are

impediments

development.

Although the country has one of the worlds biggest transport networks the rail network is twice as extensive as Chinas its poor quality hinders the efficient supply of goods. The story is roughly the same for port facilities and airports. In the coming years a total of USD 150 bn is to be invested in transport infrastructure,

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which offers huge potential for the steel industry. In the medium to long term this capital expenditure will lay the foundations for seamless freight transport

2. Introduction to Sail
The Steel Authority of India Ltd. (SAIL) is the largest steel manufacturer in India. The company's five integrated steel plants and three specialized facilities produce a variety of steels used in the construction, engineering, utilities, railway, automotive, and defense industries. SAIL's product line includes hotand cold-rolled sheets and coils, galvanized sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel, and alloy steels. While India's government owns approximately 85 percent of the company, SAIL operates under a "navratna" status, that is, it enjoys substantial operational and financial autonomy.

Vision
To be a respected world class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.

Credo
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.

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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 people's lives.

Key Dates:
1913: Production of steel begins in India. 1918: The Indian Iron & Steel Co. is set up to compete with Tata Iron and Steel Co. 1948: A new Industrial Policy Statement states that new ventures in the iron and steel industry are to be undertaken only by the federal government. 1954: Hindustan Steel Ltd. is created to oversee the Rourkela plant. 1959: By now, Hindustan is responsible for two more plants in Bhilai and Durgapur. 1964: Bokaro Steel Ltd. is created. 1973: The Steel Authority of India Ltd. (SAIL) is created as a holding company 1993: India sets plans in motion to partially privatize SAIL. 1999: The Company posts losses as a result of an industry downturn. 2003: SAIL's output surpasses ten million tons of saleable steel.

a) HISTORY
The history of the iron and steel industry in modern India is closely bound up with political and economic developments since the country achieved independence from Britain in 1947. Most of the productive units run by SAIL were built as state ventures with

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aid and assistance from industrially developed countries, and operated by SAIL's predecessor, Hindustan Steel Ltd. and the Indian Iron & Steel Company Ltd., (now an integrated steel plant of SAIL) India's largest single iron and steel company, developed separately as a private company before nationalization, but it depended on state subsidies from 1951 onward and had to function within the terms of the government's planning System. The industry, however, did not spring from nowhere in 1947. Iron had been produced in India for centuries, while Indian steel was superior in quality to British steel as late as1810. With the consolidation of the British raj the indigenous industry declined and the commercial production of steel did not begin in earnest till 1913, when the Tata Iron and Steel Company began production at Sakchi, on foundations laid by Jamsetji Tata, whose sons had raised the enormous sum of INR 23 million to set up the company, partly from family funds but mostly from Bombay merchants, several maharajahs, and other wealthy Indians who supported the movement for Indian self-sufficiency (Swadeshi) but did not want to appear openly anti-British. Tata was to dominate the Indian steel industry until the 1950s. The Indian Iron & Steel Company was set up in West Bengal in 1918 by the British firm Burn & Co., with plans to become a rival steelmaker. Steel prices declined in the early 1920s, however, and the company produced only pig iron until 1937. The acute depression suffered by the iron and steel industry after World War I was alleviated by the government's protective measures. The industry continued to make steady progress.

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From the late 1920s, when the British authorities introduced a system of tariffs that protected British and Indian steel but raised barriers against imports from other countries, the Indian market was divided in the ratio of 70 to 30 between British producers on the one hand and the Tata company on the other--thus effectively excluding indigenous new comers. By 1939 the Tata works were producing 75 percent of the steel consumed in what was then the Indian Empire, consisting of the present-day India, Sri Lanka, Pakistan, Bangladesh, and Burma. In the late 1930s, as European rearmament pushed iron and steel prices upward, the export of Indian pig iron increased and two small firms began to compete directly with the Tata Company in steel production. The first was the Mysore State Iron Works, which had been set up by the maharajah of Mysore in 1923 to produce pig iron at Benkipur, now Bhadravati. The second was the Steel Corporation of Bengal, a subsidiary established by the Indian Iron & Steel Company in 1937, the year after it had bought up the assets of the bankrupted Bengal Iron and Steel Company. The Steel Corporation of Bengal was reabsorbed into its parent company in 1953. All three companies profited from the British connection during World War II. Annual output rose from one million tons in 1939 to an average of 1.4 million tons between 1940 and 1945. In 1947, when India became independent as the biggest, but not the only, successor state to the British raj, the three major iron and steel companies had a total capacity of only 2.5million tons. A great deal of their plant was already more than three decades old,

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and badly in need of repair and replacement, while demand for iron and steel was growing.

Industry Changes in the Late 1940s-50s

Like other Third World states that achieved political independence but found their economic prospects determined by their subordinate position in the world economy, the new republic's policymakers decided to seek economic growth through a combination of protection for domestic industries, heavy public investment in them, encouragement of savings to finance that investment, and state direction of production and pricing. The Mahalanobis model of the Indian economy, based on the assumptions that exports could not be rapidly increased and that present consumption should be curbed for the sake of long-term growth through import substitution by the capital goods sector, provided the theoretical justification for this set of policies, which closely resembled what was done in the Soviet Union in the 1930s, in China in the 1950s, and in Africa and Asia in the 1960s, though with much less loss of life than in most of these cases. Under the terms of the new government's Industrial Policy Statement of 1948, confirmed in the Industries Development and Regulation Act three years later, new ventures in the iron and steel industry were to be undertaken only by the federal government, but existing ventures would be allowed to stay in the private sector for the first ten years. Thus the First Five Year Plan, from 1951 to 1956, involved the use of government funds to help Tata Iron and Steel and Indian Iron & Steel to expand and modernize while remaining in

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the private sector. As for new projects, in 1953 the government signed an agreement with the German steelmakers Krupp and Demag on creating a publicly owned integrated steel plant, which was sited at Rourkela, in the state of Orissa, to make use of iron ore mined at Barsua and Kalta. Krupp and Demag were chosen after the failure of Indian requests for aid from Britain and the United States, but were excluded from the project by 1959, when the Estimates Committee of the Lok Sabha, the lower house of the Indian Parliament, concluded that getting investment funds from them was equivalent to borrowing at an interest rate of 12 percent. In order to carry out its side of the agreement the government set up Hindustan Steel Ltd.in 1954, as a wholly state-owned company responsible for the operation of the Rourkela plant. By 1959, when the plant was commissioned, Hindustan Steel had become responsible for two more plants, at Bhilai in Madhya Pradesh and at Durgapur in West Bengal, under the Second Five Year Plan, which started in 1956. The Bhilai plant, located between Bombay and Calcutta, was designed and equipped by Soviet technicians, under an agreement signed in 1955, and by 1961 it included six open-hearth furnaces with a total capacity of one million tons, supplied from iron ore mines at Rajhara and Dalli. The Durgapur plant, meanwhile, was built with assistance and advice from Britain and sited near the Bolani iron ore mine. Hindustan Steel took over the operation of all the iron ore mines supplying its plants, all three of which had been located to take advantage of existing supplies. This policy of locating steel production near raw materials sources reflected the relatively small and dispersed nature of the domestic market for steel at that time, and contrasted with the

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market-related location policies of companies in more advanced steel-producing countries, such as the United States. Hindustan Steel's other major venture was its Alloy Steels Project, also based at Durgapur, which was inaugurated in 1964. Hindustan Steel's tasks included not only steel production but also the procurement of raw materials, and its subsidiaries included, in addition to the iron ore mines already mentioned, limestone and dolomite mines and coal washeries. It also operated a fertilizer plant at Rourkela. Durgapur, Rourkela and Bhillai were selected as sites for integrated steel plants primarily due to their proximity to large reserves of iron ore, availability of water from perennial rivers and existing rail links. Setting up of these steel plants were mainly aimed for the economic and industrial growth of this remote and underdeveloped region. The modernization of the two private sector leaders and the program of public sector investment together raised Indian steel output from about one million tons a year in the 1940s to three million tons in 1960, then to six million tons only four years later. Pig iron output rose by an even greater margin, from 1.6 million tons in 1950 to nearly five million tons in 1961. Both wings of the iron and steel industry contributed to the expansion of the engineering and machinery industries envisaged in the Mahalanobis model, and in turn were stimulated by the increased demand to raise production volume and quality. In 1965 Hindustan Steel's latest project, for an iron and steel plant with an associated township at Dhanbad in the state of Bihar, was transferred to a new company created one year

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earlier, Bokaro Steel Limited. Contact continued between the two companies, however, mainly through an arrangement whereby the chairman of each company was made a part-time director of the other. Like the Bhilai plant the Bokaro project was initiated with aid and advice from the Soviet Union, including blue prints, specialist equipment, technical training, and a loan at 2.5 percent interest. After the establishment of SAIL the Bokaro Company was changed back into a division of the public sector steel company. Throughout its first five years of production, 1958 to 1963, Hindustan Steel's losses rose steadily from INR 7.51 million to INR 260 million. It made a small profit in 1965 and1966, only to slip back into the red and stay there until 1974, the last year of the company's existence under that name. Among the reasons the company gave for these disappointing results were the losses incurred at the Rourkela fertilizer plant, the Steel Alloys Project, and the Durgapur steel plant; an increased rate of interest on government loans; an increase in provision for depreciation; and the high costs of imported plant and equipment. Problems Leading to the Creation of SAIL in 1973 The rate of growth of the iron and steel industry, and of the engineering and machinery producing sectors, with which its fate was so closely linked, declined significantly once the phase of import substitution was complete and the droughts of the mid1960s had forced a diversion of resources from industry. Pig iron output, which had risen so spectacularly in the 1950s, rose from seven million tons in 1965 to ten million tons in1985, while production of steel rose from 6 million tons to 12 million tons in the

35

same period. The industry suffered due to state intervention to keep its domestic prices low as an indirect subsidy to steel users, and-though the technical problems were different--from a heritage of outdated and inefficient plants and equipment. Indian government policy since 1965 has been to use its iron ore less as a contribution to domestic growth than as an export, earning foreign exchange and helping to reduce the country's chronic deficit on its balance of trade. Production of ore increased, from 18million tons in 1965 to 43 million tons in 1985, in order to supply a growing number of overseas markets. With the expansion and diversification of Hindustan Steel, the separate establishment of Bokaro and the beginning of planning for new plants at Salem, Vishakhapatnam, and Vijay nagar, it became increasingly clear that public sector iron and steel production would need some new form of coordination to avoid duplication and to channel resources more effectively. The Steel Authority of India Ltd. was established in January 1973 for this purpose, to function as a holding company along the lines of similar but older bodies in Italy and Sweden. The new organization was placed on a secure footing when then Indian Iron & Steel Company was nationalized, giving SAIL control of all iron and steel production apart from the venerable Tata Iron and Steel Company and a number of small scale electricarc furnace units. At the time of nationalization the Indian Iron & Steel Company included a steel plant at Burnpur in West Bengal; iron ore mines at Gua and Manoharpur; coal mines at Ramnagore, Jitpur, and Chasnalla; and a specialist subsidiary, the IISCO-Ujjain Pipe and Foundry Co. Ltd., based at Kulti.

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Both SAIL and its predecessor sought to expand capacity to meet predicted rises in demand for steel. In 1971 Hindustan Steel had unveiled plans for India's first coastal steel plant, at Vishakhapatnam. The project, which in 1991 was in the process of being opened, with one blast furnace already in operation, was expected to allow productivity of 230tons per man year compared with less than 50 in SAIL's existing plants. The Authority also invested heavily in modernizing its oldest plants, at Rourkela and Durgapur. Challenges in the 1980s The 1980s were not a happy decade for SAIL. It suffered losses between 1982 and 1984but went back into the black in the following two years. Meanwhile Tata Iron and Steel was consistently profitable. By 1986, when the Indian steel industry's total capacity was15.5 million tons, only 12.8 million were actually produced, of which SAIL produced 7.1million. Thus imports of 1.5 million tons were needed to meet total demand, after years of exporting Indian steel. By 1988 all the main steel plants in India except Vishakhapatnam were burdened with obsolescent plants and equipment, and Indian steel prices were the highest in the world. The government proposed a ten-year plan to modernize the plants, based on aid from West Germany, Japan, and the Soviet Union just at a time when the worldwide economic recession was deepening and the World Bank was recommending the privatization of SAIL and the liberalization of steel imports. In 1989 SAIL acquired Visvesvaraya Iron and Steel Ltd. In its first year under SAIL's wing this new subsidiary's production and

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turnover showed an improvement over its last year in the private sector. This progress contrasted with results for SAIL as a whole in 1989-90, since production declined, and once again planned targets were not met. Various factors contributed to this disappointing outcome, including unrest at the Rourkela plant as a result of the management's decision not to negotiate with a new union, Rourkela Sramik Sangha, which had challenged the established union, Rourkela Mazdoor Sabha, and had even won all the seats on the plant's elected works committee. Another problem, continuing over several years, arose from defects in power supply; the impact of power cuts on steel output in 1989-90 was estimated as 170,000 tons lost, and the supply of coal was unreliable. During this time period, SAIL remained in the public sector as a central instrument of state plans for industrial development. The country's reserves of iron ore and other raw materials for iron and steel made the industry central to the economy. At the beginning of he 1980s India had recoverable reserves of iron ore amounting to 10.6 billion tons, a natural endowment that it would take 650 years to deplete at then current rates of production. The high-grade ore within this total--that is, ore with an iron content of at least 65 percent--was, however, thought likely to reach depletion in only 42 years; yet it still represented about one-tenth of the world total. SAIL struggled to maintain production, let alone expand it, in large part because of circumstances outside its control. Since the purchase of raw materials typically accounted for 30 percent of the Indian steel industry's production costs, any rise in the prices of coal, ferro-manganese, limestone, or iron ore cut into the industry's profitability. In the first half of the 1980s, for example, prices for

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these materials rose by between 95 and 150 percent, at the same time as electricity charges rose by 150 percent. Most of these increases were imposed by other state enterprises. Nor did it help SAIL that the high sulfur content of Indian coal required heavy investment in desulfurization at its steel plants. Indeed, the industry had chronic problems in trying to operate blast furnaces designed to take low-sulfur coking coal. The more suitable process of making sponge iron with non-coking coal, then converting it to steel in electric arc furnaces, was introduced in the private sector later, though by 1989 only 300,000 tons were being produced in this way. India's basic output costs of INR 6,420 per ton in 1986compared well with the averages for West Germany (INR 6,438), for Japan (INR 7,898), and for the United States (INR 6,786). What finally kept Indian steel from being competitive was the imposition of levies that raised its price per ton by about 30 percent, and which included excise duties, a freight capitalization surcharge, and a Steel Development Fund charge. In spite of such problems, and in response to them, SAIL announced in December 1990an ambitious plan to increase its annual output of steel from 11 million to 19 million tons, thus transforming itself from the world's thirteenth largest steel producer to its third largest, within ten years. SAIL's use of its steel production capacity, running at about 77percent in 1990, would be raised to 95 percent by 1996, thus permitting output of crude steel to rise by two-fifths over its current level. Output for 1990 had actually been only six million tons, however, compared with 6.9 million tons in 1988, and eight million ton sin 1989. SAIL was no more able than

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large steel companies in other countries to achieve the optimum balance between demand and supply, between increasing the quantity of output and improving its quality by modernizing, and thus escaping from its heritage of outdated plant and equipment. Neither Hindustan Steel nor SAIL was ever in a position to defy the circumstances of the Indian economy or of the world steel industry on their own, but they achieved, in large part, the more modest goal of contributing to India's post war economic growth. The 1990s and Beyond As part of an economic reform policy, India set plans in motion to partially privatize its nationalized industries in 1993. As such, 10 percent of SAIL was offered to private investors over the next several years. In 1994, the company announced its plans to offer an additional 10 percent to international investors in order to raise funds for plant modernization and expansion. While SAIL worked to reach the goals set forth in the early 1990s, the company faced severe challenges in the latter half of the decade. Falling international steel prices, high costs related to its modernization program, increased inventory levels brought on by private sector growth, the Asian economic crisis, and falling export sales took their toll on SAIL's bottom line. In fact, during the 199899 fiscal years, the company posted one of the largest net losses in its history--$360 million. Overall, the global steel industry struggled during the late 1990s and into the new millennium. By 2002, a turnaround appeared to be on the horizon and demand in India had increased by 5.7 percent. V.S. Jain was named chairman that year and was

40

tapped to reverse SAIL's fortunes. Under his leadership, the company planned to raise its production capacity to 20 million tons by 2011. SAIL's output surpassed ten million tons of saleable steel in 2003 while exports grew by 53 percent over the previous year. By2004, the company was producing 12.5 million tons. Although SAIL appeared to have weathered the industry downturn, it continued to face problems related to coking coal supplies. Jain explained the issue in a June 2004Hindustan Times article. "Coking coal has been a global problem," he claimed. "Since China restricted exports to bolster its domestic industry, global prices have gone through the roof. Our current coking coal requirements are 13 million tons, of which 9 million tons is imported. Due to constraints, we had to cut production last year and make exorbitant spot purchases." Jain added, "We are exploring the option of buying equity stakes in coking coalmines in Australia and New Zealand. We are also looking at substitutes like coal tar and other petroleum derivatives." Along with the challenges brought on by the coking coal concerns, SAIL was forced to deal with rising steel prices. Over the past several years, the company had worked to overcome industry problems by diversifying into new business areas in an attempt to bolster profits. In 2001, the company formed a joint venture with the National Thermal Power Corp. to create NTPC SAIL Power Company Ltd., a company designed to manage the Captive Power Plants. Other newly formed joint ventures included the Bokaro Power Supply Co. Ltd. and the Bhilai Electric Supply Co. Ltd.

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Believing that it had a solid strategy in place, SAIL's management team remained optimistic about the company's future. India's economy was growing, leading SAIL to assume that the country's steel consumption would nearly double the 2004 levels, reaching 55 to 60 million tons by 2012. Although the company's bottom line stood to benefit from this estimate, the cyclical and turbulent nature of the steel industry left SAIL's future hanging in the balance.

b) Joint Ventures of SAIL:

NTPC SAIL Power Company Pvt. Limited (NSPCL): A 50:50 joint venture between Steel Authority of India Ltd (SAIL) and National Thermal Power Corporation Ltd (NTPC Ltd); manages SAILs captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 814 megawatts (MW). Bokaro Power Supply Company Pvt. Limited (BPSCL): This 50:50 joint venture between SAIL and the Damodar Valley Corporation (DVC) is managing the 302-MW power generating station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant. Mjunction Services Limited: A 50:50 joint venture between SAIL and Tata Steel; promotes e-commerce activities in steel and related areas. Its newly added services include e-assets sales, events & conferences, coal sales & logistics, publications, etc. SAIL-Bansal Service Centre Limited: A joint venture with BMW Industries Ltd. on 40:60 basis for a service centre at Bokaro with the objective of adding value to steel.

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Bhilai JP Cement Limited: A joint venture company with Jaiprakash Associates Ltd on 26:74 basis to set up a 2.2 million tonne (MT) slag-based cement plant at Bhilai. Bokaro JP Cement Limited: Another joint venture company with Jaiprakash Associates Ltd on 26:74 basis to set up a 2.1 MT slag-based cement plant at Bokaro. SAIL & MOIL Ferro Alloys (Pvt.) Limited : A joint venture company with Manganese Ore (India) Ltd on 50:50 basis to produce ferro-manganese and silico-manganese required in production of steel. S & T Mining Company Pvt. Limited: A 50:50 joint venture company with Tata Steel for joint acquisition & development of mineral deposits; carrying out mining of minerals including exploration, development, mining and beneficiation of identified coking coal blocks. International Coal Ventures Private Limited: A joint venture company/SPV promoted by five central PSUs, viz. SAIL, CIL, RINL, NMDC and NTPC (with respectively 28.7%, 28.7%, 14.3%, 14.3% and 14.3% shareholding) aiming to acquire stake in coal mines/blocks/companies overseas for securing coking and thermal coal supplies. SAIL SCI Shipping Pvt. Limited: A 50:50 joint venture with Shipping Corporation of India for provision of various shipping and related services to SAIL for importing of coking coal and other bulk materials and other shipping-related business. SAIL RITES Bengal Wagon Industry Pvt. Limited: A 50:50 joint venture with RITES to manufacture, sell, market, distribute and export railway wagons, including high-end specialised wagons, wagon prototypes, fabricated components/parts of railway vehicles, rehabilitation of industrial locomotives, etc., for the domestic market.

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SAIL SCL Limited: A 50:50 JV with Government of Kerala where SAIL has management control to revive the existing facilities at Steel Complex Ltd, Calicut and also to set up, develop and manage a TMT rolling mill of 65,000 MT capacity along with balancing facilities and auxilliaries.

c) MAJOR PRODUCTS OF SAIL:

LONG PRODUCTS

Structurals Crane Rails Z-Section Centre Sill Z-Type Sheet-piling Section M S Arch Bars, Rods & Rebars: SAIL TMT Wire Rods

FLAT PRODUCTS

HR Coils, Sheets & Skelp Plates CR Coils & Sheets GP Sheets & Coils, GC Sheets Electrical Steel

RAILWAY PRODUCTS

Rails Wheels, Axles & Wheel Sets SEMIS Blooms, Billets, Slabs

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OTHER PRODUCTS

Pig Iron

d) PRODUCTS AND APPLICATIONS

Galvanized Corrugated Metal Roofing

Galvanized Corrugated Metal is a plain carbon steel sheet coated in a galvanizing process that applies a barrier of zinc to insulate it from the elements. Most of the corrugated roofing and corrugated siding products seen today and for many years past, have made in the galvanized finish. This coating on the galvanized corrugated steel has been the choice for years and has a reputation as a rugged product that can and will last for unlimited time on a structure. A normal steel sheet will rust almost immediately, but galvanizing will protect the steel. Once galvanized by eltro-coated and, hot-dipped process this product surface produces a silvery look or spangled finish. As a standard several of our industrial type corrugated metal siding, corrugated metal roofing, corrugated metal decking, corrugated metalpanels and accessories are made in galvanized steel. The galvanized sheets are coated on both sides, with a layer of zinc protecting the metal from the results of being outdoors in the weather everyday. Galvanized corrugated metal roofing is a durable and functional choice.

Hot Rolled Coils, Sheets and Skelp

Hot rolled coils, sheets and skelp (narrow coil), are the largest product category of the company in terms of both sales volume and revenue. Hot rolled coils are primarily used for making pipes and have many direct industrial and manufacturing applications, including the construction of tanks, railway cars, bicycle frames,

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ships, engineering and military equipment and automobile and truck wheels, frames and body parts. Hot rolled coils are also used as feedstock for cold rolling mills where they undergo further processing. Hot rolled coils are also delivered to the company's own cold rolling mills and silicon sheet mill and pipe plant in a wide range of widths and thicknesses as the feedstock for higher valueadded steel products. The company is the largest producer of hot rolled coils, sheets and skelp in India. Semi-Finished Products The company produces semi-finished products, including blooms, billets and slabs, which are converted into finished products in the company's processing plant and, to a lesser extent, sold to rerollers for conversion to finished products. Plates Steel plates are used mainly for the manufacture of bridges, steel structures, ships, large diameter pipes, storage tanks, boilers, railway wagons and pressure vessels. The company also produces weatherproof steel plates for the construction of railcars. The company is currently the largest producer of steel plates in India with a domestic market share of more than 80 per cent for these products. The company is the only producer of wide and heavy plate products in India. Cold Rolled Products Cold rolling of hot rolled products produces a superior surface finish, improves the physical properties of the steel, such as tensile strength, and reduces its thickness to precise gauges. As a result,

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cold rolled products generally command higher prices than hot rolled products. The products of the cold rolling mill include cold rolled sheets and coils, which are used primarily for precision tubes, containers, bicycles, furniture and for use by the automobile industry to produce car body panels. Cold rolled products are also used for further processing, including for colour coating, galvanizing and tinning. The company also produces further processed cold rolled products, including galvanized sheets and tin plates. Railway Products Railway products, including rails, wheels and axles, sleeper and fish plates (which are used to connect and strengthen rails), are produced through a process of hot rolling blooms in the finishing mills and forging ingots and blooms in the forging press or hammer. Railway products are used primarily to upgrade and expand the existing railway network in India. Structurals Structural steel products are produced through a process of hot rolling in the section or structural mills. They are long steel products with cross sections of various shapes. Ibeams, channels and angle steel are used in mining, the construction of tunnels, factory structures, transmission towers, bridges, ships railways and other infrastructure projects. Bars and Rods The company produces steel bars and rods through a process of hot rolling billets in the finishing mills. Reinforcement steel and wire rods are primarily used by the construction industry. The

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company is one of the largest producers of reinforcement bars in India which are primarily sold to the construction industry. Speciality Products Speciality products include electrical sheets, tin plates and pipes. Electrical sheets are cold rolled products of silicon steel for electrical machinery. Tin plates are cold rolled steel electrolytically coated with tin for food packaging. Pipes are longitudinally or spirally welded from hot rolled coils for conveying such things as water, oil and gas.

Alloy and Stainless Products In addition to the steel products indicated above, SAIL produces a wide range of alloy steel products at ASP. Elements including chromium, nickel, vanadium and molybdenum are used in the alloy mixture to impart special properties to steel. These alloy steels are primarily used for sophisticated applications, including in the automobile, railway and defense industries. A wide variety of alloy and stainless steel plates, hot rolled sheets, cold rolled sheets, bars, billets, blooms, forgings and die blocks are manufactured at ASP in an Electric Arc Furnace. SAIL is able to produce different qualities of alloy steels to meet the requirements of its customers. To increase steel's corrosion resistance properties, nickel and chromium are used in the making of stainless steel. SSP produces cold rolled stainless steel coils and sheets with thickness ranging from 0.3 mm to 6 mm and width ranging from 500 mm to 1,250 mm. These materials can be produced in a large number of grades for different applications. Stainless steel products are used for

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diverse applications including household utensils, automobile trims, conveyor belts, elevators, chemical and food processing equipment, building and interior decoration and pharmaceutical equipment. SAIL has contributed immensely to the development of the nations infrastructure by supplying products for key sector of the economy like defense, railways, housing, roads, and power, among others. SAIL has worked tirelessly for economic development, profit maximization, employment generation, and social welfare and amenities for its employees and the community at large. Hospitals and schools at SAILs township are models of excellence in their respective areas. The SAIL story is a saga of visionaries who had the foresight to break new ground where none existed converting sleepypastrol villages into pulsating cosmopolitan giants.The organization is looking to the future by directing all its energies towards achieving synergy in maximizing profits, expanding capacity and serving the society in equal measure.

e) Major Units of SAIL

Integrated Steel Plants Bhilai Steel Plant (BSP) in Chhattisgarh Durgapur Steel Plant (DSP) in West Bengal Rourkela Steel Plant (RSP) in Orissa Bokaro Steel Plant (BSL) in Jharkhand IISCO Steel Plant (ISP) in West Bengal Special Steel Plants Alloy Steels Plants (ASP) in West Bengal Salem Steel Plant (SSP) in Tamil Nadu

Visvesvaraya Iron and Steel Plant (VISL) in Karnataka

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Subsidiary Maharashtra Elektrosmelt Limited (MEL) in Maharashtra

Bhilai Steel Plant

A major exporter of steel products, Bhilai produces 3.6 million tonnes of saleable steel annually. The plant has the distinction of supplying the widest and heaviest plates in India, besides being the only established supplier of rails to the Indian Railways. The plant has been regularly supplying quality products to the foreign markets for over two decades now and has earned the goodwill of innumerable customers worldwide.

Bokaro Steel Plant

Indias premier flat products plant produces 3.4 million tonnes

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of saleable steel annually. Bokaros Hot and Cold-rolled steels as well as its Galvanized products have been acclaimed for their quality.

Durgapur Steel Plant

With an annual production of 1.6 million tonnes of saleable steel, the plant is a major producer of Railway track materials, Billets, Structurals and Merchant products.

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Rourkela Steel Plant:

A major producer of flat, tubular and coated steel products, this plant produces annually 1.6 million tonnes of diversified steel items.

F) SWOT ANALYSIS OF SAIL

STRENGTHS The diversified product mix and multi location production units are an area of strength for the company. SAIL as a single source is able to cater to the entire steel requirement of any customer. Also it has a nationwide distribution network with a presence in every district in India. This makes quality steel available throughout the length and breadth of the country. SAIL has the largest captive iron ore operations in India, which takes care of its entire requirement. With plans in place to expand the mining operations, the company will continue to be self sufficient in iron ore after completion of the present phase of expansion. SAIL's large skilled manpower base is a source of strength. There is emphasis on skill based training in the company.

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The company has one of the biggest in-house research and development centres in Asia. SAIL's RDCIS (Research &Development Centre for Iron & Steel) is a source of regular product and process innovation. WEAKNESSES SAIL is dependent on the market purchase for a key input coking coal. As India does not have sufficient coking coal deposits, most of the supply is from external sources. A large manpower base results in higher manpower cost as a proportion of turnover forthe company. Although there has been significant reduction in manpower through natural and voluntary separations, the manpower strength in SAIL is still higher than the industry average. At present around 20% of the products are in the form of semi -finished steel, resulting in lower value addition. SAIL being a Public Sector unit has to follow set procedures in conducting its business. On occasions, it slows down the decision making with attendant fallout. OPPORTUNITIES The current per capita finished steel consumption in the country is approx. 44 kg as compared to the likely world average of around 190kg. There is a substantial scope for increase in domestic steel consumption. Although during 2008-09, steel consumption contracted by 1.2% in the country, steel demand in India is poised to grow at a modest pace with thrust on infrastructure in the 11th Plan period. Approval to 37 infrastructure projects worth Rs.70, 000 crores between August 2008 and January 2009 is likely to trigger steel demand. The size range and quality makes SAIL'S long products a preferred choice for project customers. THREATS International prices of steel dropped by over 60% from their peak level in July,2008. With import duty at 5%, and poor demand from developed countries, cheap imports are on an increase into the country putting pressure on realization of the domestic steel

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producers. With significant excess capacity in the global steel industry during 2009 there is a threat of dumping cheap steel to India which is likely to be the only major steel consuming nation with a positive growth. Clearance and renewal of mining lease, which involve multiple agencies at the State and Central levels, are an area of concern. Delay in opening new mines, and / or expanding existing mines may constrain raw materials availability, thereby impacting growth in saleable steel production, and overall economics of operation. Law and order situation in mining areas in some of the states is also a cause of concern for smooth operations in remote areas

RESEARCH METHODOLOGY DEALERSHIP ANALYSIS Who is a dealer?

Individual or firm that buys goods from a producer or distributor for wholesale and/or retail reselling. Unlike a distributor, a dealer is a principal and not an agent.

Other Meanings:An individual or entity, such as a securities firm, when it acts as a principal and stands ready to buy and sell for its own account.

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More generally, an individual or entity which buys and sells products and holds an inventory. A person or business firm acting as a middleman to facilitate distribution of securities or goods. Typically, a dealer buys for his or her own account and sells to a customer from the dealer's inventory. Thus a dealer acts as a principal rather than as an agent. The dealer's profit or loss is the difference between the price he pays and the price he receives for the same security or goods. The same individual or company may, at different times, function as a dealer or as a broker, who buys and sells for his clients' accounts.

a) Objective of The Project

Find out the perception of existing dealers towards SAIL and give out different suggestions so as to change the mindset of the dealers in the positive sense and retain them.

To assess the dealers perception about the

quality of SAILs product and competitors.

To analyze the issues related to dealers in

selling the GP/GC product to dealers and thereby designing an approach to minimize those issues by implementing the changes

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b) RESEARCH METHODOLOGY/ SAMPLING DESIGN

The methodology adopted for eliciting the data required for the study was survey method. It is the overall pattern or framework of the project that will dictate as to what information is to be collected, from which sources and by what procedures. RESEARCH METHOD Research methodology must be classified on the basis of the major purpose of the investigation. In this problem, description studies have been undertaken, as the objective of the project is to conduct the market survey about the dealership analysis related to product & services of SAIL

DATA COLLECTION The information needed to further proceed in the project had been collected through primary data and secondary data. PRIMARY DATA Primary data consists of information collected for the specific purpose at hand for the purpose of collecting primary data, dealers detail data & survey research was used and all the dealers were contacted. Survey research is the approach best suited gathering description. SECONDARY DATA

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The secondary data consists of information that already exists somewhere, having been collected for another purpose. Any researcher begins the research work by first going through the secondary data. Secondary data includes the information available with the company. It may be the findings of research previously done in the field. Secondary data can also be collected from magazines, newspapers, other surveys conducted by known research agencies etc. RESEARCH METHODOLOGY The respondents are dealers of SAIL located in Mumbai, Thane, Raigad, Alibaug in Maharashtra. The survey was carried by visiting their place. The survey was carried out with the help of a structured questionnaire, which helps in accomplishing the research objectives. The respondents by means of personal interview administer this structured ended questionnaire. Research design: Descriptive method is used in the research. A sufficient thought has been given in framing the questionnaire and deciding the types of data to be collected and the procedure to be used.

SAMPLING DESIGN These were the areas where some dealers of SAIL were located & It was convenient for carrying research study on any subject. The sampling chosen is the non probability convenience sampling, because only those dealers were interviewed that were accessible and available.

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Sample Size Selection: No statistical technique was applied to determine the sample size. For this survey the sample size selected

d) Sources of data
Primary data: Questionnaire has been used to collect the data. It contains the open ended, closed ended and scaling techniques. Data collection method: Survey method has been used for collecting the data. Method of communication: Indirect communication (questionnaire) has been used for collecting the information. Sample size: 25 Dealer have been surveyed. Sampling technique: Convenience area sampling has been used in the research. Area of survey: MUMBAI, THANE, RAIGAD & ALIBAUG within MAHARASHTRA

e) ANALYSIS & INTERPRETATION

(BASED ON SURVEY CONDUCTED FOR 25 DEALERS)

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Q1.Which product do you Authority of India Limited? A)TMT B) structurals the Above

purchase

from

Steel E) All of

C) GP/GC

D) Other

OBSERVATION:-Here out of the total no. of dealers

analysed, 75% of them purchase TMT 10% of them purchase structurals,5% of them GP/GC & also 10% of them purchase TMT & structurals together.

INTERPRETATION:- As we know the qualities of SAILs

product is very good & therefore the dealers usually purchase in high quantity but we can see that sales of GP/GC is relatively low and hence after doing the survey it

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came to know that GP/GC has been low.

because of high price the sales of

Q2.Why dont you purchase GP/GC product of Steel Authority of India Limited? (If GP/GC not purchases from SAIL)? ..

INTERPRETATION & OBSERVATION:Here the following problems were found:-

Due to high prices of GP/GC as compare to other companies they do not purchase it from SAIL. As they do not get the product in smaller quantity so they do not purchase it due to lack of affordability in higher quantity. They do not purchase because they do not get any kind of requirement for GP/GC. Most of the dealers also said that customers usually

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prefer to purchase it from local marketers. These were the reasons found during the survey for not purchasing the GP/GC.

Q3.How would you rate Authority of India Limited? A) Fair Excellent B) Good

the

products

of

Steel E)

C) Poor

D) Average

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OBSERVATION:- Here out of the total no. of dealers

analysed, around 65% of the people rated excellent to the products of SAIL, 20% percent rated good, 10% as fair & 5% as an average.

INTERPRETATION:- AS we can see through the survey

that none of the dealers gave negative points to the product of SAIL and from this we can make out from this that SAIL is very well known for its Quality.

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Q4. How would you rate the services of Steel Authority of India Limited? A)InEfficient . . . . . efficient Fast

B)Slow . . . . .

C)UnReliable . . . . . reliable

Here,the view of dealers towards services of SAIL was very Positive. In dealers opinion the services of SAIL is very Efficient, Fast & Reliable

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Which is a very good sign for the company.

Q5.Seel Authority of India Limited have to improve on Quality? A) Strongly Agree B) Agree C) Neither Agree or Disagree D) Disagree E) Strongly Disagree

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OBSERVATION:- After analysing the dealers it came to

know that around 85% of the dealers strongly disagreed with the idea that SAIL requires to improve on quality,10% of dealers disagree & 5% of dealers were confused so they were neither agree or disagree.

INTERPRETATION:- As we know from the previous

Questions that SAIL product is very good especially in terms of Quality hence many people Disagreed with the idea of improvement in quality is required to do.

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Q6.Name of the company you prefer or purchase from other than SAIL? A) Jindal Steel B) TATA Steel C) Bhilai steel E) Only SAIL D) Any Other

OBSERVATION:- When the question was asked to

analyse the dealers regarding their steel product purchase from the companies other than SAIL, the feedback were as follows as:80% of them purchase from Only SAIL 15% of them purchase from Jindal steel other than SAIL. 5% of them purchase from TATA steel also other than SAIL

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INTERPRETATION:- The dealers who all were surveyed

at the time of survey also purchases product from jindal steel & TATA steel as some of the products of SAIL were higher in rate as compare to other companies. but as we can see 80% of the people purchases from only SAIL we can easily make it out that SAILs quality is world class & services are very efficient.

Q7.What is your satisfaction level with the products & services of Steel Authority of India? A) High B) Low C) Average D) Very High E) Very Low

OBSERVATION:- When the question was asked to the

dealers regarding their satisfaction level with the products & services of SAIL, the feedback received were as follows as:-

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80% of them are very highly satisfied 15% of dealers satisfaction level was high 5 % of dealers satisfaction level was average

INTERPRETATION:- Due to the higher Quality of

product & efficient services of SAIL the satisfaction level of the dealers was very high and hence the result was very positive for the company.

Q8. How would you describe the GP/GC product of SAIL as compare to other companies in terms of prices & quality? A) SAIL is higher in price as compare to other companies B) SAIL is lower in price as compare to other companies C) SAIL is higher in quality as compare to other companies D) SAIL is lower in quality as compare to other companies

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7 6 5 4 PRICE 3 2 1 0 A B C D QUALITY

OBSERVATION:- From the above figure we can see that

Q9. How frequently do you place order for GP/GC or any other product in Steel authority of India Limited?
Purchases Products GP/GC Other Products once in a week Once in a month More than a month Do not place order

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OBSERVATION:- Here from the above pie chart it can be

seen that out of the total no. of dealers surveyed 70% of the dealers order once in a week at least. 25% of the dealers order minimum once in a month & 5% of them places order in more than a month for the products other than GP/GC.

INTERPRETATION:- due to the best quality & perfect

prices of the products like TMT & Structurals the selling of these products are in full swing hence dealers purchases these product according to their requirement.

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ORD F G /G ERS OR P C
5%

ONE'S IN A MONTH DO NOT PLACE ORDER

95%

OBSERVATION:- For the GP/GC product from the above

pie chart it can be seen that 5% of the dealers order for GP/GC at least once in a month & the remaining 95% of dealers do not place any order for GP/GC.

INTERPRETATION:- during the survey it came to know

that due to high prices of SAILs GP/GC product as compare to other companies dealers do not purchase from it and therefore dealers do not get any requirement from their customers.so the selling of GP/GC product is very low.

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Q10.Any Suggestions would you like to give to Steel Authority of India Limited? (regarding GP/GC or any other product) .......................................................................................... ........................................................................................... ........................................................................................... ........................................................................................... ........................................................................................... ..................

INTERPRETATION & OBSERVATION:Here the suggestions are as follows as: SAIL should advertise its product even in semi-urban & rural areas to create its awareness so that the demand and sales can be increased. SAIL should reduce the prices of some of their product like GP/GC so that it can be purchased in higher quantity. SAIL should also make availability of their products in smaller quantity so that it can be easily purchase by small dealers.

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e) FINDINGS ON SURVEY
1) Maximum dealers places order in the company for at least once in a month 2) Most of the dealers are highly satisfied with the product & services of SAIL and also they think that there is no need for SAIL to improve the quality as it is already excellent in terms of quality 3) The quality of GP/GC product is also good but it is relatively higher in terms of prices as compare to other companies 4) Dealers think that there is a need for the company to advertise its product even in small or rural market to create awareness.
5)

Dealers do not receive order for SAILs GP/GC product from the customer as due to high prices they purchase from other companies or local marketers

6)

Few dealers are ready to sell the GP/GC product of SAIL if the price for the product would be reduced.

7) Most of the dealers also prefer to purchase the product from TATA steel & JINDAL steel.

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8) Customers like to purchase from local marketers also as the price of their product is cheaper. 9) Some dealers require products in smaller quantity which company does not gives or sell.

f) LIMITATIONS OF THE STUDY

The sampling plan was based on non-probability method and no scientific methods were adopted.

The study concerns itself with consumer trading behaviour, which is a complex activity. This is a psychological process and is so spontaneous sometimes, that, dealer does not recognize it and remains unaware, and when dealer is asked to give his views on such buying, it cannot be 100% reliable.

The sample size is not sufficient to represent the whole population. Due to time constraint the survey has been done on the basis of convenience.

g) RECOMMENDATION

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1)

The selling of the product should also be offered in

smaller quantity as small dealers do not require product in higher quantity due to lack of affordability.
2)

There should be more effective advertisement of the

products even in rural market so that the awareness about the product can be increased. 3) The prices of the product should be reduced to some

extent atleast it should be around the prices of competitors. 4) If the dealers are having any issues so company should

find it out and try to solve them.

4) BIBLIOGRAPHY: ANNUAL REPORT (2007-2008) OF MINISTRY OF STEEL

EQUITY RESEARCH (INDIA BULLS) OF SAIL, TATA,ISPAT

ANNUAL REPORT (2007-2008) OF TATA STEEL INDIAN INDUSTRY, A MONTHLY REVIEW (AUGUST 2008) CMIE ANALYSIS FROM CRISIL. ECONOMIC TIMES,EXIM NEWSLETTER

WWW.WORLDSTEEL.ORG/?ACTION=PROGRAMS&ID=64 WWW.CRISIL.COM/SITESEARCH_BRO

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WWW.INDIANINDUSTRY .COM HTTP://STEEL.NIC.IN/ HTTP://EN.WIKIPEDIA.ORG/WIKI/STEEL WWW.AIIS.ORG WWW.NEWSSTEEL.COM

5) ANNEXURE
Questionnaire
Name of the ________________________________________ Location:-_____________________ Contact No.__________________ Q1. Which product do you purchase from Steel Authority of India Limited? Dealer:-

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A)TMT B) structurals the Above

C) GP/GC

D) Other

E) All of

Q2.Why dont you purchase GP/GC product of Steel Authority of India Limited? (If GP/GC not purchases from SAIL)? .. Q3.How would you rate Authority of India Limited? A) Fair Excellent B) Good the products of Steel E)

C) Poor

D) Average

Q4. How would you rate the services of Steel Authority of India Limited? A)InEfficient . efficient B)Slow Fast . . . . . . . . . . . . . . . . . . .

C)UnReliable . Reliable

Q5.Seel Authority of India Limited have to improve on Quality?

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A) Strongly Agree B) Agree C) Neither Agree or Disagree D) Disagree E) Strongly Disagree Q6.Name of the company you prefer or purchase from other than SAIL? A) Jindal Steel B) TATA Steel C) Bhilai steel E) Only SAIL D) Any Other

Q7.What is your satisfaction level with the products & services of Steel Authority of India? A) High B) Low C) Average D) Very High E) Very Low

Q8. How would you describe the GP/GC product of SAIL as compare to other companies in terms of prices & quality? A) SAIL is higher in price as compare to other companies B) SAIL is lower in price as compare to other companies C) SAIL is higher in quality as compare to other companies D) SAIL is lower in quality as compare to other companies

Q9. How frequently do you place order for GP/GC or any other product in Steel authority of India Limited?
Purchases Products GP/GC once in a week Once in a month More than a month Do not place order

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Other Products

Q10.Any Suggestions would you like to give to Steel Authority of India Limited? (regarding GP/GC or any other product) ............................................................................................... ............................................................................................... ............................................................................................... ..........................................................................................