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Distribution channel at Bhushan Power and Steels Ltd

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Distribution channel at Bhushan Power and Steels Ltd, Sambalpur Orrisa.

Distribution channel at Bhushan Power and Steels Ltd, Sambalpur Orrisa.

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  • 1. INTERNATIONAL INSTITUTE OF BUSINESS STUDIES NOIDA TRANING REPORT ON TOPIC: DISTRIBUTION CHANNEL AT MASTER OF BUSINESS ADMINISTRATION SESSION (2012-2014) SUBMITTED TO: Sh. P.N. MAHESHWARI DGM (MARKETING) SUBMITTED BY: ANANDKUMAR TIWARI MBA (IIBS NOIDA) 1
  • 2. DECLARATION I, ANANDKUMAR TIWARI, hereby declare that the report on “BHUSHAN POWER AND STEEL Ltd” entitled “DISTRIBUTION CHANNEL” is a result of my own work and my indebtedness to other work publications. Correction if any will be duly acknowledged. Place: NOIDA Date: 17th June 2013 Anand Kumar Tiwari 2
  • 3. CERTIFICATE OF AUTHENTICITY This is to certify that the project work titled DISTRIBUTION CHANNEL submitted to Bharathiar University in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration in is a record of the original work done by ANANDKUMAR TIWARI under my supervision and guidance and that this project work has not formed the basis for the award of any Degree/Diploma/Associate ship/Fellowship or similar title to any candidate of any University. Signature of the Guide SACHIN ROHTAGI Submitted for University Examination held on ________________________ Internal Examiner External Examiner 3
  • 4. PREFACE As MBA students our aim should not be only to learn theoretical concepts in the classroom, but it becomes more important as how we apply those concepts in practices. In present scenario the world is developing so fast, and thus the technological and application theory is changing at a greater phase. The study inculcates students to think out of the box, rather than emphasising within the box. We are coming across many modern theories and implementation of machineries, to start new business. We must have the knowledge of theories and practical, through it, the student can able to know about how to apply their mind in the real business world. This training is to create awareness about the industrial environment amongst the students. Such Industrial visit also plays vital role in MBA programme. The importance of industrial training and project preparation has been widely accepted in the education institutions. Thus knowing the importance of such practical visit, our college is providing with such a programme to enhance the overall development of the students. “BHUSHAN POWER AND STEEL Ltd” gave me the golden opportunity to carry out my training in such a great organization. I have prepared the detail report regarding the “DISTRIBUTION CHANNEL”. I have tried my best to collect all necessary information relating to the project work. 4
  • 5. ACKNOWLEDGEMENT It gives me great pleasure to present the report entitled “DISTRIBUTION CHANNEL” at BPSL, SAMBHALPUR.” First of all, with profound pleasure and proud privilege, I take this opportunity to express my deep sense of gratitude and indebtness to the Bhushan Power and Steel Ltd. Sambhalpur, for giving me opportunity to undertake this project. I would like to express my sincere gratitude to Sh. P.N. MAHESHWARI (DGM Marketing). For giving me this opportunity to complete my internship in this esteemed organization and for their kind supports. I would also like to thank Mr. TARUN GUPTA (Senior Manager Marketing) and Mr. ARVIND DUBEY (Executive Marketing) for his guidance throughout the project. With great sense of gratitude, I also thank him for his experienced judgment, endless interest and constant encouragement with out which it would have been possible for me to accomplish the project successfully. There is a saying “hundred miles journey begins with one step” it was my first step in the industry so that with immense gratitude and heartful appreciation. I am greatful to MS. SEEMA MISHRA (Asst. Dean IIBS) for providing esteemed guidance and valuable support throughout the project. I find my self- lacking in word to express sense of gratitude to my beloved parents for their encouragement, moral and emotional support. 5
  • 6. OBJECTIVE OF STUDY: Management is a course which teaches the student to get the work done properly from different available sources viz. man, machine, material, money etc. So there can be a satisfaction from the organization side and the workers side who play a significant role in achieving success. So far the fulfilment or the management course, it gives emphasis to project work and students learn how to plan in practical terms rather in terms of theory only. Student tends to develop analytical and problem solving skill. We necessary become motivated and competitive, in fact all the learning that goes on for the two year term become so much the part of our thinking that we developed a well all rounded personality. The following are the objectives and purpose of the studyI. For the fulfilment of Master of Business Administration (M.B.A) programme as realized by the International Institute of Business Management. (AICTE approved) II. To care and contact with the working of an organization and to see the different types of marketing activities. The main emphasis is on the distribution Channel aspect of the organization. III. Whatever the subject taught in the class room of MBA course that is completely theoretical. So during the training period we compare how the marketing research (sales) activities (practical) of our organization with the theories. IV. Find the depth and width of distribution channel adopted by Bhushan Power and Steels Ltd. Sambhalpur and compare them with those followed by competitors. 6
  • 7. SCOPE OF STUDY The main scope of this study is to ascertain the effectiveness of channel of distribution and various methods to increase the sales volume of the concern. The methods include regular information to the buyers creating a brand position in the market and taking measures to make the brand remain in its position. One of the important aspects of this study is also to increase the market segment for the product. 7
  • 8. TABLE OF CONTENT Chapter 1. Executive Summary 1.1 About the Steel industry 1.2 Industry trend 1.3 Indian and Global perspective 1.4 Indian Steel Industry structure 1.5 PEST Analysis 1.6 Competitor Analysis 1.7 SWOT Analysis 1.8 BPSL at glance Chapter 2. Distribution Channel 2.1 What is Distribution? 2.2 Types of Distribution 2.3 Distribution Channel at BPSL 2.4 Type of Channel Intermediaries 2.5 Distribution Network of BPSL 2.6 Marketing Management hierarchy 2.7 Design and Engineering 2.8 Marketing Activities Chapter 3. Research Methodology Chapter 4. SWOT Chapter 5. Recommendations Chapter 6. Conclusion Chapter 7. Questionnaire Chapter 8. References 8
  • 9. EXECUTIVE SUMMARY The report consists of the details on BHUSHAN POWER AND STEEL Ltd. It is one of the most effluent company’s of India for Steel Products. The main aim of it is the welfare of the society by providing quality Steel to its consumers and service to nation. This report also contains the detailed information about the rise in production of Steel. The Steel industry has being studied in detail, so that that can be converted into information which can be used by Bhushan Power and Steel Ltd for strategising its marketing distribution and channel areas. It has various Product, such as flat product and long product. BPSL’s Indian manufacturing units are located at Chandigarh, Derabassi, Kolkata and Orissa. Overseas manufacturing units are located at Nigeria, Ethiopia, Sudan and Nepal with service centres at Ghana, Benin, Kenya and Senegal This report is detailed in nature and contains vital data of the Distribution Channel at Bhushan Power and Steel Ltd. This report will help BPSL to make strategies for their long term objective. This will enable the company to take appropriate decision as needed to increase as well as to enhance the distribution channel system and further development needed in accordance with changing business scenario. The data has been analyzed by presenting it in the form of graphs and tables and based on it; the interpretations have been made for the same. The results and findings have also been made for the organization to help management in their decisions. Lastly, the recommendations have also been made for the organization. 9
  • 10. ABOUT STEEL INDUSTRY Introduction: Steel is essential to the modern world, and its use is critical in enabling man to move towards a sustainable future. Whether in lighter, more efficient vehicles or renewable energy generation, steel is a fundamental part of a greener world. India’s Steel Industry has a history of more than a century. Before the liberalization, the Indian steel industry was a predominantly synchronized one with the public sector industry. Tata Steel was the only major private player involved in the production of steel. SAIL and Tata Steel have been the major steel industries of India. The liberalization of the India economy directed to the opening up of many steel industries, consequently, increased production capacity. Since 1990, a huge investment has been made into the industry. From 1997 to 2001 when the overall global steel industry was facing a depression, Indian Steel Industry also went through a rough phase but improved after 2002. India has now emerged as one of the largest producers of steel in the entire world. Almost all varieties of steel are now being produced in the country. India has also emerged as a net exporter of steel and Indian steel is being increasingly accepted in the global market. 1. Industry trends: Indian and Global perspectives, recent happenings. Steel is the back bone of human civilization, it is very crucial in development of a modern economy. The per capita consumption of steel shows the living standard of people in any country. Global Perspective: The industry directly employs about more than two million people worldwide, with a further two million contractors and four million people in the supporting industries. Considering steel’s position as the key product supplier to industries such as automotive, construction, transport, power and machine goods, and using a multiplier of 25:1, the steel industry is at the source of employment for more than 50 million people. 10
  • 11. World crude steel production has increased from 851 mega tonnes (Mt) in 2001 to 1,527 Mt in 2011. (It was 28.3 Mt in 1900).World average steel use per capita has steadily increased from 150 kg in 2001 to 215 kg in 2011. India, Brazil, South Korea and Turkey have all entered the top 10 steel producers list in the last 40 years. World Steel in Figures 2012: The World Steel Association (world steel) has published the 2012 edition of World Steel in Figures. World Steel in Figures provides essential facts and statistics about the global steel industry. The book contains comprehensive information on crude steel production, apparent steel use, pig iron production, steel trade, iron ore production and trade, and scrap trade. Table 1: Major steel-producing countries 2011 Sr. No 2012 MT Country MT China 683.9 China 716.5 Japan 107.6 Japan 107.2 United States 88.4 United States 88.7 India 71.3 India 77.6 Russia s Country 68.9 Russia 70.4 Sources: World Steel Association 11
  • 12. Graphical Representation of Global Steel Production: Global Steel Production - Market Share (2011) 7% 7% 9% China Japan 10% 67% United States India Russia Global Steel Production - Market Share (2012) 7% 7% 8% China Japan 10% 68% United States India Russia 12
  • 13. Indian Perspective: At the time of independence, India had a small Iron and Steel industry with production of about a Million tonnes (mt). In due course, the government was mainly focusing on developing basic steel industry, where crude steel constituted a major part of the total steel production. Many public sector units were established and thus public sector had a dominant share in the steel production till early 1990s. Mostly private players were in downstream production, which was mainly producing finished steel using crude steel products. Capacity ceiling measures were introduced. Basically, the steel industry was developing under the controlled regime, which established public sector steel companies in various segments. Till the early 1990s, when economic liberalization reforms were introduced, the steel industry continued to be under the control of Indian regulation were constituted such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the government; foreign investment was restricted; and there were restrictions on imports as well as exports. But after liberalization many reforms and regulation were changed which brought the new era for development in steel industry. Some of the major developments were: 1. Large plant capacities that were reserved for public sector were removed; 2. Export restrictions were eliminated; 3. Import tariffs were reduced from 100 percent to 5 percent; 4. Decontrol of domestic steel prices; 5. Foreign investments was encouraged, and the steel industry was part of the high priority industry for foreign investments implying automatic foreign equity participation up to 100 percent; and 6. System of freight ceiling was introduced in place of freight equalization scheme. Due to this, the domestic steel industry has since then, become market oriented and integrated with the global steel industry. This has helped private players to expand their operations and bring in new cost effective technologies to improve competitiveness not only in the domestic but also in the global market. 13
  • 14. The Indian steel industry comprises of the producers of finished steel, semi-finished steel, stainless steel and pig iron. Indian steel industry, having participation from both public sector and private sector enterprises, is one of the fastest growing markets for steel and is also increasingly looking towards exports as driving the growth of the industry. 1. Indian steel Industry Structure: Indian iron and steel industry can be divided into two main sectors: Public sector and Private sector. Further on routes of production it can be classified as: Integrated producer which convert iron ore into steel e.g. SAIL, TISCO, etc and Secondary producer which make steel from sponge iron or scrap e.g. ISPAT Industries, Essar. 2. PEST Analysis Political Factors: It includes a lot of policies given by the Indian steel ministry; it includes industrial policies, electricity policies, national mineral policies, foreign trade policies, environmental policies, etc. there are also other factors including government ownership at local and national levels and other legislations and licenses involved. The Government has approved the National Steel Policy (NSP) in November 2005.The longterm goal of the NSP is for India to have a modern and efficient steel industry of world standards. The focus of the policy is to achieve global competitiveness not only in terms of cost, quality and product-mix but also in terms of global benchmarks of efficiency and productivity. The policy targets to increase steel production at a compounded annual growth rate of 7.3% to 110 mt by 2019-2020. It projects domestic consumption to grow at annual growth rate of 6.9% to 90 mt during this period. The policy envisages the share of exports to increase to 25% from present share of 10% 100% FDI is allowed under the automatic route for metallurgy and processing of all metals. Economic Factors: Inflation: the inflation has grown to about 7.25 percent so there is rise in price of all the goods, and also production efficiency has decreased. 14
  • 15. Currency fluctuation and exchange rates: With increase in the value of dollar, the industry needs to give a large amount in exchange rates. Moreover there is a rise in price of crude oil and has cost transportation charges to increase Economic Crisis: due to economic crisis in Europe led to decrease in demand of finished goods in the foreign market and has led to a trade deficit. Consumer expenditure: Due to high inflation rate the prices of product has increased leading to more expenditure of the customer. Social Factors: shift in value and culture of people, a positive attitude towards work, green environment issue, product safety issue, employment and safety laws Technological Factors: There is a need for new government investment policies. New patents and products for extracting ores, manufacturing purpose should be implemented where ever necessary to rapid the pace and improve quality of the products. The current level of investment in R&D in the Indian Steel Plants is less than 0.24% of their total turnover. In order to encourage R&D activities in Iron and Steel sector, Ministry of Steel is providing financial assistance. 3. Competitor Analysis: The Major competitors to steel industry are plastic industry, aluminium industry and cement industry. Though their cheap prices they cannot replace steel in essential products like automobile, machineries and in construction of bridges and other infrastructure. Although a small sector of steel is affected by plastic industry as steel is replaced by plastic in some kitchenware articles, and furniture’s. 4. SWOT Analysis StrengthsAvailability of iron ore and coal: India has abundance of iron ore, coal & other raw materials required for iron & steel making. It has 4th largest iron ore reserves (13 bn tons) in the world. 15
  • 16. Low labour wage rates: India has low unit labour cost, this gets reflected in low cost of production Abundance of quality manpower: It has 3rd largest pool of technical Manpower, next to United States and erstwhile USSR, capable of understanding and assimilating new technologies. WeaknessUnscientific mining: India is deficient in raw materials required by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India's hard coal deposits are of low quality Low productivity: According to an estimate crude steel output at the biggest Indian steel maker is roughly 150 tonnes per worker per year, whereas in Western Europe the figure is around 600 tonnes. Power shortages: Steel production in India is also hampered by power shortages. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure hamper the growth of Indian steel industry Low R&D investments: There are inadequate investments in infrastructure. Lack of best quality and trained professionals has been a major drawback. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high. Lack of best quality and trained professionals has been a major drawback. 16
  • 17. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high. Export Market Penetration: It is estimated that world steel consumption will double in next 25yrs. Quality improvement of Indian steel combined with low cost advantages will definitely help in substantial gain in export market Consolidation: As global companies have realized the threat of excess supply, they are looking at M&A (mergers and acquisitions) option to retain market share and improve margins. ThreatsTechnological change: Technological changes force the industry structure to change. In India where capital itself is costly, technological obsolescence is a major threat. Price sensitivity & Demand volatility: The demand for steel is derived demand and the purchase quantity depends on end-use requirements. The traders are price sensitive and buy when there are discounts. Dumping of steel by developed countries: High quality products for developed countries available for import at competitive price Slow Industry Growth: Slowing industrial growth in the country poses a constant looming threat to the steel industry. 17
  • 18. MESSAGE FROM DIRECTORS DESK “The First who innovates has the reins of the game in his hands.” Sanjay Singal Chairman & Managing Director 18
  • 19. BPSL AT GLANCE Bhushan Steel and Power Ltd is a globally renowned and prominent player in Steel Industry. BPSL is a 2.8 Million TPA Steel making company having turnover of U$D 1000 million. The company is certified to ISO 9001:2008 & TS-16949 Quality Standards and ISO 140012004 environment measurement standards. During four decades of existence, BHUSHAN POWER & STEEL LTD. (BPSL) has grown into a leading business house having diversified business interests in a range of basic and value added products viz., DRI, Pig Iron, Billets, HR Coils, CR Coils, GP/GC Sheets, Galvanised/Colour Coated Profiles, Precision Tubes, Black Pipe/GI Pipe, Cable Tapes, Tor Steel and Special Alloy Steel Round Bars, RCS, Hexagons, Wire Rods and Bright Bars. Now BPSL is reckoned as leading fully integrated Steel Company with State of the Art manufacturing plants at Chandigarh, Kolkata and Orissa in India and overseas business interests in Nepal, Nigeria, Ethiopia, Sudan, Senegal, Ghana, Benin and Dubai. BPSL have enjoyed prime position in its market segments due to its leadership in manufacturing technology vis-àvis product quality that had established acceptability of its products amongst customers in automotive (OEMs), auto-ancillary, engineering and Government sectors. Due to this quality leadership, BPSL have been able to develop and supply various products including the niche products for specific customers and specific applications. This however does not make us complacent. Our zeal to be ahead of competition through technological up-gradation for process Mission: BPSL is having mission is to achieve clear identity and leadership globally in Steel production and distribution by integration of complete chain of production starting from captive iron ore to end user Steel products. Values: Quality: To be the best in quality. We aim and achieve excellence. Technology: - State of the art technology and product enrichment by continuous Research and Development. 19
  • 20. Customer Friendly: Our products are world class and more and more clients are appreciating and using our products. We also undertake customized products with values addition and enhancement. Corporate Governance: We comply with all applicable laws and regulations. We believe in maintaining clean environment and conservation of natural resources. We contribute towards betterment of our staff and provide them with best of facilities. 20
  • 21. PRODUCTS BPSL offers a wide range of standard and differentiated products for different and demanding markets worldwide such as ultra-high strength steel for Automotive, speciality steels for Aerospace and ultra-high hardness steels for Railways Its Product can be differentiated as below: Products Long Products Flat Products Cable Tapes Wire Rods GP Coil Bar Mill Steel Coil GP Coil Sheets Corrugated Sheets Cold Rolled Sheets Narrow CR Coil Galvanized Coil Black Pipes Precision Tubes 21
  • 22. FLAT PRODUCTS: 1. Cable Tapes These Tubes are widely used for Power and Industrial boilers, Transformers, Super heaters, Automobiles and Bicycles, Railway Electrification, Furniture and General Engineering Applications etc. Specifications of Tubes ERW TUBES CEW TUBES 6.00 TO 127.00 MM 09.00 TO 110.00 MM THICKNESS(MM) 0.40. TO 6.00 0.80 TO 6.00 LENGTH UPTO 12 MTRS. UPTO 12 MTRS. APPLICATIONS Automotive,Boiler & Heat Exchangers ,Air Heater, GEN. EGG., Bicycle & Propeller Shafts Automotive, Boiler, Shock Absorbers, Textiles, General Engg. Propeller Shafts, Cylinder bore tubes for special applications & front fork tube for two wheeler. OUTER DIAMETER (MM) Precision Tubes are made at our Chandigarh and Kolkata plants. 22
  • 23. 2. GP Coils These Tubes are widely used for Power and Industrial boilers, Transformers, Super heaters, Automobiles and Bicycles, Railway Electrification, Furniture and General Engineering Applications etc. Specifications of Tubes ERW TUBES CEW TUBES 6.00 TO 127.00 MM 09.00 TO 110.00 MM THICKNESS(MM) 0.40. TO 6.00 0.80 TO 6.00 LENGTH UPTO 12 MTRS. UPTO 12 MTRS. APPLICATIONS Automotive,Boiler & Heat Exchangers ,Air Heater, GEN. EGG., Bicycle & Propeller Shafts Automotive, Boiler, Shock Absorbers, Textiles, General Engg. Propeller Shafts, Cylinder bore tubes for special applications & front fork tube for two wheeler. OUTER DIAMETER (MM) Precision Tubes are made at our Chandigarh and Kolkata plants. 23
  • 24. 3. Steel Coils These Tubes are widely used for Power and Industrial boilers, Transformers, Super heaters, Automobiles and Bicycles, Railway Electrification, Furniture and General Engineering Applications etc. Specifications of Tubes ERW TUBES CEW TUBES 6.00 TO 127.00 MM 09.00 TO 110.00 MM THICKNESS(MM) 0.40. TO 6.00 0.80 TO 6.00 LENGTH UPTO 12 MTRS. UPTO 12 MTRS. APPLICATIONS Automotive, Boiler & Heat Automotive, Boiler, Shock Absorbers, Exchangers ,Air Heater, GEN. Textiles, General Engg. Propeller Shafts, EGG., Bicycle & Propeller Shafts Cylinder bore tubes for special applications & front fork tube for two wheeler. OUTER DIAMETER (MM) Precision Tubes are made at our Chandigarh and Kolkata plants. 24
  • 25. 4. GP Coil Sheets Applications: Galvanised Coils and Sheets are used to make Boxes, Containers, Ducting, Cooler Body, etc. GP Coils are manufactured at our Kolkata Plant. 5. Corrugated Sheets Corrugated sheets are extensively used for Industrial sheds, housing, temporary structures etc. 25
  • 26. Specifications : PLAIN SKIN PASSED 0.10 to 2.50 0.30 to 2.50 0.12 to 1.60 0.30 to 2.50 0.40 to 1.20 0.60 to 1.60 width(mm) upto 1350 upto 1350 602,762, 800,900, 1050 200 to 1350 100 to 1350 100 to 1350 Cut To upto 4500 upto 4500 upto 4500 upto 4500 upto 4500 upto 4500 Surface Finish Regular & mim.spangl e Matte with zero/min. spangle Regular Spangle Matte,bright finish,No spangle Matte finish, No spangl e Matte, Bright finish, No spangle Coating 80 to 300 80 to 300 80 to 300 20 to 80 60 to 90 60 to 80 Soft/Lock forming EDD,DD,D SPCEN, SPCD,SPC C Roofing EDD,DD,D SPCEN, SPCD,SPC C SPCD, SPCC SPCEN,SPCD , SPCC Thickness(mm CORRUGATE D HLGP FGP GPC BUSES / PETROL / FAN COACHES FUEL TANK BLADE ) Length(mm) Mass(gms/m) Grades Corrugated Galvanized Sheets are manufactured at Our Kolkata plant. 6. Cold Rolled Sheets Cold Rolled Sheets are used in the manufacture of Automobiles, White Goods, Electrical Panels, Furniture, Transformers, Oil barrels and drums and general engineering products. CR Sheets are produced at our Chandigarh, Kolkata and Orissa plants. 26
  • 27. 7. Narrow CR Coils Narrow Cold Rolled Coils are used in the manufacture of Automobiles, Precision Tubes, Cable Tapes, White Goods, Electrical Panels, Furniture, Transformers, Oil barrels and drums and general engineering products. Narrow CR Coils are produced at our Chandigarh, Kolkata and Orissa Plants. 8. Galvanized Pipes Galvanized Pipes find its uses in a number of applications including domestic, agriculture and Industrial. Galvanized Pipes are available in the sizes ranging from 10mm NB to 100 mm NB, Strip thickness 1.80 mm 5.40 mm We manufacture GI Pipes at our Derabassi (Punjab) Plant. 27
  • 28. 9. Black Pipes Black pipe is used for transportation of air, gas, fabrication of structure, automobiles, cycles and general furniture industries. Varnished pipes are used for general engineering industries. Black pipe is manufactured at our Chandigarh, Derabassi and Kolkata plants. 10. Precision Tubes These Tubes are widely used for Power and Industrial boilers, Transformers, Super heaters, Automobiles and Bicycles, Railway Electrification, Furniture and General Engineering Applications etc. 28
  • 29. Specifications of Tubes ERW TUBES CEW TUBES 6.00 TO 127.00 MM 09.00 TO 110.00 MM THICKNESS(MM) 0.40. TO 6.00 0.80 TO 6.00 LENGTH UPTO 12 MTRS. UPTO 12 MTRS. APPLICATIONS Automotive,Boiler & Heat Exchangers ,Air Heater, GEN. EGG., Bicycle & Propeller Shafts Automotive, Boiler, Shock Absorbers, Textiles, General Engg. Propeller Shafts, Cylinder bore tubes for special applications & front fork tube for two wheeler. OUTER DIAMETER (MM) Precision Tubes are made at our Chandigarh and Kolkata plants. 29
  • 30. LONG PRODUCTS: 1. Wire Rod and Bar Mill With the introduction of most technologically advanced special and alloy steel long product rolling complex for manufacture of value added bars and coils, a new dimension has been added in BPSL's long history in the steel business. The Long Product Rolling Complex consists of a most modern 0.5 million tpa multiproduct Wire Rod and Bar Mill (18 pass Horizontal & Vertical Continuous Mill) supplied by Danieli Morgardshammar, Italy and KOCKS, Germany (4 pass mill). The state of the art Wire Rod & Bar Mill, one of the most modern plants of this type in the world, will produce:    Straight Bars Bar in Coil form Wire rods 30
  • 31. DISTRIBUTION CHANNEL AND DEVLOPMENT: WHAT IS DISTRIBUTION ? The main purpose of distribution channel is to supply goods and services to the consumers living in far off places. Distribution channel acts as nerve between the producer and end customer. A farmer in Srinagar has an apple orchard. Once the apples are ripened he sells the apples to an agent of Delhi. The agent collects the apples from Srinagar, packs them, and sells them to a wholesaler at New Delhi market. The wholesaler then distributes them to various retail fruit vendors throughout Delhi by selling smaller quantities. Finally, we purchase apples from those vendors as per our requirement. Thus we find that the product travels through several hands before reaching to the end customer. Thus distribution channel has the responsibility of buying, transporting, storing, protection of good, sales of goods into the market. Distribution channel can differ from sector to sector i.e. distribution channel of FMCG products involves a complex distribution channel, whereas the distribution channel in Iron and Steel industry have less complex distribution channel. Thus in short it can be defined as: The rout taken by goods from producer to consumer is known as distribution channel AGENTS CONSUM PRODUC ERR RETAILER WHOLESELER 31
  • 32. TYPES OF DISTRIBUTION CHANNELS: There are two types of distribution channels: DISTRIBUTION CHANNEL DIRECT CHANNEL INDIRECT CHANNEL Direct Distribution Channel: In this channel, producers sell their goods and services directly to the consumers. There is no middleman present between the producers and consumers. The producers may sell directly to consumers through door-to-door salesmen and through their own retail stores. PRODUCER CONSUMER For Example: Bata India Ltd, HPCL, Liberty Shoes Limited has their own retail shops to sell their products to consumers. For certain service organizations consumers avail the service directly. Banks, consultancy firms, telephone companies, passenger and freight transport services, etc. are examples of direct channel of distribution of service. 32
  • 33. Indirect Distribution Channel: If the producer is producing goods on a large scale, it may not be possible for him to sell goods directly to consumers. As such, he sells goods through middlemen. These middlemen may be wholesalers or retailers. A wholesaler is a person who buys goods in large quantities from producers; where as a retailer is one who buys goods from wholesalers and producers and sells to ultimate consumers as per their requirement, the involvement of various middlemen in the process of distribution constitute the indirect channel of distribution. Below are some of the important indirect channels of distribution. The most common channel used in distribution channel is PRODUCER WHOLESALER RETAILER CONSUMER WHOLESALER: Wholesalers are one of the important middlemen in the channel of distribution who deals with the goods in bulk quantity. They buy goods in bulk from the producers and sell them in relatively smaller quantities to the retailers. Characteristics of Wholesalers: The followings are the characteristics of wholesaler:  Wholesalers buy goods directly from producers or manufacturers.  Wholesalers buy goods in large quantities and sells in relatively smaller quantities.  They sell different varieties of a particular line of product. For example, a wholesaler who deals with paper is expected to keep all varieties of paper, cardboard, card, etc.  They may employ a number of agents or workers for distribution of products.  Wholesalers need large amount of capital to be invested in his business.  They generally provide credit facility to retailers.  He also provides financial assistance to the producers or manufacturers. 33
  • 34. FUNCTION: Following are the functions, which a wholesaler usually performs. (a) Collection of goods: A wholesaler collects goods from manufacturers or producers in large quantities. (b) Storage of goods: A wholesaler collects the goods and stores them safely in warehouses, till they are sold out. Perishable goods like fruits, vegetables, etc. are stored in cold storage. (c) Distribution: A wholesaler sells goods to different retailers. In this way, he also performs the function of distribution. (d) Financing: The wholesaler provides financial support to producers and manufacturers by sending money in advance to them. He also sells goods to the retailer on credit. Thus, at both ends the wholesaler acts as a financier. (e) Risk taking: The wholesaler buys finished goods from the producer and keeps them in the warehouses till they are sold. Therefore, he assumes the risks arising out of changes in demand, rise in price, spoilage or destruction of goods. RETAILER: Retailers are the traders who buy goods from wholesalers or sometimes directly from producers and sell them to the consumers. They usually operate through a retail shop and sell goods in small quantities. They keep a variety of items of daily use. Characteristics of Retailers: Following are the characteristics of retailers:  Retailers sell goods not for resale, but for ultimate use by consumers. For example, you buy fruits, clothes, pen, pencil etc. for your use, not for sale.  Retailers buy and sell goods in small quantities. So customers can fulfil their requirement without storing much for the future.  Retailers require less capital to start and run the business as compared to wholesalers.  Retailers generally deal with different varieties of products and they give a wide choice to the consumers to buy the goods. 34
  • 35. Functions of Retailers: All retailers deal with the customers of varying tastes and temperaments. Therefore, they should be active and efficient in order to satisfy their customers and also to induce them to buy more. Let us see what the retailers do in distribution of goods. (a) Buying and assembling of goods: Retailers buy and assemble varieties of goods from different wholesalers and manufacturers. They keep goods of those brands and variety which are liked by the customers and the quantity in which these are in demand. (b) Storage of goods: To ensure ready supply of goods to the customer retailers keep their goods in stores. Goods can be taken out of these stores and sold to the customers as and when required. This saves consumers from botheration of buying goods in bulk and storing them. (c) Credit facility: Although retailers mostly sell goods for cash, they also supply goods on credit to their regular customers. Credit facility is also provided to those customers who buy goods in large quantity. (d) Personal services: Retailers render personal services to the customers by providing expert advice regarding quality, features and usefulness of the items. They give suggestions considering the likes and dislikes of the customers. They also provide free home delivery service to customers. Thus, they create place utility by making the goods available when they are demanded. (e) Risk bearing: The retailer has to bear many risks, such as risk of:  fire or theft of goods  Deterioration in the quality of goods as long as they are not sold out.  Change in fashion and taste of consumers. (f) Display of goods: Retailers display different types of goods in a very systematic and attractive manner. It helps to attract the attention of the customers and also facilitates quick delivery of goods. (g) Supply of information: Retailers provide all information about the behaviour, tastes, fashions and demands of the customers to the producers through wholesalers. They become a very useful source of information for marketing research. 35
  • 36. DISTRIBUTION CHANNEL OF BPSL: Selection of distribution is a very strategic decision and is very vital for the organisation, thus a very strict norm are followed before choosing a distributor at Bhushan Power and Steels Ltd Types of Channel Intermediaries: There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail, 1. Channel Intermediaries - Wholesalers They break down 'bulk' into smaller packages for resale by a retailer. They buy from producers and resell to retailers. They take ownership or 'title' to goods whereas agents do not (see below). They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it andeventuallyresell to a retailer. Wholesalers often reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs. A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations. 2. Channel Intermediaries - Agents Agents are mainly used in international markets. 36
  • 37. An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up with the goods. However, a 'stockist agent‟ will hold consignment stock (I.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs). Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate. 3. Channel Intermediaries - Retailers Retailers will have a much stronger personal relationship with the consumer. The retailer will hold several other brands and products. A consumer will expect to be exposed to many products. Retailers will often offer credit to the customer e.g., electrical wholesalers, or travel agents. Products and services are promoted and merchandised by the retailer. The retailer will give the final selling price to the product. Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the USA, and Ali super, Modelo, and Jumbo in Portugal4. 4. Channel Intermediaries - Internet The Internet has a geographically disperse market. The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery. There are low barriers to entry as set up costs are low. 37
  • 38. Use e-commerce technology (for payment, shopping software, etc.) There is a paradigm shift in commerce and consumption which benefits distribution via the Internet. 5. Distribution Network Opted by BPSL There are mainly two major networks by which the product moves through into the market At BPSL we have both channel of distribution i.e. direct and indirect distribution channel Thus further the business channel is categorized as below Distribution Channel B-B/B-C B-B Direct Indirect AGENTS E-BIDDING DISTRIBUTOR S RETAILERS   OEM Retail/ Export Ex: - GC, GP sheet, GI Pipes Ex: - CRC Sheet, etc Within the Distribution category, the business is categorized as OE or Retail, based on whether the customer is serviced directly, or through the Retail / Distribution network. In OE, there are sub-segments like OEM distribution, and in Retail sub-segments like GC/GP retail distribution, CR retail distribution, and geographic segmentation. In OEM distribution, the customers 38
  • 39. specify the grade of steel that they require and the company takes responsibility to supply them the same grade of steel in the agreed cut to size condition. In retail distribution, companies maintain stocks of material for feeding its retail chain and provide Value for money products. 6. E-Bidding: E-bidding is all new concept developed by BPSL for sales of its product to end consumer in a more transparent and convenient manner. The adoption of internet technologies to create efficiencies for the Steel industry continues to grow. The latest innovation being made available to the industry is the ability to create tenders and submit bids online. The idea of online transactions is not a new concept with everything from online banking to purchases of major items such as vehicles all being transacted safely and securely. The challenge that makes the management of bidding for steel products online so difficult is the many complicated pricing options such as separate, alternate, unit, combined and other pricing options. Add to that the need to handle items such as cash allowances, bid bonds, required time to perform the work and schedules such as lists of Subcontractors and other details. Over the years these challenges have been handled by creating what are often complex and detailed tender packages that need to be completed and submitted in hard copy by a specified closing time. Thus electronic bidding concept in steel BPSL was more transparent in the way, such that the bidders are allowed to bid at same price. 39
  • 40. Distribution Network of BPSL: BPSL has selected 28 distributors and 39 sales offices in different location across India. Every distributor is given 2 days training session, after which they become confident about the product and learn how to differentiate its product from its competitor product. Aggressive distribution strategy needs to be adopted for covering large rural area. Distributors keep active sales force to cover all the retailers in their geographical area. Their sales force visits different rural and urban areas to attract retailers so that they can maximise their sales. Also, the sales force comes up with attractive schemes for the retailers to help them achieve their target sales. Dealers keep RSU vans which is used for transportation and advertising. All the distributors have upgraded warehouse with weighing machine. 40
  • 41. BPSL's marketing set up consists of a wide marketing network both in India and abroad with highly qualified and experienced sales & technical personnel, who have had rich exposure in reputed steel industries and understand the customer's needs. The modern communication systems ensure that the enquiries and orders generated from customers are transmitted without delay to in-house service departments viz., Technical Competence Canter and Supply Chain Management for further actioning. BPSL's supply chain system is fully integrated in terms of both organization & information system all the way from selection of raw materials to delivery of the products to customers. Marketing, production planners and logistics experts work closely together, using the same information system. Employees based at local Sales Offices all over India & abroad are given specialized training to enable them to understand and meet customer's needs by ensuring cost effective and reliable supplies. The company serves a wide variety of consumers, ranging from reputed contractors to retail users from the private sector organisation to the public sector undertakings. These consumers can be classified into 3 major groups: 1) Government 2) Retailer (B TO C) 3) Private sector consumers (B TO B) To cater to the needs of all its consumers, the company does both (B to B selling) and retail outlets (B to C selling). Bulk orders come under direct selling and small order from retail outlets. 41
  • 42. MARKETING MANAGEMENT HIERARCHY: MARKETING HQ MS FUNCTION HQ SALES      Sales forecasting Credit Policy Traders Selection Product Price Decision    /Transportation Pl BRANCH SALES OFFICE REGIONAL SALES OFFICE     Product Code Control Sales Report Sales Analysis Sales Projection product wise to top management.  Sales order Collection of Payments Credit Control Business Development     Collection Of Payments Credit Control Sales to Traders Sales to Project Customers Sales Accounting BRANCH STOCKYARD     42 Receipt Handling Sales Dispatch Stock Transfer Stock Maintenance
  • 43. DESIGN AND ENGINEERING: The Company have successfully commissioned a 2.8 Million TPA Greenfield Steel and Power Plant in Orissa with HR Coil making facility - First in Private Sector in the State of Orissa. For this plant, technology and equipments were sourced from leading world-renowned companies’ viz., Lurgi, ABB Ltd., SMS Siemag, SMS Meer Danieli, LOI Tenova, Kocks etc. A. Employment Opportunities At full operational stage, now BPSL plant has employed about 17369 technical staff. The indirect employment due to various ancillary units Development and other services is much more. B. Training and Development BPSL believes that the employees are its assets and strives to realize their potential in full for mutual advantage. BPSL has trained workforce of about 8700 employees in direct contract with the organisation A trained cadre of technical operative personnel and managerial cadre are provided for the successful commissioning and operation of a large steel plant like BPSL. A training and development centre with facilities is available to develop trained cadre of technical personnel and managerial cadre. Employees are sent to other steel plants on short duration tours to find solutions to the various issues facing the company. Employees are also sent to suppliers manufacturing units. BPSL provides training programme for enhancing their knowledge. C. Township A Modern township with all amenities has been developed adjacent to the steel plant site, to house the plant employees. The township is having protected drinking water supply, water borne sanitation, black top roads, hospitals, welfare centres, community facilities, parks etc. 43
  • 44. D. Water supply Operational water requirement of 36 mgd is being met from the Hirakud Dam. E. Power supply Operation power requirement of 390 MW is being met through captive power plant. The capacity of the power plant is 286.5mw; VSP is exporting around 0MWPower to OSEB. F. Advertising Bhushan Steels and Power Ltd is also following advertising, which is one among the promotional strategies.  Print media  Brochures and booklets  Posters and leaflets  Directories  Symbols of logs  Bill boards  Displays 44
  • 45. MARKETING ACTIVITIES: Under integrated marketing some of the important activities of the marketing management are as follows:  Collection of necessary information regarding marketing  Analysis of the data and drawing conclusion  Search and development stage of new marketing techniques  To chalk out detailed marketing programme  To implement that marketing programme  To coordinate between the wants of the customers and their satisfaction 45
  • 46. RESEARCH METHODOLOGY: “Marketing Research is the systematic designing, collection, analysis, and reporting of data and finding relevant to a specific marketing situation facing the company.” The present study of Steel markets in all over Sambhalpur is based on survey methods. In survey methods, there are two types of survey. One is Census Method and another is Sampling Method. In this sample survey methods I have taken only a small part of the whole and data collected from the small part are made applicable to the whole i.e. I have taken Sambhalpur and some adjacent area of Sambhalpur like Rengali etc. Within the time limit, I tried my best to select the sample representative of the whole group. During my training, I maintained different chart for different routes during my dealer survey. I have collected data from the distributor of Sambhalpur. Primary data collection involved distributors, retailers and consumers. 46
  • 47. SWOT ANALYSIS: Strengths: 1. Availability of iron ore and coal: BPSL has abundance of iron ore, coal & other raw materials required for iron & steel making. BPSL Jharsugda, is very close to the mineral rich belt of Jharkhand and Orissa 2. Availability of Labour at low cost: BPSL has low unit labour cost, this gets reflected in low cost of production 3. Abundance of quality manpower: It has around 8700 permanent skilled manpower. 4. Have huge network of sales team, which caters the huge distribution network 5. Innovative ideas of sales directly to customer by introducing Auction sales Weakness: 1. Unscientific mining: BPSL is deficient in raw materials required by the steel industry. BPSL has to source the raw materials from different companies like Vedanta. Has to outsource coal from different mining companies 2. Low productivity: As compare to European and US counterpart, productivity is less. 3. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure hamper the growth of BPSL 4. Low R&D investments: There are inadequate investments in infrastructure. 47
  • 48. 5. Lack of best quality and trained professionals has been a major drawback. 6. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high. Opportunity: 1. Export Market Penetration: It is estimated that world steel consumption will double in next 25yrs. Quality improvement of Indian steel combined with low cost advantages will definitely help in substantial gain in export market 2. Consolidation: As global companies have realized the threat of excess supply, they are looking at M&A (mergers and acquisitions) option to retain market share and improve margins. Threats: 1. Technological change: Technological changes force the industry structure to change. In India where capital itself is costly, technological obsolescence is a major threat. 2. Price sensitivity & Demand volatility: The demand for steel is derived demand and the purchase quantity depends on end-use requirements. The traders are price sensitive and buy when there are discounts. 3. Dumping of steel by developed countries: High quality products for developed countries available for import at competitive price 4. Slow Industry Growth: Slowing industrial growth in the country poses a constant looming threat to the steel industry. 48
  • 49. RECOMMENDATION: 1. Needs to increase the Sales network 2. Overseas expansion must be the prime focus 3. New Research and Development work should be taken, so as to increase production capacity. 49
  • 50. CONCLUSION: From the data analysis and survey conducted by me, I arrived at the following conclusions:1. BPSL has a huge technological advantage to those against its competitor. 2. It has huge product differentiation as compared to its competitors. 3. One of the major drawbacks of BPSL is its less no of retail outlet in India and abroad 4. The major problem faced by the distributor is the shortage of supply. 5. Distributor functions just as order takes; they should contribute me and communicate to the retailers. 6. It should be checked that whether our products is reaching to the outlets timely and regularly or not. 50
  • 51. Questionnaire for selection of Dealerships Organisation Name: Registration Number: Location: Address: Please fill below: 1. Have you being associated with BPSL before ? a. Yes b. No 2. How long you are associated with BPSL …………………………………………….. 3. Are you dealing with other Steel Companies ? a. Yes b. No 4. Which Steel Companies you are associated with ? (To be filled in only if your answer to Question Number 3 is yes) Sr No Name of Organisation Period 1. 2. 3. 4. 51
  • 52. 5. Area of your Warehouse ? ---------------------------------Sq/Mt 6. List of Organisation you are co-dealing and how long? Sr No Name of Organisation Capacity/Month 7. Your approximate sales in tonnes / Month / Year..? a. 50 to 100 b. 100 to 150 C. 150 to 200 d. 200 to 250 d. More than 250. Note: Please attach the following documents: a. Bank statement for the last three years. b. Turnover for the previous year as per latest ITR filing. 52 Period
  • 53. References: www.bpsl.net www.worldsteelorg.com www.steel.gov.in www.crugroup.com www.bsisteels.com www.steelassoc.com www.tatasteel.com www.google.com 53