A Project Report On entrepreneurship mgmt

7/27/2019 A Project Report On entrepreneurship mgmt

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A PROJECT REPORT ON

ENTERPRENEURSHIP MANAGEMENT OF TATA STEELINDUSTRY

SUBMITTED BY

PRASAD A. AMBRE

ROLL NO: 2

FOR THE DEGREE OF

M.COM (PART I) MANAGEMENT

UNDER THE GUIDANCE OF

PROF. FULMALI

M.L.DAHANUKAR COLLEGE OF COMMERCE,

DIXIT ROAD, VILE PARLE, EAST, MUMBAI 57

ACADEMIC YEAR 2013-14


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DECLARATION

I, MR. PRASAD AMBRE STUYDING IN M.L.DAHANUKAR COLLEGE OF

COMMERCE STUDENT OF M.COM PART- I (SEMISTER 1ST). HERE BY

DECLARE THAT I HAVE COMPLETED PROJECT ON

ENTERPRENEURSHIP MANAGEMENT OF TATA STEEL FOR THE

ACADEMIC YEAR 2013-14, AS PER THE REQUIREMNETS OF THE

UNIVERSITY OF MUMBAI AS A PART OF MASTER OF COMMERCE- 1

(M.COM) PROGRAMME.

THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO

THE BEST OF MY KNOWLEDGE.

DATE:

PLACE: (PRASAD AMBRE)


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ACKNOWLEDGEMENT

This satisfaction that accomplishes the successful completion of any work is when

we say thank you to the people who made it possible, whose constant

encouragement and guidance has been a source of inspiration throughtout the

Completion of project.

Firstly I extend my thanks to the various people who have shared their opinion

and experiences through which I received the required information which is

Crucial for my project.

Finally, I express my thanks to Professor FULMALI who gave me this opportunity

to learn the subject and guided me with valuable suggestions


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A project on

Entrepreneurship management

of

Tata iron & steel co.

a


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INDEX

\

Sr

no.

Particulars

1 introduction

2 history

3. Major happenings

4 Various policies of Tata steels

5. Modernization programme

6 Future projects

7. National steel policy

8. Swot analysis

9. Business plan

10. Product life cycle11. Bibliography


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INTRODUCTION:

Contribution in the development of Indias economic growth:The Indian steel industry is more than 100 years old now.

The first steel ingot was rolled on16th February 1912 - a momentous day in the

history of industrial India. Steel is crucial tot he development of any modern economy

and is considered to be the backbone of the human civi li zation . Th e lev el of per ca pi ta

consumption of steel is treated as one of the important indicators 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 flow 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 largel y shaped by thestrength of the ir steel industr ies in their initial stages of development India is the 7

the

Largest steel producer in the world, employing over 1/2 million people directly with a

cumulative capital investment of around Rs.1 lakh crore. It is a core sector

essential for economic and social development of the country and crucial for its

de fe ns e. Th e Ind ia n iron and steel industry contributes about Rs.8,000 crore to the national

exchequer in the form of ex ci se an d cu st om du ti es , ap ar t fr om ea rn in g

foreign exchange of approx imately Rs .3 ,000 crore through exports .

Consumption of finished steel grew by 5.9 % and increased to24.9 million tones.

steel consumption is likely to increase at a rapid pace in future due to largeinvestments planned in infrastructure development, increase urbanization and

growth in key steel sectors i.e. automobile, construction and capital goods. The Indian steel

industry has emerged as one of the core sectors in the Indian economy with a

very significant impact on economic growth. India with its abundant availability

of high-grade iron ore, the requisite technical base and cheap skilled labour is

thus well placed for t h e d e v e l o p m e n t o f s t e e l i n d u s t r y a n d t o

p r o v i d e a s t r o n g m a n u f a c t u r i n g b a s e f o r t h e metallurgical industries. Th e

deregulated Indian steel industry is performing at its peak level in almost all

spheres. The total production of finished steel from April 2004 to March 2005 has

been estimated to be about 383.25 lakh tones as against the production of

369.57 lakh tones during the same per iod la st ye ar sho win g a n i ncr eas e o f

3 .7 %. T he mo st sp ec ta cu la r ac h ie ve me nt ha s, however, been recorded in export

performance. Steel has so far proved to be the si ngle k ey fa ctor res ponsib le fo r

ind us tr ia l p ro du ct io n a nd t h er eb y , f o r ec o n o mi c g r o w t h . A n d i t i s g ro w in g

from strength to strength with newer developments-


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B o t h w i t h i n s t e e l m a k i n g p r a c t i c e a s w e l l a s e n g i n e e r i n g d e v e l o p m e n t s ,

w h i c h a s k f o r m o r e u s a g e o f s t e e l . S o m u c h s o , t h a t e c o n o m i c

d e v e l o p m e n t h a s b e c o m e almost synonymous with steel

Major Happening: Political:I n t h e 1 9 2 0 s a n d 1 9 3 0 s , w h e n i t w a s s t i l l c a l l e d T a t a I r o n a n d S t e e l

Company, TISCO'slargely tribal workers fought pitched battles with the

European or Parsi management. Work conditions and the right to organize were

important rallying issues, and over the years, the company developed a reputation for

union-busting, often by violent means. The value of Dorabjis Expansion Programmed

came to be appreciated only during the phase when world was reeling under the

pressure of the Great Depression. The Tatas survived the depression

and supplied nearly ofthe countrys steel requirements. By the Second World

W a r , T a t a s p r o d u c t i o n c a p a c i t i e s h a d e x p a n d e d e n o u g h t o m a k e t h e i rp r i c e s l o w e r t h a n those of steel produced in England raising them to an authoritarian

position. By t h e 19 80s , t h e g o ve rn m en t w a s c l ea r ly i n c o n t ro l o f w h a t h a d

c o m e t o b e c a l l e d t h e c o m m a n d i n g h e i g h t s o f e c o n o m y . M o r e t h a n 4 5 %

o f o u t p u t i n o r ga n i z e d i n d u s t r y c am e from the public sector as well as bank and

other long-lending institution. In 19 81- 82, eigh t of the larges t f irms in Ind ia were in

the public sector, as were 24 out of the top 30 in terms of total capital employee.

In this sense it could be said that Nehrus goals when he had began the planning

process had been achieved. But this success has to be seen in th e co nt ex t of

t h e f a c t t h a t i n d u s t r i a l g r o w t h r a t e s h a d l a g g e d a t a b o u t 4 % p e r

annum between 1964-65 and 1975-76.This rate was in sharp contrast to whatwas happening

i n t he A s i a n e c o n o m i e s a n d i n S o u t h e a s t A s i a . T h e s e c o u n t r i e s h a d a c h i e v

e d c o n s i s t e n t h i g h growth by opening up their markets and by abandoning policies of

import substitution.In di ra Ga nd hi in he r s ec on d s t i nt as pr im e m in is te r w as

not wil l ing to inaugurate a new industr ia l pol icy that departed from the

socialist pattern put in place by her father. Yet she was far too astute not to

recognize the signs of crises that were waiting in the wings. She made the

g e s t u r e t h a t h e r g o v e r n m e n t s u p p o r t s t h e e x p a n s i o n a n d m o d e r n i z a t i o n

o f t h e private sector. The basic elements of the new policy began to emerge against the

background of the India Special Drawing Rights billion-dollar loan agreement with

the International Monetary Fund to cope with the balance of payment deficits.

Tata Iron & Steel Company Ra j i v Ga nd hi - Bo th in te rn al & ex te rn al f i na nc e

sh or tag es wer e w or sen in g. Tr ade def ic i t increased from 10 b i ll ion in 1983-

84 to Rs. 34 billi on in 1985 -86 s o it be came di fficul t to repay loan.


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Economic:

TATA Steel, formerly Tata Iron and Steel Company Ltd (Tisco), the company around which the

entire township of Jamshedpur was built, was registered in Bombay (now

Mumbai) on August 26, 1907. It had an initial capacity of 160,000 tones of pig

i ro n, 100 ,000 t on es o f in g o t s t ee l , 70 ,0 00 t o n e s o f ra i l s , b ea m s a n d s h a p e s

and 20 ,0 00 ton es of ba rs , hoo ps and roids. It also had a powerhouse,

auxiliary facilit ies and a laboratory. It was in 1955 that Tata St e el be ga n it s

t w o m i l l i o n - t o n e e x p a n s i o n p r o g r a m m e d , t h e l a r g e s t p r o j e c t i n t h e

pr iv at e sector at that time. The project was completed in December 1958.

Beginning in the 1980s, the company undertook in various phases an ambitiousmodernization programmed. The first phase, between 1981 and 1985, involved a

total project cost of Rs.223 crores. This phase, among other things, saw the

installation of two 130 tone LD converters, two 250 tone a day oxygen plants, a

bar forging machine, two vertical twin-shaft lime kilns and a tar-dolo brick plant.

Significantly, a six-strand billet caster and a 130-tone vacuum arc refining unit

were installed, that too in the integrated steel plant. The second phase (1985-1992),

involving a project cost of Rs.780 crores, saw for the first t i me in In di a co al

i n j e c t i o n i n b l a s t f u r n a c e s a n d c o k e o v e n b a t t e r y w i t h 5 4 o v e n s u s i n g

stamp-charging technology. Apart from this, a 0.3 mtpa (million tone per annum)

wire rod mill, a 2.5 mtpa sinter plant, a bedding and blending plant and a waste

recyc ling plant of 1mtpa were installed.

(2)

The cost of the third phase (1992-1996) of the project was a whopping Rs.3,600

crores, and that of the fourth phase (1996-2000) Rs.1,300 crores. The company

recently commissioned its 1.2 mt (million tone) capacity Cold Rolling Mill

Complex at a project cost of Rs.1,600crores. This four-phase modernization

pro gra mmed has enab led Tata Stee l to be equ ipp ed with the most modern steel-

making facilities in the world. As of today, the Tata Steel facility has a hot metal capacity of 3.8

mtpa and a crude steel capacity of 3.5 mtpa, corresponding

toa s a l a b l e s t e e l c a p a c i t y o f 3 . 4 m t p a . T a t a S t e e l h a s

b e e n i n t h e f o r e f r o n t o f I n d i a s industrialization and an engine ofgrowth. It is part of Tata Group, a prestigious, family-owned Indian multinational

with 2005 revenue s of $17.8 billi on, th e eq uivale nt o f abo ut 2.8 % of India's GDP.

Tata Steel's acquisition of Corus was a marriage made in heaven. Tata acquired Corus,

which is 4 times larger than its size and the largest steel producer inU . K. Th e

d e a l , w h i c h c r e a t e s t h e w o r l d s f i f t h l a r g e s t s t e e l m a k e r , i s I n d i a s

l a r g e s t e v e r foreign takeover and follow Mittal steels $31 billion acquisition of

rival Arcelor in sameyear.Tata acquires corus on the


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of April 2007 for a price of $12 billion. The price per sharewas 608 pence, which is

33.6% higher the first offer which was 455 pence.For the fiscal year ended March 2006,

the comp any gen erat ed revenu es of $3, 693. 6mi lli on (IR17,144.22 Crores), an increase

of 0.1% over the previous fiscal year. The company saw ane t i n c o m e o f $ 7 5 5 . 4 m i l l i o n

( I R 3 , 5 0 6 . 3 8 C r o r e s ) , a n i n c r e a s e o f 8 % o v e r f i s c a l 2 0 0 5 months

Social:Social responsiveness became integral to organizational objectives of Tata Steel, even

beforethe company was established in 1907. In 1970, however, Tata Steel formally

incorporated itscommitm ent to the stakeho lder concern s, includi ng those of the

nation, and environment, inits Articles of Association. The Company shall haveamong its objectives the promotionand growth of the national economy through

increased productivity, effective utilization

of m a t e r i a l s a n d m a n p o w e r r e s o u r c e s a n d c o n t i n u e d a p p l i c a t i o n o f m o d

ern scientific andmanagerial techniques in keeping with the national

aspirations, and the Company shall bemindful of its social and moral

respon sibil ities to the consume rs, employ ees, shareho lders ,society and the local

community.

F o r J a m s e t j i T a t a , t h e p r o g r e s s o f e n t e r p r i s e , w e l f a r e o f p e o p l e

and the hea lth of theenterpr ise were inextr icably l inked. Wealth and the

generat ion of wea lt h have never "be en ends in themselves, but a means to an end, forthe increased prosperity of India.Tata Steels efforts at environment management are

well recognized. Its Steel Works in J a m s h e d p u r , a l l i t s m i n e s , c o l l i e r i e s a n d

ma nu fa ct ur in g di vi s i on s in it s ou t lo ca ti on s ar e certified to ISO-14001.

Jamshedpur is the only town in the country which has an ISO-

14001c e r t i f i e d s e r v i c e p r o v i d e r . S i g n i f i c a n t a c h i e v e m e n t s

b y t h e C o m p a n y i n c l u d e a n i mp r ov em en t i n e nv ir on m en t a nd

res o u rc e c o n s erva t io n , in c lu d in g a red u c t io n in g reen h o u s e ero s io n , ra w

materials and water consumption. The Company has increased wastereuse and

recycling.T h e h e r i t a g e o f r e t u r n i n g t o s o c i e t y w h a t t h e y e a r n e v o k

e s t r u s t a m o n g c o n s u m e r s , employees, shareholders and the community. This

heritage will be continuously enriched byformalizing the high standards of behaviour expectedfrom employees and companies.The TATA name is a unique asset representing Leadership with

Trust. Leveraging this assetto enhance group synergy and become globally

competitive is the route to sustained

g r o w t h a n d l o n g t e r m s u c c e s s . V a l u e s T r u s t e e s h i p I n t e g r i t y R e s p e c t f o r I

ndividual Credibi l ityExcel lence.


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Various Policies of Tata Steel:

Quality Policy

Safety Occupational Health and Environmental Policy

Human Resource Policy

Social Accountability Policy

Corporate Social Responsibility Policy

Drug & Alcohol Policy

HIV+ & AIDS Control Policy

Energy Policy

Towards organization:Tata was the 1

stcom pan y t o a men d i ts art ic le s o f a sso c i at i on including the

clause of social welfare.

Towards shareholders:

Equal participation, straight forward business policy.

Towards employees:

P i o n e e r o f P . F . s c h e m e , f r e e m e d i c a l a n d w o r k m e n s c o r p o r a t i o n fund.

Towards Society:

India should not be a economic super power but a happy country.

Towards government:

Suggestions of economic reforms and high tax Payer Company.

Towards consumers:


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Consumer is the king of market. Quality products & services timely solutions of

problems T a t a S t e e l i s a s i g n a t o r y t o t h e U n i t e d N a t i o n s G l o b a l

C o m p a c t , a n d a b i d e s b y i t s 9 p r in ci pl es t hat add re ss i ssu es o n Hu ma n

Rights, Labor Rights and Environment, etc

Tata Iron & Steel Company

Plantation of 1 lakh trees i n and around Mumbai in collaboration with the

NationalSociety of the

Friends of the Trees

S p e c i a l p r o j e c t w i t h M / s N E E R I , i n o r d e r t o a s s e s s t h e c a r r y i n g c a p a c i t y

o f t h e region and to ensure

sustainable development in the region

Technology:

(5)

Tata Steel has been fortunate to have l eaders and a rich reservoir of committed

people whocould see clearly through the fu ture and transformed the plant into a

modern technologicalgiant with the power of their meticulous envisioning,

strategy and planning, through severalmod er niz at i on pr ogr amm es ha vi ng

s p e n t mo re t h a n Rs . 70 000 m i l l io n s o n e n v i ro n m en t - f rien dly t ec hn olog ies

since 1980. Installation of a modern Cold Rolling Mil l Complex, builtat global

speed and cost, is not only the epitome of Tata Steels modernization

pr og ra mme, but also remains a global benchmark in project management of its kind. It is also

w o r t h w h i l e t o m e n t i o n t h a t t h e C o m p a n y l o s t d e a r l y f o r t h e i rd e c i s i o n o n t h e i n s t a l l a t i o n o f E O F ( En er gy

O p t i m i z i n g F u r n a c e ) a t J a m s h e d p u r W o r k s , a n d C R M ( C o l d R o l l i n g

Mi l l ) a t Gopalpur in Orrisa.Th e Ta ta s mad e a gre at con tr ibu t i on in man po wer

de ve lo pme nt f i e l d t oo. Fr om the ver y beginning the Tatas invested

substantial t ime, money and resources in training schemes. In1 92 1, th e

J a m s h e d p u r T e c h n i c a l I n s t i t u t e w a s s e t u p w i t h a p u r p o s e t o r e p l a c e

f or e ig ntechnical experts with their Indian counterparts. Furnished with super-

so ph ist ica te d la bs ,advanced training aids and other infrastructural facilities, the Technical

Training Institutes

inJ a m s h e d p u r i s t o d a y o n e o f t h e b e s t i n t h e c o u n t r y . R e ce n t l y , a n e w M a n a g e m e n t Development Centre has been built at Dimna

to impart advan ced man ag ement train ing to middle and senior level managers in the

Company.


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Modernization

Programme

8


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Tata Iron & Steel CompanyInstallation of a modern Cold Rolling Mill Complex, built at

global speed and cost, is not o n l y t h e h i g h l i g h t o f T a t a S t e e l s

mo d ern iza t io n p ro g ra mm e, b u t a l s o r ema in s a g l o b a l b en ch ma rk in p ro jectmanagement of its kind. Besides, the Company has also completelyre v am pe d i ts

i n f o r m a t i o n t e c h n o l o g y i n f r a s t r u c t u r e t o s u i t i t s m o d e r n i z e d p l a n t . I t

s p e n t c l o s e t o R s . 4 0 c r o r e s o n S A P i m p l e m e n t a t i o n a l o n e .

T a t a S t e e l s m o d e r n i z a t i o n programmers are detailed in the section,

Technology at its Best of the chapter, Imperativesof Change Management.

Natural disaster:

Disaster Management & Relief

T a t a S t e e l h a s a l o n g h i s t o r y o f p r o v i d i n g r e l i e f d u r i n g n

a t u r a l c a l a m i t i e s . S o c i a l c o ns ci ou sn es s r un s d ee p d o wn t o t he l as t

emp lo y ee o f t h e Co mp a n y. Eve ry emp lo y ee c on tr ib ut es to su ch ca us es ,

complemented by an equal, or more, amount from the

C o m p a n y . B e s i d e s , e m p l o y e e s a l s o v o l u n t e e r t o a d m i n i s t e r r e l i e f o p e r a t i

o n s a n d p r o v i d e d i s a s t e r management services to other agencies involved.

Relief OperationsT a t a S t e e l s r e l i e f a n d r e h a b i l i t a t i o n p r o g r a m m e , l a r g e l y

ex ec ut ed by th e Ta ta Re li ef committee, is carefully planned and t ime-tested

to counter unforeseen devastation caused byfloods, drought and other natural

calamities, serving both immediate and long-term needs of those affected, by

offering them food, medical aid, rehabilitation, etc. It has even designedand

constructed buildings that can withstand natural calamities such as earthquakes.

CompanyI n d i a i s a d e v e l o p i n g c o u n t r y a n d i t s e c o n o m y i s g r o w i n g

v e r y f a s t . I n s t e a d o f t h i s e co no mi ca l gr owt h th er e i s n ee d f or

infrastructure to sustain this growth. The Governme ntenvisions India becoming a

developed nation by 2020 with a per capita GDP of $154010.F or a na t io n t ha t

i s e c o n o m i c a l l y s t r o n g , f r e e o f t h e p r o b l e m s o f u n d e r d e v e l o p m e n t

a n d p l a y s a m e a n i n g f u l r o l e i n t h e w o r l d a s b e f i t s a n a t i o n o f o v e r o n eb i l l i o n p e o p l e , t h e groundwork would have to begin right now. The Indian steel industry

will be required and iswilling to play a critical role in achieving this target.I f t h e s t e e l

i n d u s t r y g e a r s u p i n a b o u t 3 t o 4 y e a r s , I n d i a n s t e e l c a n b e b o t h i n

I nd i an an dforeign markets. Steel industry has seen a sunrise after a bad and

cloudy night. Worries of financial institutions are over and have taken an

exposure in this sector. Indian governmenthas planned for pumping in a lot


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of mon ey in in fr ast ru ctu re in com in g ye ars , h enc e ste el consumption will go

up manifold.

GDP per capita to increase from USD 2500 and USD 5000 in 2020.

Population growth rate of 1.3 - 1.5%

Continuously improving macro economic factors

A strong demographic profile : with a large consumer base

Growing urbanization

Stable social and political environment


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FUTURE PROJECTS

Indian Steel production likely to triple in next 15 years

National Steel Policy Projections


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G l o b a l c r u d e s t e e l c o n s u m p t i o n i s p r o j e c t e d t o i n c r e a s e t o

a p p r o x i m a t e l y 1,730 mtpa by 2020, driven by developing countries, including China. (Chart-

3)

W h i l e C h i n a i s b e c o m i n g t h e n e w s o u r c e o f d e m a n d , t h e

d e v e l o p e d economies as a whole still remain the largest portion of the worlds

steel consumption.(Chart-3)

Positive demand fundamentals in development economics. (Chart-3)

Roads and power:

The existing road network needs to be expanded and strengthened considerably

for reducingt r a n s a c t i o n c o s t s o f t h e I n d i a n s t e e l p r o d u c e r s . T h e

s t e e l p l a n t s a n d m i n e s n e e d t o b e i ntegrated wi th the on -goi ng

programmes of national highway development and also withthe proposed rural road

schemes for expanding the delivery chain of steel across the country,esp ec ia ll y th e ru ra l

areas. The additional requirement of power for the steel industry would be 7000

MW by 2019-2020, requiring an additional investment of Rs 24500 crore.

In order to achieve the goal of 110 million tones of steel production by 2019 -20,

t he N SP s e e k s t o r e m o v e t h e s u p p l y - s i d e c o n s t r a i n t s t o t h e g r o w t h o f

th is in du st ry in an op en , globally integrated and competitive environment. The

country would need an investment inthe range of Rs.1 lakh to 1.2 lakh crore in

creation of additional steel capacities by 2011-12.Related areas like minin g andpower will require an additional investment of Rs. 25,000

to3 0 , 0 0 0 c r o r e . F u r t h e r , t h e r e i s a n e e d t o r e t a i n f l e x i b i l i t i e s i

n t h e f i n a n c i a l s y s t e m t o e n c o ur a ge i n no v at i o n. T h er e a r e m a ny

a re a s o f t ec h n o l o g y d ev e lo p me n t a n d a d o p t io n , w hich c an b e r is ky bu t a ls o

highl y re warding . V enture capital ism n eeds to b e promote d at agreater pace for

early adoption of emerging technologies.

PEST Analysis of Steel Sector:

Political Factors:

On 19

th

Nov. 2008, 5% import duty slapped on steel to save the domestic market. In Oct.,

thegovernment also removed a 15% export duty on long steel products use by

the const ruct ion of two sectors road and power.Presen t gove rnme nt commitm ent that


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to make India an economic super power for that theyinspire globalization and brass

industries to improve GDP growth rate 8% to 10%.Ministry of Steel had no scheme to

i

mplement directly till 10th Plan (2002-07 ). In the 11thPlan (2007- 12) a new

scheme named Scheme for promotion of Research & Devel opmentin Iron and

Steel sector has been included with a budgetary provision of Rs. 118.00 croreforpromotion of research & development in the domestic i ron and steel sector. The

sc he me is presently at formulation stage.

Tata Iron & Steel CompanyChanging

in government policy increase competition which benefits to the consumers.Before BJP

government as ruler in 1999, there were no benefits got by steel industry.

After 1999 when BJP came the industrial people would have got the benefits from

EXIM a s t ax relief.Wh en Na r en d r a M o d i b ec a me t h e Ch i e f Min is t e r t h e s t ee li n d u s t r y h a s s t a r t e d g r o w i n g rapidly and the profit increased by Rs 9 to Rs. 13 per

Kg.The existing re gime of liberaliz ation, decontrol and deregulation of industry in

t he co un tr yh a s o p e n e d u p n e w o p p o r t u n i t i e s f o r t h e e x p a n s i o n o f t h e

s t e e l i n d u s t r y . W i t h a v i e w t o a c c e l e r a t i n g t h e g r o w t h o f t h e s t e e l

s e c t o r a n d a t t a i n i n g t h e v i s i o n o f I n d i a b e c o m i n g a d e v e l o p e d e c o n o m y

b y 2 0 2 0 , t h e M i n i s t r y o f S t e e l f o r m u l a t e d a

National Steel Policy(NSP)in 2005. The following are the salient features of the NSP:-(1) The NSP set

out a broad roadmap for the Indian Steel Industry in its journey towardsreform,

restructuring and globalization.(2 ) T h e l on g - t e r m go a l o f t he N SP i s t h at I nd ia

should have a modern and eff ic ient s teel industry of wor ld standards ,

cateri ng t o di versi fied steel demand. The f ocus of t he p olicy is to achieve global

competitiveness not only in terms of cost, quality and product-mix but alsoin terms of global

benchmarks of efficiency and productivity.Governme nt has a sch eme fo r rou ting the

allocation of steel material from main producerslike SAIL, RINL, and TATA STEEL to SSI

units, and other government departments (up to30% of the total allocation) through the

smal l scale ind ustr ies corp ora tio n, SSICs and als othrough National Steel Industry

Corporation NSIC where SSICs are either defunct or not

ine x i s t e n c e . I n o r d e r t o e n s u r e t h a t s m a l l s c a l e i n d u s t r i e s o b t a i

n t h e s e r a w m a t e r i a l s a s rea so na ble p rices, t he g overnmen t p ro vided

nominal handling charges of approximately Rs.50 0 pe r to ne to th e

c o r p o r a t i o n s o t h a t t h e c o r p o r a t i o n s u p p l y t h e s t e e l m a t e r i a l a s

th edoorstep of the SSI units.Po li t i ca l co mp ul si on s we re th e on ly re as on fo r

st ee l c om pan ie s t o c ut pr i ces . O the rwi se , steel prices have been looking up


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18

quite some t ime now and there has been good demand of ste el in do me st ic as

w e l l a s i n t e r n a t i o n a l m a r k e t s . I n s t e a d o f p r i c e s g o i n g u p , t h e y

a r e declining. The government had recently effected a 5% customs duty cut on non-alloy steel.

Steel prices to go up as Railways increases iron ore freight rates

In a move that may increase input cost for steel

cos

like Tata Steel, Essar, Jindal and IspatIndustries, Indian Railways has decided to

increase the freight rate of iron ore by around5%. The decision would push up

freight rates by about Rs 100-200 per tone depending onthe distance. The

decision was taken to soothe the inflationary pressure. The price of the

orecomprises between 30% to 45% (depending on the kind of iron and steel) of

the total priceof steel. Currently, the price of steel is a round $750-900 per tone

in the glob al market . Th egovernment has been fighting inflation due to rise in prices of

various raw materials, iron ore being one of them. The Railways transported 53.59

million tone of iron ore for exports in2007-08

Implementation of the National Steel Policy (NSP), 2005:

Tata Iron & Steel Company Freight equalization Scheme was withdrawn in January, 1992.

However, with the coming up of ne w st e el pl an ts in di ff er en t pa rt s of th e

co un t ry , ir on an d st ee l pr od uc ts ar e fr e el y available in the domestic market.

Recent years have witnessed unprecedented turmoil in the global steel market.

The crisisi nt h e i n t e r n a t i o n a l s t e e l m a r k e t m i g h t b e a t t r i b u t e d t o t h e m i s b a l a n c e

b et ween c ap ac it y, d ema n d a n d p r o d u c t io n a n d c o n s e q u en t d ro p in p r i c es .

T h r o u g h o u t t h e w o r l d t h e r e i s

a n a p p a r e n t o v e r c a p a c i t y ( e s t i m a t e d t o b e b e t w e e n 1 0 0 M t -

1 5 0 M t ) i n t h e s t e e l s e c t o r . According to the IISI, the companies have been selling

their products below costs to survive in global competition. S in ce 2001 , whil e growth has

been negative in most mature markets, Asia has maintained steady growth rate.

The A sian pr oductio n growth has mai nly be en dr iven b y the surge i n steel demand

and production in China. The huge Chinese appetite for steel has led the 10.2%surge in

output. The growth in Chinese steel de mand, generated mainly by demand from

infrastructure sector is a beacon for Indian steel since both the nations are

comparable on many counts.

(C)

The Indian steel manufacturers are faced with some major problems and

c o n c ern s , w h ic h w o rk a s in h ib i t in g fa c t o rs t o t h e i r e f fo r t t o w a rd s g a in in g

th e c omp et it iv e e dge . A f ew of these are:


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Unremunerative Prices:

Stagnat ing demand, domest ic oversup ply and fallin g p rices in thelast few years have

hit Indian steel makers. Barring the sporadic rise in demand in the recentmont hs , it has

suffered from unremunerative prices to the e xtent that companies have

beenfinding it difficult to maintain capital costs.

Stagnating Demand for Steel:

According to Mc-Kinsey and Co the domestic steel industryis set to wi tnes s a 33% over

capacity in the hot rolled coil sector by the year 2003 when thedomestic capacity

currently at 45%, in long products and semis is expected to drop at 22% by that

year. The non-flat products are also likely to face an over capacity of over 21.4%.

Lower Consumption:

Steel consumption in India over a period of time has exhibited astrategy correlation to GDP

growth (correlation coefficient of 0.9855 between 1960-1961and 1996-1997) and gross

domestic capital formation (0.981).The correlation with GDCF has been 1.0 for the

period FY 1994 to 1999. As investmentsdeclined from 1996 -1997 onwards, steel

consumption also decreased. Failure to DevelopTrade Especially International

Trade

.

Th e co un tr ie s wh ic h ha ve ac h ie ve d ma jo r gr ow th including growth in steelindustry, like Japan, China and South Korea have largely used their trading houses to develop

their markets abroad. In India, they have singularly failed to do so.As a result, Indian steel

indust ry doe s not h ave a major presence even in the neighbo ring countries.The

reasons for the same include lack of profit motive, wrong scale of assets, little or no co-

ordination between plants and markets, inappropriate logistics/locations, over-manning,

poor investment decisions, lack of innovation and inadequate investment in requisite areas.

Slow Industry Growth:T h e l i n k a g e b e t w e e n t h e e c o n o m i c g r o w t h o f a c o u n t r y a n d t h e gr owt h o f

its steel industry is strong. The Indian steel industry is no exception. The

g ro wt ho f t h e d o m e s t i c s t e e l i n d u s t r y b e t w e e n 1 9 7 0 a n d 1 9 9 0 w a s

s i m i l a r t o t h e g r o w t h o f t h e e c o n o m y , w h i c h a s a w h o l e w a s s l u g g i s h .

Th i s s lu g g is h g ro w t h in t h e s t ee l in d u s t ry h a s res ul ted in enh an ced r ival ry

among existing firms. As the industry is not growing the onlyot he r wa y t o gr ow

i s b y i n c r e a s i n g o n e . s m a r k e t s h a r e . C o n s e q u e n t l y , t h e I n d i a n


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20

s t e e l i n d u s t r y h a s w i t n e s s e d s p u r t s o f p r i c e w a r s a n d h e a v y t r a d e

discounts, which has doneIndian steel industry no good.

Social Factors:

C o r p o r a t e S o c i a l R e s p o n s i b i l i t y ( C S R ) h a s b e e n t o d e v e l o p t h e v i l l a g e sas mo de l st e el villages. All profitable steel PSUs have made commitments to the

c au se o f CSR a nd h aveea r ma r ked a t le a s t 2 % o f t h e i r d i s t r ib u t a b l e s u rp l u s

f o r C S R a c t i v i t i e s . T h e t o t a l b u d g e t a l l o c a t e d f o r C S R i n r e s p e c t o f t h e

P S U s fo r 20 07- 08 i s a r o u n d Rs . 230 .00 c ro r e . CS R a ct iv it ies foc us in g o n

environmental care, education, health care, cultural efflorescence and peripheral

development, family welfare, social initiatives and other measures are underway

in the PSUs. In view of the calamity brought in by the floods in UP, Bihar and Assam, some of

the PSUs organized immediate relief measures in these affected states

.

SAIL, NMDC Ltd. and RINL contrib uted Rs.5 crore, Rs.4 crore and Rs.2 crore

respectively towards the flood relief measures. All t he main producers have beenu rg ed b y t he M in ist ry t o a dop t v il lag es a r o u n d t h e i r p l a n t a n d a s p a r t o f

t h e i r C S R a c t i v i t y a n d h e l p . U s e o f s t e e l h a s b e e n emphasized in items

such as storage beans, bullock carts, buildings such as school buildings, p a n c h a y a t h a l l s ,

h e a l t h c e n t r e b u i l d i n g s , w a t e r t a n k s , w a i t i n g s h e d s e t c . 1 2 9 v i l l a g e s

a r e being developed into model steel villages.

Child labour is the issues of small scale sector of the steel industry. Children were

exp loi ted by paying them low wages. A d ecision was taken to have a t lea st one dea ler

in each district in order to make availabl esteel ite ms to common man. In order to

ensure the availability of commonly used items of steel in the rural areas acrossthe country, SAIL and RINL are expanding their distribution networks at a fast pace

with the objective of having dealers in all the districts of the country. Pr e f e r e n c e f o r S C ,

ST an d OB C ent and occupation.As id e it s lo ng hi st or y, Ta ta St ee l ha s

w r i t t e n t h e b o o k o n w e l f a r e m e a s u r e s i n I n d i a n Industry many of which,

have been subsequently followed by others i

Safety MeasuresFor improvement in the overall safety situation in the Iron & Steel industries in Indiafollowing

remedial measures need to be taken up:

T i g h t e n i n g t h e l e g a l s y s t e m s o t h a t a n y i n s t a n c e o f v i o l a t i o n o f

s a f e t y p o l i c y , w h e th e r by p ub l i c se c t o r o r pr i v a te s e ct o r , d o e s n o t go

u n p e n a l i s e d . T h e s y s t e m

o f f a c t o r y i n s p e c t o r a t e , s a f e t y o f f i c e r s a n d l e g a l f r a m e w o r k h a s

t o b e r e f u r b i s h e d according ly . There should be up-gradat ion in

legal provis ions to take car e of cha nges intechnologies / work environment so that

loopholes are plugged as far as possible.


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O H S M a n a g e m e n t s y s t e m a s p e r I L O g u i d e l i n e s a n d O H S A S 1 8 0 0 1 s h o u l d

b e adopted in all plants.

In India, many outdated technologies viz., twin hearth furnace, ingot making etc.

arestill being practiced in some stee l plants. These processes are hazardous topersonnelworking there and it is required to phase these out immediately to improve safety

in such plants. Apart from this, new technological development will also facilitate

attainment of safe work environment.

F i r e m o d e l i n g a n d h a z a r d r i s k a n a l y s i s s h o u l d b e d o n e i n a l l p l a

n t s f o r b e t t e r assessment of inherent risk/ hazard:

Social Audit (2002-03)

T h e S o c i a l A u d i t b e i n g r e p o r t e d , f o r t h e p e r i o d 1 9 9 1 2 0 0 1 , w a s

co nd uc te d du ri ng th e period 2002- 03 within the framework of the same

Terms of Reference as t hat of the 2ndSocial Audit. The Audit Panel comprised of

the following members recommended by theBoard:

Ms. Pheroza Godrej

Justice S. K. Mohanty

The late Justice D. N. Mehta (Retd.) (Chaired the Panel until June 2003, when he suddenly

Passed away)

Ms. Tarjani Vakil, MD, EXIM Bank (opted out during the initial phase of the Audit)The

Company nominated Mr. Ajit Jha, Resident Representative, New Delhi, Tata Steel,

asthe Secretary and Chief, Co-ordination, 3rd Social Audit, to provide

management support tothe Audit Panel, and later in the e valuation process, his

role mandated to be independent of intra-company domain. Subsequently, Mr. S.

K. Suman, Head, Co -ordination, Tata Steel,was nominated by the management to

provide research and report assistance to the

6

Tata Iron & Steel CompanyPanel . Mr. Jha and Mr. Suman assi duou sly checked the

facts and figures contained in

thisreport

7


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SWOT ANALYSIS

Earlier known as Tata Iron & Steel Companyupto 2005

Strengths of TATA STEEL:

1.

Mineral Reserves

Tata Steel has two collieries i

n West Bokaro and Jharia, inthe state of Jharkhand. The iron ore units are located in Noamundi,

Joda andKatamandi in the states of Jharkhand and Orissa. Tata Steel Limited also has

amanganese mines and dolomite quarries in Orissa. These mines are located at anapproximate

distance of 150 kms from Jamshedpur, home to the steel company'smanufacturing facility. The

Steel Company's iron ore units produce 9 million tons perannum of various grades of

high quality iron ore including rich blue dust ore. Thecompany in India is having mines of 281

million tones reserves in its mines inJharkhand and thus having minerals to cater its needs for

more than 20 years. Thecompany has also been acquiring stake overseas in Canada,

Mozambique, Australiaetc. to boast its reserves for clean coking coal which is rarely available in

India.

2.

Management Team

- Tata Steel has a highly credible management team who hasdisplayed their skills in

expanding the company through inorganic route. Thecompany has successfully acquired Nat

Steel of Indonesia, Millennium Steel of Thailand and more importantly Corus. The companys

virtuosos of finance have beenable to find innovative ways to tackle the companys bulgeoning

debt and keep thebottom line in the green zone despite lowering demand and huge debtsaccumulated.

3.

Information Technology

- The entire mining operation of the Company is safeguarded against accident occurrence.

Proactive measures are undertaken to ensurethe employee's health and productivity through

ergonomically designed work stationsand by protecting them from occupational hazards. All its

mines are ISO-14001 -Environmental Management System Certified. Tata Steel's collieries

use 'Surpac', astate-of-the-art mine planning software that estimates the volume of coal in

everyseam. This software is coupled with qualitative detailing that focuses on

outputconsistency. To maximize productivity and utilization, a voice and data equippedGlobal

Positioning System is used, which helps to supervise mining activity formachine movement and

engine status.

4.

Innovativeness of TATA Steel with respect to its competitors

- TataSteel has the lowest operating cost for steel manufacture in the world


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Further it has displayed effective means in adopting an eco-friendly andsustainable approach

towards the manufacture of steel thus

proactivemeasures are undertaken to ensure the employee's health and productivity

throughergonomically designed work stations and by protecting them from

occupationalhazards.

5.Adaptability of the company in the fast change of the environment

- Tata Steel has displayed immense agility in the recent past during the globalfinancial tsunami.

Its virtuosos of various fields have adopted variousmethods like lowering of production and

even shutting down of steel plantsowing to the lack of demand, managing the balance sheet

efficiently etc. Thecompany has 70% of its procurement of raw materials for its operations

inAsia through long term contracts and so its margins can be shielded from thenuances of the

volatility of the financial markets.6.

Brand value

- The TATA brand owing to its highly ethical and a socialisticapproach to business have made its

name synonymous to trust. After theacquisition of Corus another powerful brand, the brand value of the

companyhas enhanced further.7.

Corporate governance

- Tata Steel has had an impeccable record forcorporate governance. It has set the benchmark in

global corporategovernance principles of transparency, accountability and equity for others

tofollow. Tata Steel has been consistently receiving prestigious awards at boththe national and

the international arena. Recently it bagged the BestGoverned Company Award for corporate

practices presented by Asian Centrefor Corporate Governance.8.

Excellent integration with Corus

Corus has a great reserve of around2000 metallurgists and technology which could be

exploited by Tata Steel onseveral fronts.9.

Excellent procurement philosophy- Tata Steel has around 70% of itssupplies through long term contracts. Thus it can be shielded from

thevolatility of the financial markets.10.

Spawning upon opportunities

- Tata Steel has been amongst the earliestto spot the escalation in the demand for steel in

the forthcoming years. It hashence invested heavily in the expansion of its existing facility at

Jamshedpurand is setting up other green field projects at Orissa, Jharkhand etc

Weaknesses of TATA Steel-

1.

Huge debt burden

- Tata Steel is having a total debt of 10.2 billion USD inits books. It has a debt equity ratio 0f 1.6

which means that the assets of thecompany is largely financed through debt. With the inflation

on a rise thecentral banks of most all the countries are intending to tighten in the liquidityin the

money markets. As a result of which the interest rates are on a rise. InIndia the banks are

mulling the option of a rate hike and most analysts feelthat the RBI is going to increase the repo

rate by almost 100 bps further aftera CRR hike of 75 bps in late February this year. Thus it


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would add to theinterest burden of the company which would further increase the liabilities

of the company and thus degrade the quality of its balance sheet further.2.

High attrition rate

- Tata Steel has traditionally faced the brunt of highattrition rate. In its Jamshedpur plant many

engineers constantly change their jobs to SAIL in Bokaro and vice-versa. Thus the formation of a

core team of capable individuals across all departments is very difficult as the size of theteam isever changing.3.

Products in the portfolio lacking demand-

The company has certainproducts in its portfolio like aerospace steel which lacked demand in

therecent past. Primarily due to the slow down of the aviation sector which led todelay in the

delivery of aircrafts as a result of cutting of capacity by airlines. The company also had certain

Cast products largely marketing in the UK which has been witnessing slowdown in demand

since 2001. Hence thecompany had to close down its Tee Side plant.4.

Degradation in brand value owing to job losses-

TATA group has madeits name synonymous to job security of it employees. But the shutdown

of itsplants in the UK and The Netherlands will dent its image to a certain extent.As a result

of which around 1600 employees would lose their daily livelihood.5.

Low cost recovery

There are specific products like the aerospace steeland cast products which has received

feeble response in the past. Thecompany has failed to recover costs in this business front.6.

Laggard in technological front

- Companies like SAIL has efficientlyintroduced the XRF (X-Ray Fluorescence) in its plants at

Durgapur and Bokaroover 12 months back which the Tata Steel has failed to do.7.

Bad raw material procurement philosophy of its subsidiaries-

Thelargest subsidiary of Tata Steel,

Corus has high exposure to spot prices and a higher operational gearing among the

larger European steel companies. Hence it has the risk of volatilityassociated with pricing, oneof the key elements in determining profitability of a commodity

Opportunities

.

Competitive position of the company-

Tata Steel is the second largestproducer of steel in India and the sixth largest producer in the

world.2.

Newer technologies

i)

The Corex processcombines an iron melter/coal gasifier vessel witha pre-reduction shaft to produce a liquid

product that is very similar toblast furnace hot metal. Coal, oxygen, and pre-reduced iron are

fedinto the melter/gasifier to melt the iron and produce a highly reducingoff-gas.ii)

The HIsmelt process

Iron reduction and coal gasification take placein a liquid metal bath. The fundamental processes

of HIsmelt beganwith early experiments in Germany with bottom-blown oxygensteelmaking


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25

converters (LD, LD-AC, KMS, among others) to allow forcoal, lime, and/or iron ore injection

through the bottom nozzles.iii)

Direct Iron Ore Smelting

(DIOS) process in Japan and the AISI directsteelmaking process in North America produced

two similar routes tohot metal production. Both processes utilize a smelting reactor wherethe

primary reactions occur in a deep slag bath as opposed to in themetal phase.3.Opportunities in the field-

India has geared up for rapid expansion in thefield of infrastructure. The Government of India

(GoI) has earmarked Rs.1, 70,000 crore forinfrastructural spending for the fiscal year 2010-

2011 and the trend is set toescalate up to the fiscal year 2025 when India is slated to become

the thirdlargest economy in the world. Further many private players eitherindependently or by

undergoing public private partnerships (PPP) has alsocome into the fray. The consumption of

steel has been steadily increasingwith the rapid investment in the infrastructure and real estate

projects. Theannual steel production of India has touched 200MT and according togovernments

steel policy is expected to touch around 250 MT by 2013-2014. The demand for Indian made

steel is escalating overseas out of the 200 MT of steel currently produced in India around 50%

of it is exported. In the first sixmonths of the fiscal year 2009-2010 the Indian steel export

almost doubledto 9.3MT from 4.4MT in the same period the previous fiscal year. Thecountrys

iron ore exports during April-October 2009 period grew 20 per centover the year ago period to

53 million tons.4.

Acquisition opportunities -

In the aftermath of the financial tsunamivarious mineral assets are available globally at a price

which is just a shadeof their prime valuations. The government of various countries has

beenputting up coal blocks under the hammer. Tata Steel has been very active in

the asset acquisition space and has bagged various coal blocks in Asia, Africaetc. which isessential for its security of raw materials.5.

Opportunities for demand of higher prices

- The demand for steel is on arise both domestically and internationally as a result of the

enhanced focus uponinfrastructural development. Secondly with other steel projects of

internationalgiants POSCO, ARCELOR MITTAL stalled due to land acquisition problems

the pricesof steel are slated to soar. In the month of April 2010 the steel prices wereincreased

by Rs.2500/ton and this is just the brink of the U-Shaped economicrecovery and the prices are

slated to rise further in the near future.6.

The movement of Tata Steel in the value chain front-

India is the onlycountry in the world where steel can be made cheaper and there is

consumption. Then there are other countries like Ukraine, Iran, Brazil, Australia and

Bangladeshwhere steel can be made cheap because of the availability of iron ore and coal.

TataSteel has been to Iran, Ukraine, Bangladesh - all in the last year and is looking atChina for

finishing capabilities Ukraine is like India, where the factors of productionare competitive. The

sustainable level of demand in Ukraine is 12 million tons (MT),but one can make much more

steel because of the availability of ore. Secondly, thelabor is cheap in India and so is the cost of

energy


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.

Hence, Tata Steel's strategy isbased on breaking up this value chain and putting each part

where it's the mostcost-effective. So primary steel will be produced in India, where there are

largedeposits of iron ore. But the Asian markets, now a key focus for Tata Steel, will bebetter

addressed by taking the semi-finished steel to these countries for finishingand then selling

there. For now, Jamshedpur will provide the semi-finished steel forthe NatSteel bases.Tomorrow, it could well come from Iran or Ukraine; thesecountries have abundant iron ore and

are therefore ideal for primary steel making.

7 . I m p r o v e m e n t i n t h e q u a l i t y o f o p e r a t i o n s , p r o d u c t s ,

i n v e n t o r y management7.1 Strategic Sourcing Approach

Tata Steels approach is based on the principle that strategic procurement isan exercise

beyond cost reduction. Commodities used for steel-makingprocesses and their allied services

are being selected and prioritized forstudy using strategic sourcing tools, before their annual

procurement,depending upon their annual purchase value and criticality of application.After the

selection of the commodities, a Commodity Competence Team(CCT) is formed which is a cross-

functional team wherein people fromdifferent departments such as User/Operation,

Research and Development,Quality Control, MRO, Supply Management and Finance come

together toformulate sourcing strategies for a commodity purely on a techno-commercial basis.

After the formation of the CCT, the commodity studies arecarried out based on different

technical and commercial parameters as

Strategic Sourcing Levers

Strategic sourcing requires the application and interpretation of sophisticatedstrategic sourcing

tools and techniques. Tata Steel follows a variety of sourcing strategies, as shown in Figure 5,

with multifarious objectives whichare mentioned below: Decrease specific consumption and

specific cost of commodities on life-cycle costing basis. Source consistent qualityproducts.

Ensure continuous supply ofmaterials. To increase the productivity of blast furnaces or steel-

Melting shops bydecreasing the down time through the use of improved quality, cost-effectivematerials, wherever applicable

3 Total Refractory Management Concept

To ensure the quality of refractory, proper service and the life of cast houserunners which are

directly related to the hot metal production and also todecrease the total cost of ownership on

a life-cycle costing basis, a strategicdecision was taken to go for total refractory management.

In the totalrefractory management of cast house troughs for high-capacity blastfurnaces, the

supplier is responsible for the supply of the entire refractorymaterial for all the locations of cast

house troughs, initial installation, regularsupervision, maintenance of troughs through

casting till guaranteedthroughput hot metal is achieved and the supply of all kinds of

equipmentsrequired for installation and maintenance of cast houses.7.3.1 Vendor Selection through comparative assessment

A comparative analysis of the suppliers was carried out based on parameters,which includes

total throughput commitment of hot metal, throughput of hotmetal committed in between two

repairs, total down time of trough runners,a reference list of a suppliers customers, quality of

refractory to be used andlife-cycle cost of refractory in terms of Rs/ ton of hot metal (Rs/thm).

7.3.2 Reduction of Life-cycle cost


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7.3 Total Refractory Management Concept

To ensure the quality of refractory, proper service and the life of cast houserunners which are

directly related to the hot metal production and also todecrease the total cost of ownership on

a life-cycle costing basis, a strategicdecision was taken to go for total refractory management.

In the totalrefractory management of cast house troughs for high-capacity blastfurnaces, the

supplier is responsible for the supply of the entire refractorymaterial for all the locations of casthouse troughs, initial installation, regularsupervision, maintenance of troughs through

casting till guaranteedthroughput hot metal is achieved and the supply of all kinds of

equipmentsrequired for installation and maintenance of cast houses.

7.3.1 Vendor Selection through comparative assessment

A comparative analysis of the suppliers was carried out based on parameters,which includes

total throughput commitment of hot metal, throughput of hotmetal committed in between two

repairs, total down time of trough runners,a reference list of a suppliers customers, quality of

refractory to be used andlife-cycle cost of refractory in terms of Rs/ ton of hot metal (Rs/thm

A reduction of the total life-cycle cost. Of refractory, in terms of Rs/thm, hasbeen done by

proper selection of material, optimization of its amount toachieve the guaranteed throughput

and finally by knowledge-basednegotiation.

7.3.3 Benefit to Tata Steel

Reduced down time ofthe trough runners leading to higher rate ofproduction. Reduced

specific consumption of refractory in terms of kg/thm. Reduced overall cost ofownership due

to higher campaign life of refractories and also due to higher rate of production, as

the productivity of the blast furnace largely depends on the quality of refractories used at

thecast house. Different Sourcing Levers Applied for Procurement of High Value

and CriticalCommodities8. Time for diversification-

With the demand for various products of steelsoaring presents us with the right time for upstream

diversification.

Threats faced by Tata Steel-

1. Resources to cushion the from business environmental change-

Tata Steel is a company floated by Tata Sons whose assets are valued at


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around 108 billion USD and thus the company has enough reserves tocushion itself from market

fluctuations.

2. International competition-

Companies like the Indian Steel magnateLakshmi Mittals Arcelor Mittal, Posco has landed in

the shores of India andhave proposed to set up 8 MT and 12 MT respectively. These are

amongstthe largest steel producers in the world and have a high chance of eatinginto the

market share of Tata Steel. Indian market is also plagued withcheaper Chinese made steel


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which is ubiquitously available and issignificantly munching through the pie of all Indian steel

makers including Tata Steel.

3. Financial Crises -

Tata Steel is having a huge debt of 10.2 billion USD inits books and hence a huge interest

burden. With the volatility of thefinancial markets and the tightening of the liquidity by

the central banksthis rate is slated to go up and hence would further increase theinterestburden of the company.

4. Adoptability of the company to technological changes

Tata Steelhas shown immense integration abilities in the past. With the acquisitionof it has

been able to imbibe the high end technological knowledge to itsproduction facilities and hence

has been able to produce high quality steelat least prices and significantly bettered its

operating margins.

5. Regulatory norms-

The government of India has chalked a strict normfor the clearance of a plant through

environmental impact assessment(EIA). To get clearance from the concerned authority

demands more thaneight months thus leads to delay and project cost escalation. Albeit

thegovernments steel policy has been pro industry in order to increase thesteel capacity at

a brisk pace.

6. Adverse effects of land acquisition picketing-

India is plagued withviolent agitation against land acquisition. The land acquisition process

ofthe companys plant in Orissa has been stalled primarily due to theuprising of the land losers

in the concerned area. Albeit the company isproviding with attractive compensation packages,

the uprising is primarilydue to the cheap politics of the local leaders to come into the

limelight. This will severely dent the companys expansion plans of the future.

7. Decrement in the sales volumes-

Some of the Tata Steel products(likeaerospace steel) have witnessed a severe reduction in sales

and as aresult of which the production facilities of the company in the UK and TheNetherlandsis facing the brunt of shut down.

8. Brand equity of the products-

Tata Steel brand is a very powerful one,can only take a product very far. Beyond that it will be

necessary for theroduct to strike ahead with its own brand. He says, "A villager who goesto buy

steel in the marketplace does not know what Tata Steel is bringingto this steel. All he knows is

that it is a Tata product." That villager needsto be told about the superiority of Tata Steels

product over others. This isthe work of the brand. Branding has begun to yield rich dividends.

Lastyear Tata Steel sold about 345,000 tons of branded steel, whichrepresented about 12 per

cent of its total steel sales, as against 265,000tons, representing 9 per cent of total steel sales,

the previous year. Thisyear the company plans to more than double its volume of brandedsteel.Although the resultant increase in turnover of branded products will beenormous, there

are miles to go before Tata Steel can rest on its laurels.


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BUSINESS PLAN

Tata Steel Consulting provides business planning services to a range of

industrial sectors, including:

Iron and steel - all long and flat products

Tube and pipe

Foundry and forge products

Rail products

Iron ore mining

Engineering steels

Wire products

Metal fabrication industries

Steel distribution and service centres

Ferro alloys

The business planning group operates independently or in tandem with other groups within

Tata Steel Consulting and sometimes in collaboration with external organisations such as

management consultants and investment banks. As a result it can always call upon an

exceptional range of skills and experience to meet the diverse requirements of its clients.


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Clients

The business planning group has assisted a broad range of clients, in public and private sectors,

situated in a large number of countries.

Expertise

Assignments undertaken are diverse in terms of the problems and issues addressed. Tata Steel

Consulting has provided strategic assistance to numerous manufacturing companies.

Methodologies

A wide range of expertise and methodologies is employed by the business planning consultancygroup. The first stage of assignments often requires detailed analysis of market prospects for

the client company. This can involve extensive interview programmes in the metals consuming

sectors as well as economic and demand forecasts.

New Delhi: The world's seventh largest steel maker Tata Steel Ltd, a part of India's

diversified business conglomerate Tata Sons Ltd, plans to sell its stake in various groupcompanies, including Tata Motors Ltd, to raise fund for expansion and repay high cost

loans, the Business Standard reported citing unidentified bankers.

The steel major may garner as much as Rs 72 billion via selling its stake in group companies, the

bankers told the paper.

Presently, Tata Steel owns 5.6% equity stake, worth Rs 50.14 billion, in Tata Motors. Besides, it

also holds 51% stake in Tata Sponge; 73.4% inTinplate India; 54.5% in Tayo Rolls;32.5% in TRFLtd; 0.7% in Tata Power and 50% in Dhamra Ports.
http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/clients/http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/expertise/http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/methodologies/http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/methodologies/http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/expertise/http://www.tatasteelservices.com/en/products_and_services/consulting_services/business_planning/clients/


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The steel making company may sell these stakes to the holding company Tata Sons Ltd to raise

funds, which will be utilized for expansion in the Odisha state and repay higher cost loans,

bankers told the daily.

Early this year, Tata Steel was holding discussion with Adani Group to divest its holding in the

Dhamra port project (Odisha), media reports said, adding that the company is now awaiting the

Odisha government's approval to raise capacity so that it gets a better valuation for the loss-

making port company.

Tata Steel plans to spend around Rs 420 billion in its Odisha plant in two phases. Total

expenditure for the phase I has risen up to Rs 240 billion from the earlier estimated Rs 190billion on account of currency fluctuation and other cost overrun

Tata Steel Europe has won an order to manufacture 60,000 tonnes of high-quality rail

for a new high-speed line linking the two holy cities of Makkah and Madinah in Saudi

Arabia.

The new railway will allow millions of pilgrims to cross the 444km between the two

cities at speeds of 320kmh.

The line will cross desert, withstanding temperatures ranging from freezing to 50C, as

well as sand storms, flash flooding and shifting dunes, a statement said.

Grard Glas, rail sector head for Tata Steel, said: "This is a prestigious project which will

see the holy cities being linked by rail for the first time.

"Tata Steel is delighted to be contributing to this high-speed line, which will have to

overcome some major challenges presented by building a high-capacity rail line across some

of the most extreme terrain in the world."

Steel for the project will be made at Tata Steel's Scunthorpe plant in the UK before

being rolled into rail in lengths of 25 metres both there and at the company's plant in

Hayange, Northern France, he said.

Work on producing the rail will start at the end of this year and is expected to continue

throughout 2014.

Tata Steel rail has already been used successfully in similarly challenging conditions for

projects in Brazil and Mauritania, the statement added.


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Last year the Saudi Railways Organisation awarded the contract for the finalphase of

completing, running and maintaining the Haramain High-Speed Rail Project to a group of

Spanish infrastructure, construction and technology companies.

The new line is expected to carry around 160,000 people a day - and even more during

the Hajj pilgrimage. They will be transported on a fleet of 35 new high-speed trains.The project started in 2009, with an estimated cost of more than 12bn. The new rail

line is set to open to the public in late 2014 or early 2015.

Besides the two holy cities, the line will have three other stops, two in Jeddah for

commuters and one in Saudi Arabia's new King Abdullah Economic City, a residential,

industrial and commercial macro-complex that is still being built.

Spanish construction companies Copasa, Imathia and OHL are responsible for building

the line's superstructure and the track bases, as well as for the line's mechanisms.

PRODUCT LIFE CYCLE

Life Cycle AssessmentIn recent years concern for the environment has grown among national governments, industry

and the general public.

In consequence, there is pressure to improve manufacturing systems and change consumer

behaviour to progress towards sustainable development. Life Cycle Assessment (LCA) has

emerged as a leading tool for quantitative analysis of environmental impacts of products and

processes, which are often very complex. LCA measures the impact on the environment over

the course of a products lifetime, from the parts and materials that are used in its manufacture

through to its assembly, shipment, use, and ultimate disposal.

Major drivers for the increased use of LCA include:

Assessing and Improving Environmental Performance

LCA provides a holistic understanding of environmental performance; the impact on the

environment can be reduced not just in certain process stages, but from the viewpoint of the

products total lifetime.


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