Presentation on SAL Steel Ltd


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Presentation on SAL Steel Ltd

  1. 1. Mansi Desai (11017)Sheetal Kurup (11035)Chandan Pahelwani (11047)Nikunj Gajara (11046)Kruti Pandya (11048)
  2. 2. One of the most useful and versatile material, steel isconsidered to be the backbone of human civilization.Consumption of steel is taken to be an indicator ofeconomic development.The establishment of Tata Iron and Steel Company(TISCO) in 1907 was the starting point of modern Indiansteel industry.
  3. 3. At the end of 2012, the steel production capacity in India isexpected to touch 124 million tonnes and 275 million tonnes by2020.With development in civilization, various new application ofstainless steel have been developed such as: 1. Architecture, building and construction, use in railway coaches. 2. Automotive 3. Chemical, processing and oil & gas industries 4. Power generation 5. Manufacture of LPG cylinders, 6. In portable water treatment plant 7. Food production 8. Medical applications
  4. 4. During the early 90s, the sponge iron industry had been speciallypromoted so as to provide an alternative to steel melting scrap,which was increasingly becoming scarce.As per the International Iron and Steel Institute, India has emergedas the largest producer of sponge iron in the world in 2001 and2003 accounting for about 14.54% and 14.82% respectively
  5. 5. SAL Steel is a versatile steel, Ferro Alloys and PowerCompany having operations near Kandla Port in the stateof Gujarat in Western India.SAL also selling power to various customers from its 40MW power plant.The company has double advantage of havingproximity one of the busiest commercial port and alsoto the customer of company’s finished products.
  6. 6.  Direct Reduced Iron (Sponge Iron) Ferro Alloys Power Plant
  7. 7. •Year of Establishment : 2003•Nature of Business: Manufacturer•Major Markets: Indian Subcontinent
  8. 8. To be recognized as the leader inIndia, in high quality Sponge iron, Ferro alloys, increasingly in the premium segment.
  9. 9. To provide a high level ofcustomer satisfaction through appropriate products, technical supportand fair commercial practices keeping safety of theemployee and environment at the top priority.
  10. 10.  To be leader in our product portfolio with latest technology, technical and managerial excellence. To be conscious of our responsibility towards society and environment. To improve continuously our operational norms To provide a fair return to our shareholders. To provide on-going training and development of all the employees Building a corporate culture of learning, trust and fairness.
  11. 11. Business organizationServices Products Consumer Industrial Goods Goods Consumer Consumer Non-durable Durable
  12. 12. Strength WeaknessOpportuniti Threats es
  13. 13. Strength• Good quality standards.• Sponge iron of our company consist of 84% pure iron• Cost competitiveness.• Diverse Supplier Base.• Long-standing contracts for purchase of raw materials.• Strong product design and development.• Skilled, qualified and motivated employees• Captive Power Consumption.
  14. 14. • Exposure to raw material price fluctuations.• Under-utilization of plant capacity.• Dependency on third party for raw material.
  15. 15. • Unexplored Markets- The Indian rural sector remains fairly unexposed to their multi-faceted use of steel. The rural market was identified as a potential area of significant steel consumption way back in the year 1976 itself.• Ever-growing demand in Steel Industry- The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India.
  16. 16. • Rising raw material prices.• High Cost of Capital.• Constraint of Raw Material availability.• Global economic slowdown• Competitive price of China.
  17. 17. Government are our largest suppliers.Around 90% of our raw material are supplied bygovernment from different states like Orissa , MadhyaPradesh, etc.
  18. 18. • S.A.L Steel Ltd produces power by itself which is anadvantage for its. If SAL Steel Ltd had to purchase power as raw materialfrom suppliers it would had cost it to around Rs.15 per unit. But this not the case with SAL Steel Ltd, power in itsplant comes at a cost of Rs.3.20• Sponge iron of our company consist of 84% pure iron
  19. 19. Reasons for this strategy:- In order to expand customer group. In order to increase the scope and spread the risks. In order to its production and efficiency.
  20. 20. S.A.L Steel Ltd Shah Alloy Ltd.
  21. 21. Power Plant S.A.L Steel Ltd The expansion strategy they are adopting is the expansion of Power Plant from 40 MW capacity to 60 MW capacity.
  22. 22. In order to cut cost, increase productivity and as a measure to increase profitability, S.A.L Steel Ltd isthinking of expanding its power plant capacity of 40 MW to 60 MW
  23. 23. MARKET SIZE Embryonic Growth Maturity Decline TIME
  24. 24.  Threats of new entrants Intensity of rivalry among existing competitors The bargaining power of suppliers The threat of substitute products The bargaining power of buyers
  25. 25. Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set up 1 mtpa capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn depending upon the location of the plant and technology used.
  26. 26.  The steel industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports. Steel, being a commodity it is, branding is not common and there is little differentiation between competing products. The 4 major domestic rivals are SAIL, JSW, ISPAT & ESSAR STEEL. Rest are all smallish mills which together accounts for 30 % of the total market share.
  27. 27. Non-integrated or semi integrated industry have to depend onsuppliers. An example could be SAL, which imports lignite.Since domestic raw material sources are insufficient to supplythe Indian steel industry, a considerable amount of rawmaterials has to be imported. For example, iron ore depositsare finite and there are problems in mining sufficient amountsof it. India’s hard coal deposits are of low quality.In order to safeguard itself from the high bargaining power ofthe supplier, SAL had planned much earlier into the strategy of‘Backward Integration’ by setting S.A.L Steel Ltd.
  28. 28.  Plastics and composites pose a threat to Indian steel in oneof its biggest markets — automotive manufacture.For the automobile industry, the other material at presentwith the potential to upstage steel is aluminium. Perhaps the most attractive alternative to stainless isaluminium.
  29. 29.  Some of the major steel consumption sectors likeautomobiles, oil & gas, shipping, consumer durablesand power generation enjoy high bargaining powerand get favourable deals. However, small and retail consumers who arescattered and consume a significant part do not enjoythese benefits.
  30. 30. Raw material i.e. iron ore, Ferro chrome ore, etc. from mines inKarnataka, Madhya Pradesh, Orissa and Goa for their plant atBharapar which involves logistical issues, economic decisionmaking in ensuring optimum inventory.Any delay in supply of raw material to their plant may affect theirplant’s operations, which in turn may hamper the Company infulfilling its obligation for supply of sponge iron
  31. 31. Further, any rise in the transportation cost may in turn lead torise in the cost of production.In case they are not able to pass on the burden of suchadditional cost to the buyer of our product, our profit marginsmay be affected.Maintain minimum inventory for 1.75 months for iron ore andFerro chrome ore, which the company feels quite adequate inmeeting the working capacity of plant in case of logistical delaysarising in ordinary course of business or unfortunatecircumstances arising in business
  32. 32. Major inputs like limestone in production ofsponge iron and Lignite for our CaptivePower Plant are in abundance in thesurrounding areas and are easily available.Installation of Captive Power Plant reduces thepower cost considerably and keeps theproduction costs, particularly of Ferro-alloys low.
  33. 33. The Project is set up at Village Bharapar, Kutch,which is near the Kandla Port and will result inbenefits available at the location under the specialpackage of incentives for sales tax and excise dutydeclared under the Incentive Scheme 2001 forEconomic Development of Kutch District after theearthquake. This as result in cost savings.
  34. 34. The Board of Directors & Senior Management Members shall:• Act honestly, fairly, ethically and with integrity;• Act in the best interest of and fulfill their fiduciary obligations to S.A.L Steel Limited and all its stakeholders;• Act in good faith, responsibly, with due care, competence and diligence, without allowing their independent judgment to be subordinated;• Disclose potential conflicts of interest that they may have regarding any matters relating to S.A.L Steel Limited;• Comply with all applicable laws, rules and regulations;
  35. 35. • Comply with all applicable laws, rules and regulations;• Maintain the confidentiality of information relating to the affairs of the Company acquired in the course of their service as Directors, except when authorized or legally required to disclose such information;• Disclose potential conflicts of interest that they may have regarding any matters that may come before the Board, and abstain from discussion and voting on any matter in which the Director has or may have a conflict of interest;
  36. 36. Shah alloys ltd Organizational Structure SAL steel ltd Captive powerSponge iron Ferro alloy plant (CPP) Production Production Production Finance Finance Finance Engineering Engineering Engineering
  37. 37. PRODUCT BASE STRUCTURESAL steel is having product base structure as groupingof the activities is done on the basis of the productline. The advantages of this structure that thecompany get are,• Optimum use of the specialized skills and equipment.• Increases coordination and enables fixation of responsibilities for profit making and usage of resources.
  38. 38. INTERNAL CONTROL SYSTEMThe Company has adequate internal controlprocedures with accordance to its size andnature of its business. The objectives of theseprocedures are to ensure efficient use andprotection of the Company’s resources,accuracy in financial statements and duecompliance of statutes and Company’spolicies and procedures.
  39. 39. Company maintained healthy, cordial andharmonious industrial relations at all levels. TheBoard of Directors and management wish to placeon record their appreciation of the efforts put inby all employees to achieve good performance.
  40. 40. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE• Corporate Governance is a set of systems and practices to ensure that the affairs of the Company are being managed in a way which ensures accountability, transparency, fairness in all its transactions in the widest sense and meet its stakeholders aspirations and expectations.• The Company will continue to focus its resources, strengths and strategies for enhancement of the long term shareholders’ value while at the same time protecting the interest of other stakeholders.
  41. 41. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE• Shri Ambalal C Patel– Chairman, Shri Jethabhai M Shah and Shri Harshad M Shah are members of the Committee.• The Committee is empowered to oversee the redresses of Investors’ complaints and other miscellaneous complaints.• The Company as a matter of policy disposes of investor complaints within a span of five working days.• During the year under review, all shareholders complaint received either by Registrar & Share Transfer Agent or the Company were satisfactorily replied and resolved. There were no outstanding complaints as on 31st March, 2012.
  42. 42. INFORMATION SYSTEMSAL steel uses fully computerizedinformation system. They also usetransaction processing system andEnterprise Resource Planning softwareincluding SAP.
  43. 43. REWARD SYSTEM• Employee of the month• Employee of the week• Employee of the year
  44. 44.  S.A.L. Steel Limited are committed to satisfy customer by providing quality products and services. To install and maintain suitable Quality Management System. To achieve continual improvement in technology, products and services. To encourage employee participation at all levels supplemented with continuous training and development.
  45. 45.  Prevention of industrial risk rather than detection/ rectification and its adverse impact on the environment. Preserve the health, safety and environment of plant and its neighborhood. Follow safe work practices and continually improve the effectiveness of system.
  46. 46.  Creating an environment of teamwork as well as increase the system awareness to employees. Conserve natural resources by their responsible and efficient use in all operations. Comply with relevant laws and regulations as well as take any additional measures considered necessary.