A STUDY ONDISTRIBUTION CHANNEL WITH SPECIAL REFERENCE TO VISAKHAPATNAM STEEL PLANT (RINL), VISAKHAPATNAM,A project report submitted in the fulfilment for the award of theBACHELORS OF BUSINESS MANAGEMENTByOM PRAKASH BASRANIUnder the guidance of

Dr. P. AshaAssistant ProfessorM.A. (Eng.), M.Phil, Ph.D GITAM INSTITUTE OF MANAGEMENTGITAM UNIVERSITY(Established U/S 3 of UGC Act, 1956)

VISAKHAPATNAM(2010-13)

CERTIFICATEThis is certify that the project work entitled A STUDY ON DISTRIBUTION CHANNEL WITH REFERENCE TO VISAKHAPATNAM STEEL PLANT (RINL),VISAKHAPATNAM is a project work done and submitted by OM PRAKASH BASRANI in fulfilment of the requirements for the award of BACHELORS OF BUSINESS MANAGEMENT(B.B.M),GIM -GITAM , VISAKHAPATNAM is a record of the bonafide work carried out by him under my guidance.

Dr. P. Asha Assistant Professor

DECLARATION

I hereby declare that project work entitled A STUDY ON DISTRIBUTION CHANNEL WITH SPECIAL REFERENCE TO VISAKHAPATNAM STEEL PLANT (RINL),VISAKHAPATNAM submitted in the fulfilment for the award of BACHELORS OF BUSINESS MANAGEMENT (B.B.M) ,GIM GITAM , Visakhapatnam is my original work and not submitted to any other university/institution.

Place:Date:OM PRAKASH BASRANI

ACKNOWLEDGEMENT

It is my pleasure to acknowledge and express my gratitude to all those who helped me throughout in successful completion of this project.

I take this opportunity to thank the Principal of GITAM Institute of Management Prof. K. Siva Rama Krishna and Prof. P.Sheela, Vice principal and Dr.Manjusree Naidu, Head, Department of BBM for giving me this valuable opportunity to experience the work culture in an organization.

I am grateful to Dr.P. Asha, Assistant Professor, GIM, GITAM University, for her continuous guidance to accomplish this project work successfully.

I am very thankful to Sri SHIVANAND, DGM (MARKETING), of Rashtriya Ispat Nigam Limited(RINL), Visakhapatnam, who is my project guide and who has been a constant source of inspiration for me throughout the study of the project.

OM PRAKASH B ASRANI No. 1214110129

CONTENTSLIST OF TABLES 6CHAPTER-1THEORETICAL FRAMEWORK 7 INTRODUCTION a. Abstract b. Introduction & Industry Profilec. Iron & Steel Promotion in Indiad. Industry Structuree. Swot Analysis of the Industryf. Industry Performance THEORETICAL BACKGROUND OF DISTRIBUTION CHANNEL 22CHAPTER-2 COMPANY PROFILE MARKETING AT VSPCHAPTER-3 47 Significance of The Study Objectives Of The Study Scope of the study Data analysis Limitations of the studyCHAPTER-4 53 DATA ANALYSIS AND INTERPRETATIONCHAPTER-5 88 FINDINGS SUGGESTIONS AND CONCLUSIONSBIBLIOGRAPHY 93ANNEXURE 95

LIST OF TABLES

S.No TABLE NAME PG.NO

1 STEEL DEALERSHIP TAKEN BY THE DEALERS 54

2 HIGH SALES VOLUME IN STEEL INDUSTRY 56

3 MOST VALUABLE SUPPLIERS 58

4 QUALITY OF THE VIZAG STEEL 60

5 PRICE OF THE VIZAG STEEL 62

6 FAST MOVING BRAND IN STEEL INDUSTRY 64

7 ORDER AND REPLACEMENT WITH VIZAG STEEL 66--

8 AVAILABILITY OF THE VIZAG STEEL 68

9 MARGINS OFFERED BY VIZAG STEEL 70

10 SATISFIED WITH VIZAG STEEL DEALERSHIP 72

11 ADVERTISEMENT OF THE VIZAG STEEL 74

12 SALES PROMOTIONAL EFFORTS OF THE VIZAG STEEL 76

13 LIFE TIME OF THE OVERALL STEEL 78

14 RELIABILITY OF THE VIZAG STEEL 80

15 PAYMENT TERMS OF THE VIZAG STEEL 82-

16 MARKET RESEARCH IN STEEL INDUSTRY 84

17 DELIVERY PERIOD BY VIZAG STEEL 86

CHAPTER-1THEORETICAL FRAMEWORK

ABSTRACT

Distribution channels are behind every product and service that consumers and business buyers purchase everywhere. Usually, combination on institutions specializing in manufacturing, wholesaling, retailing and many other areas join force in Distribution channels.

A Distribution channel is a set of interdependent organization involved in the process of making a product or service available for use or consumption.

Distribution channels decisions play a role of Strategic importance in the overall presence and success a company enjoys in the market palace.

This project report entitled "A Study on Distribution Channel with Special Reference to Visakhapatnam steel plant/RINL in Visakhapatnam District". To determine the dealer satisfaction of the product and future demands,needs,wants.

The study starts with an introduction of the Distribution Channel, company profile, important of the Study and objectives are set out for the study. data analysis, findings and suggestions of the study follow.

INTRODUCTION & INDUSTRY PROFILE

PROFILE OF IRON & STEEL INDUSTRYSteel is a versatile, constantly developing material that underpins all manufacturing activity. If a product is not made from steel, then it is certainly made using steel at some point in the manufacturing process.OVERVIEW OF IRON AND STEEL INDUSTRYSteel is crucial to the development of any modern economy and is considered to be the backbone of human civilization. The level of per capita consumption of steel is treated as one of the important indices of the level of socio-economic development and living standard 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 characterized 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.HISTORICAL PERSPECTIVE

The finished steel production in India has grown from a mere 1.1 million tonnes in

1951 to 29.27 million tonnes in 2000-2001. During the first two decades of planned economic development, i.e. 1950-60 and 1960-70, the average annual growth rate of steel production exceeded 8%. However, this growth rate could not be maintained in the following decades. During 1970-80, the growth rate in steel production came down to 5.7% per annum and picked up marginally to 6.4% per annum during 1980-90, which increased to 6.65% per annum during 1990-2000. Though India started steel production in 1911, steel exports from India began only in 1964. Exports in the first five years were mainly due to recession in the domestic iron and steel market. Once domestic demand revived, exports declined. India once again started exporting steel only in 1975 touching a figure of 1 million tonnes of pig iron export and 1.4 million tonnes of steel export in 1976-77. Thereafter, exports again declined to pick up only in 1991-92, when the main producers exported 3.87 lakhs tonnes, which rose to2.79 million tonnes in 1995-96. The steel exports in 1999-2000 were 2.36 million tonnes and

in 2000-01 it was 2.57 million tonnes. The growth in the steel sector in the earlier decades since Independence was mainly in the public sector units set up during this period. The situation has changed dramatically in the decade 1990-2000 with most of the growth originating in the private sector. The share of public sector and private sector in the production of steel during 1990-91 was 46% and 54% respectively, while during 2000-01 the same was 32% and 68% respectively. This change was brought about by deregulation and decontrol of the Indian iron and steel sector in 1991. A number of policy measures have been taken since 1991 for the growth and development of the Indian iron & steel sector. Removal of iron & steel industry from the list of industries reserved for the public sector and also exemption from the provisions of compulsory licensing under the Industries (Development & Regulation) Act, 1951, deregulation of price and distribution of iron & steel, inclusion of iron and steel industry in the list of high priority industries for automatic approval for foreign equity investments up to 74%, lowering of import duty on capital goods and raw materials etc.The Indian steel sector was the first core sector to be completely freed from the licensing regime and the pricing and distribution controls. This was done primarily because of the inherent strengths and capabilities demonstrated by the Indian iron and steel industry. During 1996-97, finished steel production shot up to a record 22.72 million tonnes with a growth rate of 6.2%, while in 1997-98, the finished steel production increased to 23.37 million tons, which was 2.8% more than the previous year. The growth rate has drastically decreased in 1997-98 and 1998-99 being 2.8% and 1.9% respectively as compared to 20% in1995-96 and 6.2% in 1996-97. The growth rate in 2000-2001 has improved to a healthy

9.60% with the total production touching 29.27 million tonnes. The production of finished steel during 2001-02 has been 30.61 million tonnes, which means a lower growth rate of about 4.5% compared to the previous year. This fall in the growth rate of steel production has been brought about by several factors that, inter-alia, include general slowdown in the industrial production and construction activities in the country coupled with lack of growth in major steel consuming sectors. The total production of finished steel and the share of main and secondary producers during 90's and up to 2002-03 are given in the annexure.

THE INTEGRATED STEEL PLANTS IN INDIA ARE:Rourkela Steel PlantBhillai Steel PlantBokaro Steel PlantDurgapur Steel PlantTata Iron and Steel Company ( TISCO)

Visakhapatnam Steel Plant ( VSP)

ESSAR Steel Company

JINDAL Steel Company

IRON AND STEEL PROMOTION IN INDIA

Although iron and steel is one of the most important industries in the Indian manufacturing sector, India is only the 15th largest steel producer in the world. Originating from the first set up of a single steel plant in 1911-12, the iron and steel sector included 7 integrated iron and steel plants in 1995-96. Due to the regulatory and political development of the sector only one of these plants is in private hands accounting for about 15% of total steel production. The integrated steel units usually use the blast furnace basic oxygen/open hearth furnace process route for iron and steel production. In addition, there are about 180 secondary producers employing the electric arc furnace process. Another 500 mostly smaller units rely on other processes such as induction furnace process, melting by re-rollers, and ship breaking units.

PROJECTED PRODUCTION OF IRON & STEEL (Mt/annum)Crude Steel

Production (Mt/annum) based on

Crude Steel Production (Mt/annum)based on

YearGDP totalGDP industryAverage

200128.7129.5329.12

200535.3836.9336.15

201045.9549.0747.51

Though currently the iron and steel sector seems to be on an upward path in a world of free market competition and prices, there are several drawbacks threatening the Indian industry. For example, the state of technology, despite the efforts towards modernization andup gradation, is still inferior to that in other countries. Low costs of primary inputs have sofar led to low costs of production and economic viability of Indian steel. These advantages, however, may be eroded in the near future making Indian steel less competitive. Therefore, technological progress and the adoption of more efficient and improved technologies need to continue supported by policy and economic incentives to the extent possible.

OBJECTIVE OF STEEL POLICYStrategic Goal: The long-term goal of the national steel policy is that India should have a modern and efficient steel industry of world standards, catering to diversified steel demand. The focus of the policy would therefore be 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. This will require indigenous production of over 100 million tonnes (mT) per annum by 2019-20 from the 2004-05 level of 38 mT. This implies a compounded annual growth of 7.3 percent per annum.Table 1: Production, Imports, Exports and Consumption of SteelProductionImportsExportsConsumption

2019-2011062690

2004-05382436

CAGR*7.3%7.1%13.3%6.9%

(in million tones)

Consumption of Steel = Production+Imports-Exports

INDUSTRY STRUCTUREThe iron and steel industry in India is organized in three categories viz. main producers, other major producers and the secondary producers. The main producers and other major producers have integrated steel making facility with plant capacities over 0.5 mT and utilize iron ore and coal/gas for production of steel. In 2004-05, the main producers i.e. SAIL, TISCO and RINL had a combined capacity of around 19.3 mT and capacity utilization was 104 percent. The other major producers comprising of ESSAR, ISPAT and JVSL had a capacity of 6.4MT with capacity utilization of 97 percent. The secondary sector is dispersed and consists of:(a) Backward linkage from about 120 sponge iron producers that use iron ore and non- coking coal, with a capacity of around 13 mT, providing feedstock for steel producers. The capacity utilization in 2004-05 was 75 percent.(b) About 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces that use iron ore, sponge iron and melting scrap to produce steel. Their capacity is around 14.7 mT, and capacity utilization in 2004-05 was 58 percent.(c) Forward linkage with about 1,200 re-rollers that roll out semis into finished steel products for consumer use. These are small and medium enterprises, whose reported capacity is around 15 mT, and capacity utilization in 2004-05 was 55 percent.

SWOT ANALYSIS OF THE INDUSTRYThe strengths, weaknesses, opportunities and threats for the Indian steel industry have been tabulated below. The national steel policy lays down the broad roadmap to deal with allof them.

Strengths

1. Availability of iron ore and coal

2. Low labour wage rates

3. Abundance of quality manpower

4. Mature production base

Weaknesses

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

INDIAN STEEL INDUSTRY - A SWOT ANALYSISStrengths

India has rich mineral resources. It has abundance of iron ore, coal and many other raw materials required for iron and steel making. It has the fourth largest iron ore reserves (10.3 billion) after Russia, Brazil, and Australia. Therefore, many raw materials are availableat comparatively lower costs. It has the third largest pool of technical manpower, next to United States and the erstwhile USSR, capable of understanding and assimilating new technologies. Considering quality of workforce, Indian steel industry has low unit labour cost, commensurate with skill. This gets reflected in the lower production cost of steel in India compared to many advanced countries (Table 3). With such strength of resources, along with vast domestic untapped market, Indian steel industry has the potential to face challenges successfully.Weaknesses

Endemic DeficienciesThese are inherent in the quality and availability of some of the essential raw materials available in India, eg, high ash content of indigenous coking coal adversely affecting the productive efficiency of iron-making and is generally imported. Advantages of high Fe content of indigenous are often neutralized by high basicity index. Besides, certain key ingredients of steel making, eg, nickel, ferro-molybdenum is also unavailable indigenously. Systemic Deficiencies However, most of the weaknesses of the Indian steel industry can be classified as systemic deficiencies. Some of these are described here. High Cost of Capital Steel is a capital intensive industry; steel companies in India are charged an interest rate of around 14% on capital as compared to 2.4% in Japan and 6.4% in USA. Low labour Productivity In India the advantages of cheap labour gets offset by low labour productivity; eg, at comparable capacities labour productivity of SAIL and TISCO is 75 t/man year and 100 t/man year, for POSCO, Korea and NIPPON, Japan the values are 1345 t/man year and 980 t/man year. High Cost of Basic Inputs and Services High administered price of essential inputs like electricity puts Indian steel industry at a disadvantage; about45% of the input costs can be attributed to the administered costs of coal, fuel and electricity, eg, cost of electricity is 3 cents in the USA as compared to 10 cents in India; and freight cost from Jamshedpur to Mumbai is $50/ton compared to only $34 from Rotterdam to Mumbai. Added to this are poor quality and ever increasing prices of coking and non-coking coal.Other systemic deficiencies include:

Poor quality of basic infrastructure like road, port etc.

Lack of expenditure in research and development.

Delay in absorption in technology by existing units. Low quality of steel and steel productsLack of facilities to produce various shapes and qualities of finished steel on-demand such as steel for automobile sector, parallel flange light weight beams, coated sheets etc.Limited access of domestic producers to good quality iron ores which are normally earmarked for exports, andHigh level taxation

Besides these Indian steel makers also lacked in international competitiveness on determinants like product quality, product design, on-time delivery, post sales service, distributionnetwork,managerialinitiatives,researchanddevelopment,information technology and labor productivity etc. As is evident in Table 4, the weaknesses gets reflected in Indias poor standing in the global competitiveness as measured in terms of indicated parameters.Opportunities

The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India. Table 6 gives a glimpse of untapped potential of increasing steel consumption in India; eg, even to reach the comparable developing and lately developed economies like China and other Europe, a quantum jump in steel consumption will be required.

Unexplored Rural Market

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. However, forceful steps were not taken to penetrate this segment. Enhancing applications in rural areas assumes a much greater significance now for increasing per capital consumption of steel. The usage of steel in cost effective manner is possible in the area of housing, fencing, structures and other possible applications where steel can substitute other materials which not only could bring about advantages to users but is also desirable for conservation of forest resources. Other Sectors Excellent potential exist for enhancing steel consumption in other sectors such as automobiles, packaging, engineering Industries, irrigation and water supply in India. New steel products developed to improve performance simplify manufacturing/installation and reliability is needed to enhance steel consumption inthese sectors. Main objective here have to be improvement of quality for value addition in use, requirement of less material by reducing the weight and thickness and finally reduction in overall cost for the end user. Latest technology must be adopted by Indian steel manufacturers for production of superior quality of steel for these applications. For example, pre-coated sheets can be used in manufacture of appliances, furnishings, electric goods and public transport vehicles. Production and supply of superior grades of steel in desired shapes and sizes will definitely increase the steel consumption as this will reduce fabrication need; thereby reduce cost of using steel. Few other perceived opportunities are: Export Market Penetration it is estimated that world steel consumption will double in next 25 years. Quality improvement of Indian steel combined with its low cost advantages will definitely help in substantial gain in export market.

THREATSSlow Industry Growth

The linkage between the economic growth of a country and the growth of its steel industry is strong. The Indian steel industry is no exception. The growth of the domestic steel industry between 1970 and 1990 was similar to the growth of the economy, which as a whole was sluggish. This sluggish growth in the steel industry has resulted in enhanced rivalry among existing firms. As the industry is not growing the only other way to grow is by increasing ones market share. Consequently, the Indian steel industry has witnessed spurts of price wars and heavy trade discounts, which has done Indian steel industry no good as a whole. Threat of Substitutes Plastics and composites pose a threat to Indian steel in one of its biggest markets. For the automobile industry, the other material at present with the potential to upstage steel is aluminum. However, at present the high cost of electricity for extraction and purification of aluminum in India weighs against viable use of aluminum for the automobile industry. Steel has already been replaced in some large volume applications: railway sleepers (RCC sleepers), large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and domestic water tanks (PVC tanks).

Technological Change

Technological changes often force the industry structure to change. For a developing country like India where capital itself is costly, technological obsolescence is a major threat. Price Sensitivity and Demand Volatility The demand for steel is a derived demand and thepurchase quantity depends on the end-user requirements. The traders discounts. This volatility of demand often affects the integrated steel manufacturers because of their inability to tune their production in line with the market demand Fluctuations. Some other threats are:Ever decreasing import duty on steel.

Dumping of steel by developed countries.

High quality products from developed countries available for import at very competitive prices.Non-availability of capital from financial institutions for iron and steel sector.

STRATEGIC RESTRUCTURING A Comparative AnalysisThe effect of globalization on steel industries in different regions or countries has not been uniform. Each region is unique in its own way in terms of raw materials availability, technology adopted, market conditions, trading policies, etc. Consequently restructuring of steel industries in different regions have been done in a manner that best suits the needs and situations of the country or region (Table 7). The divergent strategies adopted for restructuring by steel industries in different countries/regions provide the right perspective for building a turnaround strategy for Indian steel industry

STEEL DEMANDUrban Areas: The present steel consumption per capita per annum is about 30 kg in India, compared to 150 kg in the world, and 350 kg in the developed world. The estimated urban consumption per capita per annum is around 77 kg in the country, expected to reach approximately 165kg in 2019-20, implying a CAGR of 5 percent. Apart from the anticipated growth in the construction, automobile, oil and gas transportation, and infrastructure sectors of the economy, conscious promotion of steel usage among architects, engineers and students by the institute of Steel Development and Growth (INSDAG) and the large producers will drive this additional consumption. Steps would be taken to encourage usage of steel in bridges, crash barriers, flyovers and building construction. Benefits of steel usage would be added to the technical education curricula in the country.

Rural Areas: The rural consumption of steel in India remains at around 2 kg per capita per annum, primarily because steel is perceived to be expensive among the villagefolks. Based on the promotional efforts mentioned above, and an active focus on opening new block level rural stock points, a target is set for raising the per capita rural consumption of steel to 4 kg per annum by 2019-20, implying a CAGR of 4.4 percent.

Exports: Although the focus of Indian steel industry is on the domestic market, export will be another window on the demand side. The growth of exports of steel from India has been around 10 percent per annum over the past decade. That speaks for the international cost competitiveness of the steel sector. It takes assiduous effort to create, and hold on to export markets. While the business decision to export will depend on the prevailing relative prices, the Government would encourage strategic alliances with buyback arrangements and dedicated export production through 100% export-oriented units. A growth rate of around 13 percent per annum is envisaged up to 2019-20. The issues related to exports have been discussed in section 13 on Trade Policy.

INDUSTRY PERFORMANCE

The performance of Indian steel industry has been analysed in the medium term from1997 to 2011. The sample for analysis includes data from SAIL and Tata Steel among theISPs and JVSL, Ispat, Essar and Lloyds among the secondary majors7.Category wise estimated demand for iron and steel all India 2002-2003Category

Bars and rodsQuantity, 103 t

10500

Structural2500

Railway materials845

Plates2250

HR coils/skelp6600

HR sheets500

CR coils/sheets3300

GP/GC sheets1930

Electrical steel sheets200

Tin plates325

Pipes850

Total finished steel29500

UNEXPLORED RURAL 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. However, forceful steps were not taken to penetrate this segment. Enhancing applications in rural areas assumes a much greater significance now for increasing per capital consumption of steel. The usage of steel in cost effective manner is possible in the area of housing, fencing, structures and other possible applications where steel can substitute other materials which not only could bring about advantages to users but is also desirable for conservation of forest resources.

STEEL PRICES

Following de-regulation of prices for integrated steel plants in 1991-92, the domestic prices of steel have become market-determined. Market prices remain in step with international prices, though generally lower. During industry downturns, prices fall and during upturns, they rise. While rationalization of the customs and excise duty structure is aimed primarily at reducing fiscal and revenue deficits, it has an indirect influence on consumer prices. At present, there are around three thousand units manufacturing steel and steel products, which are marketed by over 100,000 traders for ultimate consumers. This dispersal of the distribution chain has been the principal reason why no price regulation of the steel trade has ever been in force. Government has recently set up a Competition Commission to look into complaints of monopolistic pricing.Steel futures: The cyclical nature of the steel industry deters fresh investments due to risks of recession. The mismatch between demand and supply also leads to price volatility witnessed during recent times. Stagnation in steel prices for long periods followed by sudden spurt also affects the consumers and the infrastructure industry. Therefore, the efforts of various stakeholders to develop risk-hedging instruments like futures and derivatives would be supported.

HUMAN RESOURCES

The anticipated steel production of 110 mT by 2020 would require an additional workforce of 220,000 after accounting for the expected productivity improvements.7 Further the creation of 1 man-year of employment in the steel industry generates an additional 3.5 man-years of employment elsewhere in the economy due to its strong linkages with other sectors such as transport, mining, construction, machinery, and steel fabrication. The total additional employment generated in the economy due to expected production of 110 mT by2020 would be around 1 million.

The profile of the required human resources will have a larger share of the skilled and semi-skilled labour force. It is a matter of concern that availability of scientists, engineers and technicians per thousand of population in India is 7.05 compared to 113 in Japan, 90 in U.K.,53 in Korea, 54 in Australia and 85 in Germany.8 Further, the task is not limited to increase in the stock of technical manpower. The technical and professional institutes of the country would also be required to impart new competencies and capabilities in tune with changes in technology and the needs of globalization. The existing training and research institutes under the Ministry of Steel would be brought under an umbrella organization with representation from each segment of the industry. The functions of this organization would include (a) suitable training programmes especially for the secondary small scale units, (b) promotion of steel consumption through dissemination of information on availability and suitability of steel for various applications, and (c) collection and analysis of data on important parameters of the industry. TECHNOLOGIES, RESEARCH AND DEVELOPMENTThough the choice of technology will be determined by entrepreneurs based on techno-economic considerations, the Government would encourage adoption of technologies, which: Have synergy with the natural resource endowments of the country.

They are conducive to production of high-end and special steel required for sophisticated industrial and scientific applications Minimize damage to the environment at various stages of steel making and mining.

Optimize resource utilization.

Facilitate modernization of the steel industry so as to achieve global standards of

productivity and efficiency.

Development of front end and strategic steel based materials.

Indias expenditure on Research and Development has been negligible not only in absolute terms but also as a percentage of GNP at 0.86%. This can be compared to the developed world with an average ratio of 2.5%. In the case of steel industry, the ratio of expenditure on R&D as a percentage of turnovers is only 0.26%.

The low priority to indigenous R&D has given rise to adoption of technologies that are more suited to conditions prevailing in the developed world. For example, resource position of raw materials requires development of technologies, which can use indigenous coking coals and non-coking coals and for improvement in quality of high alumina Indian iron ore. But lack of innovation and adaptation to Indian conditions is resulting in large-scale import of coking coal and low performance in iron making. Aggressive R&D efforts would, therefore, be mounted to create manufacturing capability for special types of steel, substitute coking coal, enrichment and agglomeration of iron ore fines, develop new products suited to rural needs, enhance material and energy efficiency, utilize waste, and arrest environmental degradation. Public sector steel companies would enhance R&D expenditure in the coming years to finance internal R&D efforts and sponsor outside research, which may provide a framework for inter-disciplinary cooperation with the private sector across national boundaries. Governments contribution to fostering basic and applied R&D will be enhanced.

STEEL INDUSTRY-MAJOR PROBLEMS AND CONCERNS

The Indian steel manufacturers are faced with some major problems and concerns, which work as inhibiting factors to their effort towards gaining the competitive edge. A few of these are: Un remunerative Prices Stagnating demand, domestic oversupply and falling prices in the last four years have hit Indian steel makers. Barring the sporadic rise in demand in the recent months, it has suffered from UN remunerative prices to the extent that companies have been finding it difficult to maintain capital costs. Stagnating Demand for Steel According to McKinney and Co the domestic steel industry is set to witness a 33% overcapacity in the hot rolled coil.

THEORETICAL BACKGROUND OF

DISTRIBUTION CHANNEL

Place, distribution, channel or intermediary

A channel of distribution comprises a set of institutions which perform all of the activities utilized to move a product and its title from production to consumption.

Bucklin - Theory of Distribution Channel Structure (1966)

Another element of Neil H. Bordens Marketing Mix is Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

There are six basic 'channel' decisions:

Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler)Single or multiple channels

Cumulative length of the multiple channels

Types of intermediary (see later)

Number of intermediaries at each level (e.g. how many retailers in Southern

Spain).

Which companies as intermediaries to avoid intra channel conflict

Selection Consideration - how do we decide upon a distributor?

Market segment - the distributor must be familiar with your target consumer and segment. Changes during the productlife cycle- different channels can beexploited atdifferent points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores. Producer - distributor fit - Is there a match betweentheir polices, strategies, image, and yours? Look for' synergy. Qualification assessment - establishes theexperience and track record of your intermediary. How much training and support will your distributor require?

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 fromproducers andresell 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 fortheir product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer.

Wholesalers offer 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. 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 in goods. However, a 'stockist agent will holdconsignment 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 willhold 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 Alisuper, Modelo, and Jumbo in Portugal4. 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 low barriers to entry as set up costs are low.

Use e-commerce technology (for payment, shopping software, etc.)

There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

CHAPTER-2 COMPANY PROFILE

COMPANY PROFILE

Vision

To be a continuously growing world class company we shall

Harness our growth potential and sustain profitable growth.

Deliver high quality and cost competitive products and be the first choice of customers.Create an inspiring work environment to unleash the creative energy of people.

Achieve excellence in enterprise management.

Be respected corporate citizen, ensure clean and green environment and develop vibrant communities around us.Mission

To attain 16 million ton liquid steel capacity through technological up-gradation, operational efficiency and expansion; to produce steel at international standards of cost and quality; and to meet the aspirations of the stakeholders.Objectives

Expand plant capacity to 6.3 Mt by 2008-09, with the mission to expand further in subsequent phases as per the corporate plan. Sustain gross margin to turnover ratio>25%.

Be amongst top five lowest cost liquid steel producers in the world by 2009-10.

Achieve higher levels of customer satisfaction than competitors.

Instill right attitude amongst employees and facilitate them to excel in their professional, personal and social life. Be recognized as an excellent business organization by 2008-09.

Be proactive in conserving environment, maintaining high levels of safety and addressing social concerns.

PROFILE OF VIZAG STEEL PLANT

To meet the growing domestic needs of steel, the decision of the Government of India to set up an integrated Steel Plant at Visakhapatnam was announced by the Prime committeechooses the site near Balacheruvu creek and the prime minister did the formal inauguration and laid the foundation stone on 20th January 1971. The consultant, M/s M.N.Dastur and Company ltd., submitted a techno-economic feasibility report for the plant, with an annual capacity of about 3 million tones of liquid steel, in October 1977. The service examined the detailed project report prepared by Dastur Company and offered Technical and Economic operation for the same. The government and erstwhile USSR signed agreement on June 12th1979, for co-operation in setting up a 3.4 million tones integrated steel plant at

Visakhapatnam. In terms of this agreement, soviets and Indian design organization revised the earlier detailed project report of Dastur Co., jointly and a comprehensive revised detailed project report for VSP was submitted in November 1980. A new company i.e. Rashtriya Ispact Nigam Ltd. (RINL) was incorporated to have independent decision taking facility with more concentration on this particular unit. The construction of the project commenced in 1982 with a schedule of 4 and 6 year for the first and second stage respectively. During construction due to inadequate found availability, the project could not be adhered to, resulting in huge cost and time overruns. In a bid to reduce the capital investment Rationalized concept was adopted in 1985. As per this one steel melt shop and one rolling mill i.e. the universal beam mill were dropped. The other steel melt shop of 2.2 MTPA of liquidsteelwithoutanyadditionalfacilities.TheHonorablePrimeMinisterSri.P.V.Narasimha Rao dedicated the plant to the Nation on 1st August 1992. Unlike other

integrated steel plants in the country. New technology, large-scale computerization and automation etc., are incorporated in the plant. To operate the plant at international levels and attains such labor productivity; the total manning of the organization has been limited to17500 employees. The plant has a capacity of producing 3.0 MT of liquid Steel and 2.656

MT saleable steel.

HISTORY OF THE VIZAG STEEL PLANT

The decision of the government of India to set up an integrated steel plant at

Visakhapatnam was announced in parliament by the Prime Minister Smt.Indira Gandhi on

17th April 1970. The selection committee chose the site near balacheruvu creak and the prime minister did the formal inauguration on January 20, 1971. The Consultant, M/S.M.N.DASTUR & company private limited submitted a techno economic feasibility report in February 1972, and a detailed project report for the plant, with an annual capacity of about 3 million tone of liquid steel in October, 1977. In setting up the 3.4 million tonesintegrated steel plant at Visakhapatnam. In terms of this agreement the earlier DPR of Dastur & Co was revised jointly by Soviets and India design organizing and a comprehensive revised DPR (CRDPR) for VSP was submitted in November 1971.The project was estimated to cost Rs. 8397.28 corers, based on prices as in the 4th

quarter of 1981. However, during the implementation of the project it was observed that the project cost has increased substantially over the sanctioned cost, mainly due to prices escalations and under provision of DPR estimates. In view of these and the critical fund situation, alternatives for implementation of the project with rationalization of the approved concept were studied in 1986. Under the rationalized concept 3.0 million tones of liquid steel to be produced in a year and the project is estimated to cost Rs.5822.17cr as on fourth quarter of 1987.

REASONS FOR ESTABLISHMENT

All the steel plants in India were located in the non coastal area of the country; because of that reason the plant authorities were incurring high import and export expenses in the form of tax besides the transportation cost of the raw materials, finished products, spares and other equipments for various purposes. The concern authority has gone in deep discussion to reduce this type of cost for at least to the latest steel plant for this reason and the political threat for locating the steel plant in Visakhapatnam are the main points.Compared to the other steel plants in India it is the 1st shore based steel plant.

In the year 1979-80 the construction took high speed and in following year i.e.

1981 contract signed with Soviet Union for preparation of working drawing for coke ovens, blast furnace and sinter plant. 1982, there were drastic changes in the management of VSP i.e. from SAIL to RINL.

During the year 1985, Govt of India thought of dispensing with the scheme of installing of steel plant at Visakhapatnam once for all, because of high capital cost of the exercise and very own phase getting returns on the investment. At his stage there were around 30 to 35 thousand contract labours working in the construction under various contract jobs.

In the early stages, the Govt. has given assurances to the people that they will be given jobs in the steel plant whose lands are lost in the acquisition. The total area gathered by the steel plant, authority is 27000 acres. The land owners in this area were most of them farmers. Most of the farmers are uneducated. This type of people is around 6000 that is performing different non technical, inexpensive and transportive etc.

INFRASTRUCTURE OF VISAKHAPATNAM STEEL PLANT

a) Location and General layout

The plant is located on the coast of Bay of Bengal, 16 kms to the South West of the Visakhapatnam port. It lays between the northern boundaries of the national highway No.5 from Chennai to Kolkata and 7 kms to the south west Howrah Chennai railway line.b) Climate

Visakhapatnam has warm and humid climate. April to June is the warmest months of the year and December to February are the coldest months. The benefits from he South west monsoon and he northeast monsoons. The average annual rainfall is 873.6 mm. highest mean monthly maximum temperature is 37.8 deg. C.

MAJOR PLANT FACILITIESVSP has the following production facilities

Three coke ovens batteries of 67 ovens, each having 41.6 m3 volumes.

Two sinter machines of 312 sq.m area.

Two blast furnace of 3200 m3 useful volumes.

Steel melting shop with three L.D. converters (two operating and one standby by of 150 tons each of capacity each and 6nos. of four strand continuous blooms casters) Light and medium merchant mill (LMMM) of 7, 10,000 tones per year capacity

Wire rod mills (WRM) of 8, 50,000 ones per capacity.

A. Modern Technology

VSP is the most sophisticated and modern plant in the country. Modern technology has been adopted in many areas of production some of them for the first time in the country. Among them are Selective crushing of coal 7 meter tall coke ovens Dry quenching of coke On ground blending of sinter base mix Conveyor charging and bell less top for blast furnace 100% continuous casting of liquid steel Gas expansion turbine for power generation utilizing blast furnace top gas pressure Hot metal desulphurization Extensive treatment facilities of effluents for ensuring proper environmental protectionB. Coke Ovens & Coal chemicals PlantCoking coal after selective crushing and proper blending is subjected to destructive distillation (heating in the absence of air) in the Coke Ovens. After heating for nearly a period of 16-18 hours at a temperature of about 1100 degree C, Coke is obtained and is used as a fuel as well as reducing agent in the Blast Furnace. The Coke Ovens of VSP are engineering feats by themselves. They are the tallest ovens meter constructed in the country. The Plant has 3 batteries of 7 meter. Another feature is the dry cooling of coke carried out by the inert gas nitrogen thus, reducing pollution considerably. Besides bio-chemical plant separately undertakes the treatment of effluents, by products like benzene, toluene, xylene, naphthalene, coal tar, creosote oil, pitch, and ammonium gas, VSP produces, among other by- products, pushkala a prime fertilizer based on ammonium sulphate.C. Steel Melt Shop & Continuous Casting

There are Top blown converters each of 133cu.m Volume, produce a total of 2.7 million tones of liquid steel per annum. This liquid steel thus produced is casted in six-4 strand bloom casters.A special feature in energy conservation is the collection of Converter gas to be used as a fuel in the plant. The entire molten steel as VSP is continuously cast at the radial type continuous casting machines resulted in significant energy conservation and better quality steel. 100% Continuous casting on such a large scale has been conceived for the first time in India.

D. Rolling Mills

The cast blooms from continuous casting department are heated and rolled in the three high speed and fully automated rolling mills namely light & Medium Merchant Mill, Wire Rod Mill and Medium Merchant & Structural Mill, to produce various long products like Reinforcement bars, rounds squares, flats, angles, channels billets, wire rods etc. Technologies adopted at Rolling Mills include world class Steel work and Tem core process.SWOT ANALYSIS

The SWOT analysis of RINL brings forth the opportunities and threats facing RINL, with a view to buildings up on the strengths, exploiting the opportunities improving upon the weakness and converting threats into opportunities. The strengths, weakness, opportunities and threats of RINL are as under. S- Strengths1. State of-the technology

2. High commitment to achieve capacity levels

3. Areas of excellence

4. Economies of scale

5. High expansion potential

6. Strong commitment to conserve environment

W-Weaknesses

1. High capital rated charges

2. Low return product mix

3. Productivity below international levels

4. Practices not as per with international standards

O-Opportunities 1. Shore based

2. Sizeable export markets

3. Access to import resources

4. Proximity to southern markets

5. Increasing domestic demand due to thrust on infrastructure development.

T-Threats

1. Availability of iron ore and coal

2. Rising input and costs

3. Increasing competition

4. Sensitive to exchange rate variation

5. Possibility of import duties declining further

6. Excise duties continue to be high

7. Lack of alternatives sources for major raw materials

8. Major market place (north&west) located far off

9. Infrastructure continues to be inadequate

VSPs State of the art technology, high expansion potential and economies of scale would be utilized for offsetting the disadvantages of low return product mix and high capital related charges. Shore based location of the company would promoted export and import of quality raw materials. Proximity of VSP to southern make can help in capturing larger market share in south. VSP would meet the increasing competition through its quality products and customer orientation.DESIGN AND ENGINEERINGThe soviet design organization, GIPROMETS designed the coke oven and coal chemical plant (excluding the 7-meter tall battery portion) sinter plant and blast furnace. MECON of Ranchi engineered the 7-meter tall coke oven batteries with dry quenching. Dastur & Co. has designed the remaining facilities.

a. Raw Material

Raw MaterialSource

Iron ore lumps & fines.Bailadilla, MP.

BF limestone.Jaggayyapeta, A.P.

SMS lime Stone.Dubai

BF Dolomite.Madharam, A.P.

SMS Dolomite.Madharam, A.P.

Manganese ore.Chipurupalli, A.P.

Boiler coal.Talcher, Orissa.

Cocking coal.Australia.

Medium Cocking coal (MCC)Gidi / swang / rajarappa / kargli.

b. Employment OpportunitiesAt full operational stage, now Visakhapatnam Steel Plant has employed about 17369 technical staff. The indirect employment due to various ancillary units development and other services is much more.

c. Training and Development

RINL believes that the employees are its assets and strives to realize their potential in full for mutual advantage.A trained cadre of technical operative personnel and managerial cadre are provided for the successful commissioning and operation of a large steel plant like VSP.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.

VSP provides training programmer for enhancing their knowledge.

d. 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, schools hospitals, welfare centers, shopping centers, community facilities, parks etc.e. Water supply

Operational water requirement of 36 mgd is being met from the Yeleru water supply scheme.f. Power supply

Operation power requirement of 180 to 200 MW is being met through captive power plant. The capacity of the power plant is 286.5mw; VSP is exporting around 60MW Power to APSEB.g. Advertising

Visakhapatnam Steel Plant 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

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.

CHANNELS OF DISTRIBUTION

Distribution channels can be characterized by the number of channel levels. Each middle man who performs some work in bringing the product and title closer to final buyer constitutes a channels level.

PROMOTION

Promotion is the scientific techniques of communication regarding the quality of products through which consumers get to know about the merit and demerits to mortgage and to overall informing the potential customers promotional techniques i.e. advertising publicity and personal selling should be used. These are the real and major tools of promotional activities. According to W.J.Stantion promotion is and exercise tin information and influence.

MAJOR AWARDS WON BY VSP

India Priyadarshini Vrikshmaitra for massive forestation of RINL1992-93.

National Energy conservation Award 2002, first prize in integrated sector.

Award from Andhra Pradesh pollution control Board for significant work on calendar

Production technologies.

Second prize for RINLs stalls at international Trade Fair.

Successful Re-Certificate or ISO 9001-2000

Udyog Excellence gold medal award for excellence in Steel Industry

Golden Peacock (1st Prize) National Quality Award -1996.

Nehru Memorial National Award for Pollution control 1992-93 & 1993-94.

Best Management Award

Ispact Suraksha Puraskar (1st prize) for longest accident free period, 1991-1994.

Rolling shield for Ecological protection by ministry of information & Broad Casting.

Greenstick safety silver Award for 2002-2003 in Steel Sector for implementing best safety standards.INSAAN Organizational Excellence Award instituted by the Indian national suggestion

Schemes associated for the year 2004.

PMs Trophy for 2004-2005.

4

MARKETING DEPARTMENT VISAKHAPATNAM STEEL PLANT

I. THE FOLLOWING STEPS ARE FOLLOWED FOR PROCEEDING WITH ANY SALE

1. Maintaining of database of materials, specification of materials , storage facilities, loading facilities, pricing , duties, levies, complaints, test certificates, formats etc .in respect of iron & steel products 2. Build up of customer database through market information , journals, information on competitors, applications of the products etc.. And maintain a database of prices of our competitors.3. Study and analyze the customer requirements and give feedback to production units regarding product specifications quality.4. Formulate annul production plan based on customer requirements by the middle of February for the next financial year.5. Formulate annual production plan based on annul marketing plan by the end of February, for the next financial year by giving monthly millwise break ups.6. Dispatch of materials to branch stockyards as per their requirements to meet their monthly targets.

II. mode of selling :Selling the finished/semi finished products by any one of the following modes.a. Free sales b. Short/long term contracts c. Tender sales d. Sales under approved marketing tools(discount/credit sales) e. Sales on negotiated basis f. e- auction salesg. DLD schemeh. CSA scheme

III. SERVICE OF CONTRACTS/SALES:Based on production plan, stock holdings and long term contracts on hand, offer letters are sent to the long term customers. For the balance materials, intimation letters are sent to prospective customers regarding the availability of the materials and issue offer letters, if the customers are interested to lift the material. The offer indicates the price of the material and also indicates concessional rate of sales tax available on submission of statutory forms and full rate of sales tax applicable otherwise.

IV. DELIVERY ORDER: The customer pays the amount by way of demand draft /pay order/ cheque etc. to finance executive of branch sales office. Once the finance executive is satisfied with the financial arrangement he issues money receipt to customer. In case of letter of credit / Bank guarantee, the executive scrutinizes it for acceptability and communicates to marketing executive for issue of delivery order.

V. COORDINATION WITH PPM AND PRODUCTION DEPT:Marketing dispatch planning section holds meeting with the personnel of PPM/Traffic and mills at the shop floor everyday. The stocks, dispatches, wagon availability, clearances required for materials at shop floor are discussed. Rail indents are indicated to PPM & Traffic. Traffic in turn raises indent on Railways on daily basis. Dispatch of material by road movement to various stockyards also discussed. Internal movement of material to BC.Gate , NEY and NSY are also discussed. Besides the above , weekly coordination meeting is conducted at the level of ED (Works) along with GM (Mktg).

VI. CUSTOMER SATISFACTION:At VSP, customer satisfaction is no longer the ultimate watchword. VSPs business strategies to-day focus on developing customer loyalty. Customer satisfaction is just the beginning of this process .VSP focuses on a few critical issues in pursuit of this new loyalty centered approach, which help in satisfying customer and achieving profitability for the company .The combination of product quality, supporting services and the ability to provide innovative and quality products and services define value .VSP strives to efficiently control and strike a balance between the price, quality innovation and image, which go a long way in determining customer loyalty as well as companys financial performance .besides these, VSP also takes into consideration external factors such as business environment and customer characteristics.

VII. DISTRIBUTION NETWORK:VSP has branch offices and stockyard at all major consuming centers in India, manned by experienced marketing professionals. The field personnel undertake extensive customer contact programmes including frequent visits to customer premises in the area for discussion and assessing their immediate and future requirements. the branch managers regularly organizes customer meets at branch offices and these meets are attended at least once in three months by regional managers and Sr.Executives from HQ. The branches, through this exercise , send regular feedback to HQ regarding the current and emerging requirements and demand patterns in their respective areas. Quarterly and monthly production and dispatch plans are made based on these projections as well export orders.

VIII. NEW MARKETS:VSP continuously interacts with structural designers / fabricators and consultants all over the country and projects and construction authorities of central and state Govts.for broad banding customer base as well as assess the market for construction steel in the country. An inter disciplinary group has been constituted for the development of special steel grades to meet the specific requirements of selected customers. Thus VSP funnels information on customer requirements into the business systems and culture of the organization. Lastly, with a view to ascertain the effectiveness of VSPs various initiatives, customers opinion survey is carried out every year through an external reputed agency. These surveys bring awareness about the strength and weaknesses of VSP with regard to key areas determining customer satisfaction level. Concerted efforts are taken to improve on the required areas. Besides this, VSP also keeps track of competitors efforts towards customer satisfaction.

IX STOCKYARD ITS ORGANISATION & FUNCTIONSStockyards play and important role in the marketing operations. They help storing the companys materials at specific locations and subsequent distribution so that maximum number of customer could be served easily. They help in prompt movement of materials from the plant to the customer, there by ensuring continuous production and availability of materials.

BROAD OBJECTIVES OF STOCKYARD:A) To ensure movement of material produced at the plant, thereby ensuring continuous production at full capacity.B) To facilitate economic rolling at the plant as per the plan and movement of materials in bulk from the plant to consumption centers.C) To store materials received from the plant and supply to consumers in convenient lots and in the mix required by them. D) To avoid waiting time of the customer and to ensure prompt fulfillment of demand. E) To distribute material uniformly so as to avoid acute shortages / heavy surplus.

TYPE OF STOCKYARDS i) Own stockyards- the company procures land , developments it , arranges for railway siding, weighbridge and other facilities and generally opts for a handling contractor . In such cases the handling agent is responsible for receipt, storage delivery and custody of materials.ii) Stockyard with consignment agents in this case the consignment agents arranges for land and facilities for handling and storage of materials including safe custody materials.iii) Stockyard with consignment sales agents in this case, the consignment sales agents is responsible for receipt, storage, selling, of materials. This stockyard and infrastructure belongs to him.

HANDLING OF MATERILAS IN STOCKYARDS Handling of materials in stockyards is generally done by a handling contractor / consignment agent using his own equipment and labour.Aspects considered in handling:1. Type of the product shape , size , length , bundle dimensions , weight per piece / packet , quality etc.2. Layout of siding and its capacity. 3. Possible deterioration during storage.4. Type of wagons likely to be received .5. average daily deliveries 6. Shape and size of stockyard area.7. Need to ensure availability of siding at all times to receive in coming consignments.8. Location of approach road to the stockyard.

FUNCTIONS CARRIED OUT IN THE STOCKYARD 1. Receipt of materials from the plant ,or from other stockyard by rail/road 2. Sorting of materials 3. Stacking in easily identifiable and oderely manner ,product wise ,lot wise , size and quality wise 4. Weighment and delivery of materials to customers.5. Production of materials from damaged / deterioration in storage 6. Utilization and maintenance of assets.7. Control of operating cost in the stockyard. 8. Maintaining records \accounts of receipts, delivery and stock of materials9. Physical verification of stocks10. Implementation of various statutory acts and rules11. Furnishing periodical reports\returns12. Security of the materials

RECIEPT OF MATERIALS THROUGH OWN SIDING1. Activities prior to arrival of wagon:Marketing HQ sends tentative monthly dispatch plan and weekly dispatch advice to branch through region. With these documents delivery can be taken even without original documents by executing indemnity bond with the railways2. Pending wagons 3. Arrival of wagons4. Unloading of materials5. Weighment of incoming materials in stockyardRECIEPT OF MATERIALS THROUGH PUBLIC SIDING1. Activities prior to arrival of wagons.2. Unloading at public siding3. Transportation of materials to stock yard.STACKING OF MATERIALS 1) Preparation of stacking plan 2) Method of stacking 3) Minimising cost of stacking4) Demmurage 5) Internal transportation for stacking6) Sign board/painting 7) Sorting8) DocumentationSTOCK ACCOUNTING The objectives of stock accounting are to document the receipts issues and stock on handa) To identify periodical shortages and surpluses, if any -Lot card-Filling receipts in Lot card-Filling issues in Lot card-Filling balance in Lot card-Summery card for daily monitoring-Stock cum sales statement (SCSS)STOCK VERIFICATIONStock Verification helps in the followinga) To exercise check and control on stocks b) To identify in time, the discrepancies if any in stock and ascertaining reasons for the same and top ensure recovery from consignments agents\handling contractors c) To arrive at true & fair valuation of stock for the purpose of stock profit & lose account andd) To comply with statutory obligationsDIVERSION OF MATERIAL & ACCOUNTING OF DIVERSIONS Diversion of materials from one stockyard to anothera) Due to wrong delivery by railwaysb) Materials diverted to meet critical situationsc) Inter stockyard transfer of stock

STRUCTURE OF MAKRKETING DEPARTMENT, RINL:

Marketing System at RINL

HQ SalesCollection of MoneyCredit ControlSales of TradesSale to project customersSales Accounting

MS FunctionsProduct Codes control Sales ReportsSales AnalysisMS Reports to TOP managementByproducts SalesCollection of Money Credit ControlSalesLong Term Sales Accounting

Regional Sales Office5 Regions (AR, SR, ER, NR, WR)Control of pricesAdministration and control

BC GATEStock Transfer to Branches Sales DispatchesVehicle entry ControlExports

Branch Sales Office (23 Branches)Collection of Money Credit ControlSales to TradersSales to TradersSales to Project CustomersSales Accounting

Branch stockyard(23 stock yards)Handing of ReceiptSales dispatchesStock TransferStatutory Registers

THE NETWORK OF VSP

The VSP marketing department has got total manpower of 301 out of which 108 manpower is at Head Quarters and the rest are in various branches. For facilitating the sales and increasing the customer base by showing the presence all over, the whole county is divided into five regions and each region has a regional office which coordinates with the branch sales offices in their respective regions. Following are the regions with their head-quarters: North (Delhi) South (Chennai) East (Kolkata) West (Mumbai) Andhra (Visakhapatnam) Altogether there are 24 branches. Besides they also have consignment sales agencies at three places Jammu, Guwahati and in Ranchi. It is also exporting the products to various destinations such as Sri Lanka, US, Bangladesh, Middle East, Singapore and other. Export of materials also takes place for Nepal but through road only.Production Department for various products as per demand in the market, which will be assessed through various modes. Once the production is completed, material produced is to dispatch to the designated destination at the right time through various modes of transportation.QUALITY MANAGEMENT SYSTEM:Welcome to the Quality Complaint System(QCS) of Visakhapatnam Steel Plant. This system is used for registering and settling the customer's complaints. Quality complaint is based on many factors like dimension, quality, quantity of the material etc., Customers are requested to make use of this system to settle Quality Complaints of the purchased material.About QCS: Customer has to enter all the details of the material then complaint number will be generated. QCS hastotal 8 stages including the registration stage. After each and every stage customer will be intimated with the updated status of the complaint and at anytime customer can track his complaint status with the complaint number.

CHAPTER-3

METHODOLOGY

METHODOLOGY

SIGNIFICANCE OF THE STUDY

The study is very significant to understand the distribution channels. The study is important to know the dealers satisfaction level for the dealership. The study is important to know the dealers satisfaction level in the price of the steel. The study is important to know the dealers preference for the quality. The study is very important to know the sales volume. The study is also analyses the effective media for improving the sales. The study is important to know availability of the steel The study is important to know margins in the steel industries

OBJECTIVES OF THE STUDY

OBJECTIVES:

To find out the distribution channels of vizag steel plant in Visakhapatnam district. To compare the distribution system of vizag steel with other steel companies. To find out the advertisement efficiency of Vizag steel. To find out the marketing situation of Vizag steel from others. To find out the present problems faced by dealers. To find out the any new scheme required by the dealers. To give valuable suggestions to the company for increase the sales volume.

SCOPE OF THE STUDY

The scope of the study is confirmed to distribution channel with special reference to the"VISAKHAPATNAM STEELPLANT" inVisakhapatnam district.

The study can help to the management to know the factors why their sales volumes.

DATA ANALYSIS:RESEARCH DESIGN:Since the population runs into several thousands, it is not possible to conduct a census survey. Therefore a sample survey is conducted using a quota sampling.SAMPLE SIZE:The total sample size is 50. SOURCES OF DATATo pursue the mentioned objectives, required data had been collected through a) Primary Data. b) Secondary Data. Primary Data is the data, which is collected directly by direct personal interview, interview, indirect oral investigation, Information received through local agents, drafting a schedule, drafting a questionnaire.Secondary Data is the data, which is collected from the various books, magazine and material, reports, etc. The data which is stored in the organization and provide by the HR people are also secondary data, various information were taken out regarding that subject as well other subject from various sources and stored.DATA COLLECTION METHODThe information for the study has been obtained from two sources namely: Primary Data Secondary DataPrimary Data:In the due course of the research study the primary data was collected through a structured questionnaire. The questionnaire is the one in which all questions and answers are specified. Here there will be less scope for comments made in the own word of the respondents.Secondary Data:The secondary data is collected from various sources like magazines, company records, internet websites,books.

LIMITATION OF THE STUDY One of the important of the study was lack of time though the respondent to the study was vast due to the time constraints the sample size was limited. The researcher has difficulty with most of the respondents who was not willing to cooperate with study, as they were very busy with their own work. The research had also difficulty with the respondents because they did not fill up the questionnaire in proper time. Another limitation of the study was confined with not only retailers but also consumers for survey of this study.

CHAPTER- 4DATA ANALYSIS &INTERPRETATION

TABLE NO: 1ANALYSIS OF THE STUDYSTEEL DEALERSHIP TAKEN BY DEALERSBRAND

NO OF RESPONDENTSPERCENTAGE

ROURKELA STEEL PLANT612

BHILAI STEEL PLANT918

DHURGAPUR STEELPLANT816

BOKARO STEEL PLANT918

VISAKHAPATNAM STEEL PLANT1836

TOTAL50100

INFERENCE:From the above table, it is inferred that 12% of the respondents are having the Rourkela steel plant dealership,18% of the respondents are having the bhilai steel plant dealership,16% of the respondent are having the dhurgapur steel plant dealership,18% of the respondents are having the bokaro steel plant and 36% of the respondents are having the Visakhapatnam steel plant dealership.

STEEL DEALERSHIP TAKEN BY DEALERS

TABLE NO:2HIGH SALES VOLUME IN STEEL INDUSTRYBRANDNO OF RESPONDENTPERCENTAGE

ROURKELA STEEL PLANT714

BHILAI STEEL PLANT1122

DHURGAPUR S.P714

BOKARO S.P1020

VISAKHAPATNAM S.P1530

TOTAL50100

INFERENCE:From the above table,it is inferred that 14% of the respondents feel that Rourkela steel plant is getting high sales volume,22% of the respondents feel that bhilai steel plant is getting high sales volume,14% of the respondents feel that dhurugapur steel plant is getting high sales volume,20% of the respondents feel that bokaro steel plant is getting high sales volume and 30% of the respondents feel that Visakhapatnam steel plant is getting high sales volume.

HIGH SALES VOLUME IN STEEL INDUSTRY

TABLE NO:3MOST VALUABLE SUPPLIERSBRANDNO OF RESPONDENTPERCENTAGE

ROURKELA S.P510

BHILAI S.P1020

DHURGAPUR S.P1122

BOKARO S.P918

VISAKHAPATNAM S.P1530

TOTAL50100

INFERENCE:From the above table, it is inferred that 10% of the respondents feel that the Rourkela steel plant is most valuable supplier,20% of the respondents feel that the bhilai steel plant is most valuable supplier,22% of the respondents feel that the dhurgapur steel plant most valuable supplier,18% of the respondents feel that the bokaro steel plant is most valuable supplier and 30% of the respondent feel that the Visakhapatnam steel plant is most valuable supplier.

MOST VALUABLE SUPPLIERS

TABLE NO 4QUALITY OF THE VIZAG STEELOVERALL RATENO OF RESPONDENTSPERCENTAGE

EXCELLENT1428

VERY GOOD816

GOOD1428

AVERAGE816

POOR612

TOTAL50100

INFERENCE:From the above table ,it is inferred that 28% of the respondents feel that quality of the product is excellent,16% of the respondents feel that quality of the product is very good,28% of the respondents feel that quality of the product is good,16% of the respondents feel that quality of the product is average and 12% of the respondents feel that quality of the product is poor.

QUALITY OF THE VIZAG STEEL

TABLE NO:5PRICE OF THE VIZAG STEEL LEVEL OF SATISFACTIONNO OF THE RESPONDENTSPERCENTAGE

HIGHLY SATISFIED1428

SATISFIED1122

AVERAGE612

DISSATISFIED816

HIGHLY DISSATISFIED816

TOTAL50100

INFERENCE:From the above table , it is inferred that 28% of the respondents are highly satisfied with price,22% of the respondents are satisfied with price ,12 % of the respondents feel that average,22% of the respondents are dissatisfies with price and price of the respondents are highly dissatisfies with price.

PRICE OF THE VIZAG STEEL

TABLE NO :6FAST MOVING BRAND IN STEEL INDUSTRYBRAND NO OF THE RESPONDENTPERCENTAGE

ROURKELA S.P714

BHILAI S.P714

DHURGAPUR S.P1020

BOKARO S.P918

VISAKHAPATNAM S.P1734

TOTAL50100

INFERENCEFrom the above table ,it is inferred that 14% of the respondents feel that Rourkela steel plant is fast moving in steel industry,14% of the respondents feel that bhilai steel plant is fast moving in steel industry,20% of the respondents feel that dhurgapur steel plant is fast moving in steel industry,18% of the respondents feel that bokaro steel plant is fast moving in steel industry and 34% of the respondents feel that Visakhapatnam steel plant is fast moving in steel industry.

FAST MOVING BRAND IN STEEL INDUSTRY

TABLE NO :7ORDER AND REPLACEMENT WITH VIZAG STEELLEVEL OF SATISFACTIONNO OF RESPONDENTSPERCENTAGE

HIGHLY SATISFIED1734

SATISFIED612

AVERAGE1122

DISSATISFIED816

HIGHLY DISSATISFIED816

TOTAL50100

INFERENCE:From the above table,it is inferred that 34% of the respondents are highly satisfied with order and replacement of the vizag steel ,12% of the respondent are satisfied with order and replacement of the vizag steel,22% of the respondents feel that average with order and replacement of the vizag steel,16% of the respondents are dissatisfied with order and replacement of the vizag steel and 16% of the respondents are highly dissatisfied with order and replacement of the vizag steel.

ORDER AND REPLACEMENT WITH VIZAG STEEL

TABLE NO:8AVAILABILITY OF THE VIZAG STEELLEVEL OF SATISFACTIONNO OF RESPONDENTSPERCENTAGE

HIGHLY SATSIFIED1224

SATISFIED1428

AVERAGE816

DISSATISFIED816

HIGHLY DISSATIFIED816

TOTAL50100

INFERENCE:From the above table it is inferred that 24% of the respondents are highly satisfies with availability of the product,28% of the respondents are satisfies availability of the product,16% of the respondents are average with availability of the product, 16% of the respondents are dissatisfied with availability of the product and , 16% of the respondents are highly dissatisfied with availability of the product

AVAILABILITY OF THE VIZAG STEEL

TABLE NO:9MARGINS OFFERED BY VIZAG STEEL PLANT

LEVEL OF SATISFACTIONNO OF RESPONDENTSPERCENTAGE

HIGHLY SATISFIED1530

SATISFIED816

AVERAGE1326

DISSATISFIED816

HIGHLY DISSATISFIED612

TOTAL50100

INFERENCEFrom the above table it inferred that 30% of the respondents are highly satisfied with margins offered by the product, 16% of the respondents are satisfied with margins offered by the product, 26% of the respondents are average with margins offered by the product,16 % of the respondents are dissatisfied with margins offered by the product, 12% of the respondents are highly dissatisfied with margins offered by the product.

MARGINS OFFERED BY VIZAG STEEL PLANT

TABLE NO:10

SATISFIED WITH VIZAG STEEL DEALERSHIP

SATISFIEDNO OF RESPONDENTPERCENTAGE

YES2856

NO2244

TOTAL50100

Inference

From the above table, itisinferred that56%ofthe respondents satisfied withtheVizagsteeldealership,andother38%oftherespondentsnotsatisfiedwith theVizagsteeldealership.

SATISFIED WITH VIZAG STEEL DEALERSHIP

TABLE NO : 11ADVERTISEMENT OF THE VIZAG STEELADVERTISMENTNO OF THE RESPONDENTPERCENTAGE

TOO HIGH1530

HIGH918

MODERATE816

LOW918

TOO LOW918

TOTAL50100

INFERENCEFrom the above table it is inferred that 30% of the respondents feel that advt. offered by vizag steel is too high, 18% of the respondents feel that advt. offered by vizag steel is high, 16% of the respondents feel that advt. offered by vizag steel is moderate, 18% of the respondents feel that advt. offered by vizag steel is low, 18% of the respondents feel that advt. offered by vizag steel is too low.

ADVERTISEMENT OF THE VIZAG STEEL

TABLE NO: 12

SALES PROMOTIONAL EFFORTS OF THE VIZAG STEELOVERALL RATENO OF RESPONDENTPERCENTAGE

EXCELLENT1428

VERY GOOD 714

GOOD1122

AVERAGE714

POOR1122

TOTAL50100

INFERENCEFrom the above table it is inferred that 28% of the respondents feel that sales promotional is excellent, 14% of the respondents feel that sales promotional is very good, 22% of the respondents feel that sales promotional is good, 14% of the respondents feel that sales promotional is average, 22% of the respondents feel that sales promotional is poor

SALES PROMOTIONAL EFFORTS OF THE VIZAG STEEL

TABLE NO: 13

LIFETIME OF THE OVERALL STEELBRANDNO OF RESPONDENTSPERCENTAGE

ROURKELA S.P714

BHILAI S.P1326

DHURGAPUR S.P48

BOKARO S.P1020

VISAKHAPATNAM S.P1632

TOTAL50100

INFERENCE:From the above table ,it is inferred that 14% of the respondents feel that Rourkela steel is having more life time, 26% of the respondents feel that bhilai steel is having more life time, 8% of the respondents feel that dhurgapur steel is having more life time, 20% of the respondents feel that bokaro steel is having more life time, 32% of the respondents feel that Visakhapatnam steel is having more life time

LIFETIME OF THE OVERALL STEEL

TABLE NO: 14RELIABILITY OF THE VIZAG STEEL OVERALL RATENO OF RESPONDENTSPERCENTAGE

EXCELLENT1530

VERY GOOD918

GOOD1122

AVERAGE714

POOR816

TOTAL50100

INFERENCE:From the above table, it is inferred that 30% of the respondents feel that reliability of the product is excellent, 18% of the respondents feel that reliability of the product is very good, 22% of the respondents feel that reliability of the product is good, 14% of the respondents feel that reliability of the product is average, 16% of the respondents feel that reliability of the product is poor.

RELIABILITY OF THE VIZAG STEEL

TABLE NO : 15PAYMENT TERMS OF THE VIZAG STEELOVERALL RATENO OF RESPONDENTPERCENTAGE

EXCELLENT1632

VERY GOOD816

GOOD816

AVERAGE1122

POOR714

TOTAL50100

INFERENCE:From the above table it is inferred that 32% of the respondent feel excellent with payment terms of the vizag steel,16% the respondent feel very good with payment terms of the vizag steel, 16% the respondent feel good with payment terms of the vizag steel,22% the respondent feel average with payment terms of the vizag steel, 14% the respondent feel poor with payment terms of the vizag steel

PAYMENT TERMS OF THE VIZAG STEEL

TABLE NO: 16MARKET RESEARCH IN THE STEEL INDUSTRYBRAND NO OF RESPONDENTSPERCENTAGE

ROURKELA S.P918

BHILAI S.P1020

DHURGAPUR S.P816

BOKARO S.P1020

VISAKHAPATNAM S.P1326

TOTAL50100

INFERENCE:From the above table it is inferred that 18% of the respondents feel that Rourkela steel plant is doing market research in steel industry, 20% of the respondents feel that bhilai steel plant is doing market research in steel industry, 16% of the respondents feel that dhurgapur steel plant is doing market research in steel industry, , 20% of the respondents feel that bokaro steel plant is doing market research in steel industry,and 26% of the respondents feel that Visakhapatnam steel plant is doing market research in steel industry.

MARKET RESEARCH IN STEEL INDUSTRY

TABLE NO:17DELIEVERY PERIOD BY VIZAG STEEL DELIEVERY PERIODNO OF THE RESPONDENTPERCENTAGE

1-3 DAYS1428

3-51122

5-10816

10-13816

13-15918

TOTAL50100

INFERENCE:From the above table it is inferred that 28% of the respondents answered that within 1-3 days they are getting their product, 22% of the respondents answered that within 3-5 days they are getting their product, 16% of the respondents answered that within 5-10 days they are getting their product,16% of the respondents answered that within 10-13 days they are getting their product, 18% of the respondents answered that within 13-15 days they are getting their product.

DELIEVERY PERIOD BY VIZAG STEEL

CHAPTER -5FINDINGS, SUGGESTIONS AND CONCLUSIONS

FINDINGS OF THE STUDY 36% of the respondents are having Visakhapatnam steel plant dealership. 30% of the respondents feels that Visakhapatnam steel plant is having high sales volume. 30% of the respondents are considering most valuable suppliers from the dealers point of view. 28% of the respondents feel that quality of the product is excellent. And 12% of the respondents feel quality is poor. 28% of the respondents satisfied with price of the product.and 16% of the respondent not satisfied with the price of the products. 34% of Visakhapatnam steel plant is moving fast brand in steel industry. 34% of the respondent feel that order and replacement is highly satidfied . and 16% of the respondents feel that highly dissatisfied. 28% of the respondents satisfied with availability of the product , and 16% of the respondents are highly dissatisfied. 30% of the respondents highly satisfied with margins offered by the product. And 12% of the respondents feel that margins of the product are highly dissatisfied.

56% of the respondents satisfied with Visakhapatnam steel plant dealership. And 44% of the respondents not satisfied. 30% of the respondents feel that advertisement offered by Visakhapatnam steel plant is too high. And 18% of the respondents feel that advertisement is low. 28% of the respondents feel that sales promotional efforts of the Visakhapatnam steel plant are excellent. 22% of the respondents feel that poor. 32% of the Visakhapatnam steel plant products are having more life time. And 8% Dhurgapur steel plant product has less life time from others. 30% of the respondents satisfied with reliability of the Vizag steel. And 16% of the respondents not satisfied. 32% of the respondents satisfied with the payment terms of the Vizag steel and 14% of the respondents not satisfied. 28% of the respondents satisfied with delivery period of the product within 3 days. And 16% of the respondents not satisfied.

SUGGESTION Visakhapatnam steel plant should concentrate in credit facility of the dealers. Visakhapatnam steel plant should concentrate on sales man visit for wide marketing Visakhapatnam steel plant should do more market research and get feed back. Visakhapatnam steel plant should concentrate to fulfil the service for the dealers required.

CONCLUSIONAfter analysis of the data we have concluded that Visakhapatnam steel plant has conquered first place because the sales volume of it is very high compare than others and the awareness of the Visakhapatnam steel plant is very high in Visakhapatnam district.Moreover viskhapatnam has good dealership with dealers.Visakhapatnam steel plant has to improve its sales promotional efforts as well as follow some strategies through effective market research and get feedback from their consumers and customers(dealers). And give more advertisement so that move powerful than others and fixed the standard price.At the same time quality ,availability and delievery time of the Visakhapatnam steel plant is good.IN SIMPLE WORDS VISAKHAPATNAM STEEL PLANT IS IN DEVELOPED STAGE IN VISAHAPATNAM DISTRICT

BIBLIOGRAPHY

TEXT BOOKS Philip Kotler (2002), Marketing ManagementPrentice Hall of India, New Delhi, Eleventh Edition. Kotler and Armstrong (2001),Principles of Marketing Prentice Hall of India, New Delhi. Samars and Barner (1987), Fundamentals of Marketing Mc Graw Hill Company, Ryerson, Eight Edition. C.R.Kothari (2003), Research Methodology Wishwa Prakashan, Mumbai. Leon G.Schiffman & Leslie Lazar Kanuk (2003), Consumer Behavior Pearson Education, New Delhi.

Websites Visited: www.vizagsteel.com www.indiansteelindustry.com www.wikipedia.com www.google.com

ANNEXURE

QUESTIONNAIREDECLARATION : I,OM PRAKASH BASRANI pursuing BBM from Gitam university have undertaken research on the topic A study on DISTRIBUTION CHANNEL profile in VISAKHAPATNAM STEEL PLANT/RINL. I humbly request you to spare your valuable time in offering your opinion on the various aspects relating to the topic and thus helping me to