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A Summer Training Research Report on Marketing Strategy of By-products & Secondary Product at, Bokaro Steel Plant under,SAIL SUBMITTED TO: Gautam Buddh Technical University, Lucknow For the partial fulfillment of the requirement of Master of Business Administration (MBA-2010-12)

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A

Summer Training Research Report on

Marketing Strategy of By-products &

Secondary Product at,

Bokaro Steel Plant under,SAIL

SUBMITTED TO:

Gautam Buddh Technical University, Lucknow

For the partial fulfillment of the requirement of

Master of Business Administration

(MBA-2010-12)

Under the guidance of: Under the supervision of:

Mr. Prabhat Dwevedi Mrs. Meena kamal

SUBMITTED BY

DIGVIJAY NATH

MBA FINAL YEAR

ROLL NO.-1018170027

SCIENCE AND TECHNOLOGY ENTREPRENEUR’S PARK-

HARCOURT BUTLER TECHNOLOGICAL INSTITUTE, NAWABGANJ

KANPUR-208002

PREFACE

The word “Marketing” is not new to us but there have occurred

a sea changes in its principles since the time it was first heard .

When we talk about marketing strategy of a firm, one need to

constantly waste a lot of chalks on his drawing board to outdo

their competitors. So it is a place of constant innovation & one

need to have an eagle eye on their competitors.

I student of School Of Management, STEP-HBTI,Kanpur pursuing

MBA (Mktg) course and towards the partial fulfillment of it , I

have undergone a summer project named “Study on marketing

strategy of secondary & by-product in Bokaro Steel Plant” for a

period of EIGHT(8) weeks .I used my expertise to complete the

objective accomplished in the stipulated time as study of

marketing strategy is not a cup of tea. Despite all the

limitations, obstacles, hurdles and hindrances, I came across

many difficulties to make this objective a reality. Anyhow with

the kind help and genuine interest formally supported by my

guide and college authorities.

The purpose of this project is to understand the strategy

adopted by BSL to sell their secondary & by-products. In later

part of this project we will able to understand how BSL has

2

been effectively utilizing the scraps (i.e. secondary products)

produced during the different production process & also how

constant improvement in different sections is helping BSL to

provide quality products for customers with time on delivery.

Though every effort have been made to present accurate data

& correct information, although if you find any part of the

project unacceptable, I will be highly obliged to hear your

suggestions.

3

ACKNOWLEDGEMENT

Any task is not a single person effort, same is with this project. Thus I

would like to extend my sincere thanks to all those people who helped

me in accomplishing my project .

The information’s & ideas contained in this project is the manifestation of

learning process during my Eight weeks of training period. During my training

period I came across some wonderful peoples in the form of managers, my

mentor, friends or acquaintances from whom I learned immensely. While it is

not possible to name them individually I would like to express a deep sense of

gratitude towards them.

I would also like to express my heartfelt thanks to all the officers of Bokaro

Steel Plant who really helped a lot and guided me throughout my training

session, This project would not have been possible in the absence of their help.

I like to thanks Mr. B.K Prasad (DGM,Stores), Mr. Haldhar Ojha (AGM,SSD), Mr. Prasad

(AGM,BPP), Ms. Manisha (Jr.manager, S&C) and Mr. Ashok Rai(e-Auction,metal junction)

who are directly involved in this project.

No amount of thanks can be ever repay the great debt that I own of Mr.

Gobinda burman (Jr.Manager ,Marketing), whose constant guidance &

inspiration have made this project successful.

Submitted with regards,

4

Digvijay

Nath

TABLE OF CONTENTS

CHAPTER SUBJECT PAGE NO.

1. 1.1 EXECUTIVE SUMMARY

1.2 OBJECTIVE OF STUDY

1.3 METHODOLOGY

1

10

11

2. BRIEF PROFILE OF THE UNIT UNDER

STUDY SAIL,BOKARO STEEL PLANT

2.1 INTRODUCTION OF SAIL

2.2 ABOUT METAL JUCTION

2.3 CENTRAL MARKETING ORG.

2.4 ABOUT BSL

2.5 CORE VALUE OF BSL

2.7 MAJOR UNITS OF BSL

12-30

12-14

15-`16

17-20

21-25

26

27-30

3. SECONDARY AND BY-PRODUCT IN BSL

3.1 WHAT ARE SECONDARY PRODUCTS AND BY-PRODUCT

31-39

31-36

5

3.2 NECESSITY OF SELLING THE SECONDAY PRODUCT

AND BY-PRODUCT

37-39

4. MARKETING DEPARTMENT (BSL)

4.1 OBJECTIVE

4.2 FUNCTION

4.3 MARKETING POLICY

41-51

41-42

43

44-48

5. STRATEGY

5.1 MARKETING STRAEGY OF BSL

49-55

49-55

6. MODE OF SALE

5.1 E-AUCTION, PROCEDURE OF E-AUCTION, RULE AND

REGULATION, CONDUCTION OF AUCTION AND TERMS AND

CONDITION.

5.6 SALE THROUGH FIXED PRICE

5.7 OPEN TENDER

56-68

57-62

63-65

66-68

6. DATA ANALYSIS

6.1 DATA COLLECTED FROM MARKETING AND OTHER

DEPARTMENTS OF BSL

69-75

69-75

6

7. SWOT ANALYSIS 76-77

8. FINDING 93

9. SUGGESTION & RECOMMENDATION 79-80

CONCLUSION ………………………………………………………………81

QUESTIONNAIRE…………………………………………………………100

ABBREVIATION ……………………………………………………………116

BIBLIOGRAPHY ……………………………………………………………….117

7

EXECUTIVE SUMMARY

The present study was undertaken to see the mode of sale of

Secondary Product and by- product of SAIL. Marketing

Department is the newest genesis from the SAIL and attempts

to reach their where no corporate has ever ventured so far.

The survey was conducted in Marketing Department and Sales

Coordination department. I was to find how auctions, fixed price

and tenders are used for marketing purpose BSL.

Various steps involved are as follows. To know about the e-

auctions of Marketing Department. How they use this technique

and 60% marketing and selling is done through auction and

rest will be taken through fixed price selling and tenders.

Data were mainly collected from Marketing department of BSL.

BSL is the largest Steel manufacturing sector of India and is top

ranked in the global fortune 500 companies.

8

During my training I had to find out mode of sale of secondary

products of BSL. Primary products are sold by CMO, Delhi. I

passed through various stages of problems and difficulties to

accomplish the task of project work but it was a privilege for

me to take this opportunity a challenging work to study and

observe "marketing of Secondary products in B.S.L", which is a

unit of SAIL.

Bokaro Steel Plant recognizes that leadership is essential for

survival in competitive environment; Customer's satisfaction

like quality is a journey and not a destination. It is essential that

everyone in the company have a clear understanding of what

customer satisfaction means if the plant aim to achieve

leadership in customer satisfaction. While improved customer

satisfaction is necessary for ensuring prosperity of the company

must also be recognized that ability of the company to satisfy

its customers would depend on its ability to continuously

improve its profit and growth.The basic objective behind the

study carried out by me is to study the major contribution of

Secondary product and By- product to total sales, which is pre-

determining for the success of the company. By selling the

Secondary product in local market company is earning profits.

9

It is also creating an employment in small scale industries and

developing the economy.

OBJECTIVE OF THE STUDY

In Bokaro steel plant there is various section of marketing

department. Since I have chosen "Marketing of secondary

products in B.S.L." my main objectives are:-

1. To know what is secondary product, by product and why is it

necessary to sell the secondary product.

2. To know the use of secondary product & by-product.

3. Market study of secondary product & by-product in BSL.

4. To know the pricing of secondary product & by-product.

5. Ensuring timely dispatch of material, products, scrap etc to

the potential customers.

10

6. To know the others terms and conditions for marketing of

secondary products.

METHODOLOGY USED

The methodology adopted by me during the project on

"Marketing of Secondary Product on B.S.L" can be divided into

two parts:

(A) To know about the organization.

(B) To know about the procedure and working of Marketing

Department and Secondary Section.

(A) To know about the organization. Information / data has

been

Collected from:-

(i) Government Publications.

(ii) Books of organization.

(iii) Journal.

(iv) Company's Website.

11

(B) To know about the procedure and working of Marketing

Department and Secondary Section information has been

collected by:

(a) Observation Method

(b) Personal Interview with AGM , Senior managers ,Managers.

(C) Document provided by them.

INTRODUCTION

Iron & steel are being use by men for almost 6000 years, but

the modern form of iron & steel industry came into being only

during 19th century. This industry has grown very rapidly only

after the Second World War; World production was 2.83 MT in

1900, rose to 159.6 MT by 1943 and 782.8 MT in 1989. The

total demand of steel in the world was to be 913 MT in 2007.

World’s 1st Iron works was established in 1646 in USA. In 1984

1st open Hearth Furnace was used in Europe for making steel. In

1906 1st are Furnace was used. In 1950 1st Basic Oxygen

Furnace was used. In 1960 Computer was used in steel

industry. In 1970 Continuous Casting Process was used for the

production of steel and 6% of total steel were produced through

12

this process. Now 66.6% of the world’s raw steel production is

through this process. As a result product yield increased from

81% to 95% and reduced its energy consumption by 12.5%.

Japan is producing 95.4% of its steel production through this

process, the highest in the world. Japan is the largest exporter

of steel in the world with 18 MT of finished products. Japan is

the 2nd biggest producer of steel in the world with 119.3 MT. the

1st is USSR and 3rd is USA with 82.2 MT.

Steel Authority of India Limited (SAIL) is the leading steel

making company in India. It is a fully integrated iron and steel

maker , producing both basic and special steels for domestic

construction , engineering , power , railway , automotive and

defense industries and for sale in export markets.

Ranked amongst the top ten public sector companies in India in

terms of turnover, SAIL manufactures and sells a broad range

of steel products, including hot and cold rolled sheets and coils,

galvanised sheets, electrical sheets, structurals, railway

products, plates, bars and rods, stainless steel and other alloy

steels. SAIL produces iron and steel at five integrated plants

13

and three special steel plants, located principally in the eastern

and central regions of India and situated close to domestic

sources of raw materials, including the Company's iron ore,

limestone and dolomite mines. The company has the distinction

of being India’s largest producer of iron ore and of having the

country’s second largest mines network. This gives SAIL a

competitive edge in terms of captive availability of iron ore,

limestone, and dolomite which are inputs for steel making.

SAIL's wide ranges of long and flat steel products are much in

demand in the domestic as well as the international market.

This vital responsibility is carried out by SAIL's own Central

Marketing Organisation (CMO) and the International Trade

Division. CMO encompasses a wide network of 37 branch

offices and 25 departmental Warehouses located in major cities

and towns and throughout India

With technical and managerial expertise and know-how in steel

making gained over four decades, SAIL's Consultancy Division

(SAILCON) at New Delhi offers services and consultancy to

clients world-wide.

SAIL has a well-equipped Research and Development Centre for

Iron and Steel (RDCIS) at Ranchi which helps to produce quality

14

steel and develop new technologies for the steel industry.

Besides, SAIL has its own in-house Centre for Engineering and

Technology (CET), Management Training Institute (MTI) and

Safety Organisation at Ranchi. Our captive mines are under the

control of the Raw Materials Division in Kolkata. The

Environment Management Division and Growth Division of SAIL

operate from their headquarters in Kolkata. Almost all our

plants and major units are ISO Certified.

15

16

ABOUT METAL JUNCTION

Corporations across the world have realized that in a world

without boundaries, certain regions and people with distinct

competencies will be more efficient than others and therefore

the visible trend in the world today is outsourcing. Companies

are outsourcing manufacturing activities, customer services,

back office operations and a host of other activities, either

because there is someone else who can do the same thing for

less, or, there is specialist who can offer services of higher

quality. Industry has recognized that whilst it has to

concentrate on growth, a prerequisite is to become globally

competitive. Industry has to, on the one hand, concentrate on

its core competencies of bringing about efficiencies in

manufacturing and on the other hand look at bringing about

efficiencies in their Supply Chain which is their buying and

selling processes. Metaljunction operates at the extreme ends

of the value chain and hence it was essential to segregate the

organization into two Major Business Units (Commercejunction

and Metaljunction) so as to independently focus on:

Specific Requirements of Clients/Customers

17

Specific procedures for both the functions

Knowledge and Information management for the two

functions

18

It is a joint venture between Tata Steel

and SAIL

CENTRAL MARKETING ORGANISATION

The ISO 9001:2000 certified Central Marketing Organization

(CMO) is India’s largest industrial marketing set up that

markets carbon steel produced by the four integrated steel

plants of SAIL. Headquartered in Kolkata, it transacts business

through its network of 34 branch sales offices spread across the

four regions, 24 Warehouses equipped with mechanized

handling systems, 11 Customer Contact Offices and 15

Consignment Agents. CMO’s domestic marketing effort is

supplemented by its ever widening network of authorized and

rural dealers who meets the demands of the smallest

customers in the remotest corners of the country. A strong IT

support system enables real time network connectivity within

the entire CMO network.

Extensive customer contact, product and segment

specialization, close monitoring of order servicing and feedback

analysis through the Customer satisfaction Index are

19

established norms at CMO. The customer friendly approach of

CMO is backed by practical after sales service.

Through the process of Key Account Management, CMO

provides single window service to key customers across the

country for every business transaction from enquiry to order

booking, order tracking to delivery, and even consultancy after-

sales service.

Central Marketing Organization (CMO) is India's largest

marketing home. It has spread its wings far and wide from

Srinagar in the North to Cochin in the South and Dhimapur in

East to Ahmedabad in the west.

All SAIL Product are marketed in India through C.M.O. to ensure

quality and prompt dispatch of product, CMO keeps in touch

with producing units as well as the transport and shipping

sectors. It operates through the network of stockyards,

dockyards, Branch sales offices, consignment agents and

Extension counter.

CMO has got responsibility to sell pig iron and mild steel

products manufacture by BSL, DSP, RSP, and BSP, having its

headquarters at Ispat Bhavan, 40 Chouringee Road, Kolkata 71.

20

CMO Branches spread through out the country with stockyards

for storing and selling Iron & Steel materials of the plants.

CMO’s International Trade Division

International Trade Division ( ITD), in New Delhi- an ISO

9001:2000 accredited unit of CMO, undertakes exports of Mild

Steel products and Pig Iron from SAIL’s five integrated steel

plants. Ever ready to meet the exacting demands of its global

customers, ITD maintains a close liaison with customers and

the production units to cater to the customized requirements of

its customers both in terms of quality and sizes.

ITD has successfully established SAIL’s brand name globally.

Among the notable destinations for SAIL products are Japan,

P.R. of China, Korea, Taiwan, Vietnam, Philippines, Singapore,

Malaysia, Thailand, Indonesia, Australia, Mexico, Europe (UK,

Germany, France, Belgium, Italy, Spain, Netherlands, Portugal),

Sudan, Oman, UAE and the neighbouring countries such as

Myanmar, Bangladesh, Sri Lanka and Nepal.

The Transport & Shipping Division of CMO headquartered at

Kolkata with its branch offices at Haldia, Paradip, Vizag and

21

Kolkata ports, ensures timely import of the key ingredient in

steel making, coking coal and handles its entire logistics. It also

caters to other plant imports and ensures efficient dispatch of

steel exports.

  

  Headquarters

 Ispat Bhavan

 40, Jawaharlal Nehru Road,

 Kolkata - 700 071.

 Phone: (033) 2288 3810/12/14/17/18

 Fax:    (033) 2288 61838

 E-mail:  [email protected]

  International

Trade Division

 Hindustan Times

House

 13th Floor, 18-20,

 Kasturba Gandhi

Marg,

 New Delhi - 110

001.

 Phone: (0091-11)

2335 5733.

 Fax:    0091-11-

2332 1018,2371

2774

 E-mail: editd@sail-

steel.com

   

22

Regional Offices

  Western

Region

 The Metropolitan

 8th & 9th floor,

 Bandra-Kurla Complex,

 Bandra (E), Mumbai- 400

051.

 Phone: (022) 2657

1493/96/97.

  Phone Fax E-Mail

FP

Group

022-

26572788/

26571836

022-

2657

1996

rmfpwr@sail-

steel.com

LP

Group

022-

26571819/

26571827

022-

2657

2042

rmlpwr@sail-

steel.com

 Southern

Region

 Ispat Bhavan

 5 ,  Kodambakkam High

Road,

 Chennai - 600 034.

 Phone:044-2827

2091/2827 4105.

  Phone Fax E-Mail

FP

Group

044-

28257164/

28274105

044-2827

1602/

28242342

rmfpsr@sail-

steel.com

LP

Group

044-

28259660

044-2827

1602

rmlpsr@sail-

steel.com

Transport and Shipping

  

  Headquarters

 

 Ispat Bhavan

 40, Jawaharlal Nehru Road,

 Kolkata - 700 071.

 Phone: (033) 2288 3810/6151

 Fax:    (033) 2288 61808

23

BOKARO STEEL PLANT –

A PARTNER IN NATION BUILDING

24

INTRODUCTION

Bokaro Steel Plant - the fourth integrated plant in the Public

Sector - started taking shape in 1965 in collaboration with the

Soviet Union. It was originally incorporated as a limited

company on 29th January 1964, and was later merged with

SAIL, first as a subsidiary and then as a unit, through the Public

Sector Iron & Steel Companies (Restructuring & Miscellaneous

Provisions) Act 1978. The construction work started on 6thApril

1968.

The Plant is hailed as the country’s first Swadeshi steel plant,

built with maximum indigenous content in terms of equipment,

material and know-how. Its first Blast Furnace started on 2nd

October 1972 and the first phase of 1.7 MT ingot steel was

completed on 26th February 1978 with the commissioning of

the third Blast Furnace. All units of 4 MT stage have already

25

been commissioned and the 90s' modernization has further

upgraded this to 4.5 MT of liquid steel.

The new features added in modernization of SMS-II include two

twin-strand slab casters along with a Steel Refining Unit. The

Steel Refining Unit was inaugurated on 19th September, 1997

and the Continuous Casting Machine on 25th April, 1998. The

modernization of the Hot Strip Mill saw addition of new features

like high pressure de-scalers, work roll bending, hydraulic

automatic gauge control, quick work roll change, laminar

cooling etc. New walking beam reheating furnaces are

replacing the less efficient pusher type furnaces. A new

hydraulic coiler has been added and two of the existing ones

revamped. With the completion of Hot Strip Mill modernization,

Bokaro is producing top quality hot rolled products that are well

accepted in the global market.

Bokaro is designed to produce flat products like Hot Rolled

Coils, Hot Rolled Plates, Hot Rolled Sheets, Cold Rolled Coils,

Cold Rolled Sheets, Tin Mill Black Plates (TMBP) and Galvanized

Plain and Corrugated (GP/GC) Sheets. Bokaro has provided a

strong raw material base for a variety of modern engineering

26

industries including automobile, pipe and tube, LPG cylinder,

barrel and drum producing industries.

Directions

Bokaro Steel is working towards becoming a one-stop-shop for

world-class flat steel in India. The modernization plans are

aimed at increasing the liquid steel production capacity,

coupled with fresh rolling and coating facilities. The new

facilities will be capable of producing the most premium grades

required by the most discerning customer segments.

Brand Bokaro will signify assured quality and delivery, offering

value for money to the customers.

BRIEF GEOGRAPHICAL INFORMATION OF BOKARO STEEL

CITY

27

LOCATION Along the south bank of Damodar river on

Dhanbad-Ranchi highway at a distance of

50 km from Dhanbad and 300 km from

Kolkata.

LATITUDE 23° 29’

LONGITUDE 86° 9’

ALTITUDE 210 (meter) varying from 195m to 224m.

RAINFALL Average 157cm Maximum : 195cm

TEMPERATURE Max : 47°c Min : 12°c

CLIMATE Hot & dry, i.e. Tropical

WIND

DIRECTION

South-West to North-East

SOIL Loamy up to 1 to 2 meters and then sandy

COLOUR OF SOIL Red, yellow and light grey

HILLOCK Sarsl pahar (296m high, 5.5 km south of

Bokaro)

FOREST Bandgora (sal forest)

GRASSLAND About 3-5% of total land

28

TOTAL LAND

AREA

33,045.53 Acres

PLANT (BSL) 17,208.01 Acres

GARGA

RESERVOIR

3,886.87 Acres (Storage Capacity =17.5

million m)

RAILWAYS 1,835.94 Acres

GREEN BELT 1,011.74 Hectares

POPULATION About 3.5 lakhs

SOURCES Water - Garga river & Tenu Canal

Power-Chandrapura TPP(DVC),Bokaro TPP &

CPP

29

CORE VALUES OF BSL

30

Customer Satisfaction

Concern for

People

Consistent Profitability

Core Values

Commitment of Excellence

BOKARO STEEL PLANT—MAJOR UNIT

Brief Description:

COKE OVEN AND BY PRODUCT PLANTS:

Only shop in the country to have silos for source wise

storage.

The carbonization temperature is 10000C.

Coke oven has 8 batteries with 69 ovens each.

By-products plant produces valuable by-products like,

anthracene oil, benzene, toluene, xylene, light solvent

naptha and ammonium sulphate, extra hard pitch.

Coke Sources:

Prime coking coal: Dugda, Moonidih, Belatand

Medium coking coal: Mahuda, Rajrapa, Kedla, Kathar

Middlings for Power Plant: Dugda, Swang, Mahuda, Kedla,

ECL31

RAW MATERIAL AND MATERIAL HANDLING PLANTS:

Responsible for receipt, blending, storage, screening and

supply of raw material to blast furnace, sinter plant and

lime dolomite shop.

Shop also maintains buffer stock to take care of any

interruption in supply from mines.

Around 9MT of different raw materials are handled by four

wagon tipplers, stackers and re-claimers.

Only plant in India to have source-wise blending facilities

at RMCH.

Raw Material Sources:

Iron Ore: Kiriburu, Meghataburu, Gua, Noamundi.

Limestone: Bhawanathapur, Puranapani, Kahanabanjari,

Kuteswar, Jaisalmer.

Dolomite Limestone: Nanwara, Ametha.

Manganese Ore: Barbil, Banspani

Bauxite: Lohardaga.

BLAST FURNACE:

Five 2000 cubic meter blast furnace.

32

Furnaces are equipped with beltless top charging, double

cast houses, coal dust tar injection, cost house slag

granulation, under-burden probes.

STEEL MELTING SHOPS:

SMS-I: 5 LD converter of 120T capacity each.

SMS-II: 2 LD converters each of 300T capacity (Largest in

India).

SMS-I produces Rimming Steel also.

CONTINUOUS CASTING SHOP:

Integrated to SMS-II.

Produces mild steel of drawing, deep drawing, extra deep

drawing, boiler and tin plate quality.

Also produces low alloy steels like LPG, WTRC, SAILCOR

and API Grade.

SLABBING MILL:

COUNTRY’S ONLY Universal Mill, Hot and Cold Scraping

Machine.

2800T Shearing Machine.

Controlled heating in Soaking Pits.

33

HOT STRIP MILL (HSM):

Only continuous Hot Strip Mill in India, fully automatic.

Walking beam Reheating Furnaces, High pressure De-

scaling system, Roughing Group: Roughing Train of

Vertical scale beaker, one 2-high roughing stand, for high

universal roughing stand and edge.

Finishing Group: Flying Shear, Finishing Scale Beaker,

Seven 4-high finishing stands.

HOT ROLLED COIL FINISHING:

Hot rolled coil from HMS received here for further

distribution.

Coiled sheared and finished to customer required size and

dispatch to customer.

COLD ROLLING MILL:

Produces high quality sheet gauge materials, tin mill black

plate and galvanised products.

Capable of rolling out the widest sheet in India.

34

Products used for deep drawing purpose, automobile

bodies, furniture, drums, barrels, railway coaches, other

blending and shaping jobs and coating.

QUALITY ASSURANCE:

Entire Production flow, including allied departments,

accredited under ISO 9001:2000. Quality Management

System ISO 14001:2004. Environment Management

System implemented in all production and allied shops

SHOAS 18001:1999 Standards for occupational health and

safety implemented in all production and all allied shop.

SCRAP AND SALVAGE DEPARTMENT:

As the name signifies, the department works with Ferrous [Iron

& steel] scrap to salvage it & make it useful by adding value to

it. SSD has a dual role to play in overall scheme of things in the

works division. Primarily it has to supply Iron and Steel scrap to

Steel Melting Shop (SMS) as a technological input in the Steel

Melting process. Secondly, the role of SSD is to collect all the

Ferrous Scrap (waste for the place of origin) and bring it to the

department to transform it into a useful product. Every

35

department of the plant from Coke Oven to Cold Rolling Mill

produce mental waste termed scrap. This may be in the form of

maintenance waste e.g. broken or worn out parts, damaged

structure or equipment or may be process arising. The prime

products continue on their production flow towards the final

defined output, while the arising have to drop out as they are

not suitable chemically, Mechanically or by size and shape. In

the shape of fish tails or irregular edge trimming or produce

which are below the planned size. In a nut shell SSD’s role is to

ensure that all Iron and Steel Scrap (unwanted at place

production) are transported to site processed and transformed

to usable shape, size and quality (free of slag etc.) and

transported SMS Magnetic Scrap Yards for using as coolant in

the converter bath. Surplus scrap after supplying the

requirement of scrap is offered for external sale to generate

cash resources for the Company.

36

SECONDARY PRODUCT AND BY-PRODUCT

Secondary Products: -

These are the defectives or rejected materials due to improper

mixing of chemical components or fail to meet the optimum

requirements. Scraps generated inside plant are also termed as

Secondary products. The secondary products used here in after

will mean ferrous materials generated from various production

units which can either suitably be used for re-melting to

produce iron and products or offered for sale if rendered

surplus in production process for example Defective Heavy

blooms, Defective Rails, Rail cutting, Rod cutting, Scrap etc.

37

Following Items fall under the category of Secondary

Products:-

(A) REROLLABLE/IRON AND STEEL SCRAP/BFG SLAG

1. MS SLAB END CUTTING WITHOUT FISH TAIL

2. HR Coil

3. CR Coil

4. AMG HR Plate

5. Cobbled Plate

6. MS THICLE PLATE CUTTING (25-40 MM) MIXED W.FR.

7. SPILLED HOT METAL (10 MT AND BELOW) SMS ARISINGS.

8. LIQUID NITROGEN.

9. FINE IRON CHIPS FROM IMP (FE-70% APP

10. LIQUID ARGON.

11. PIG TRON.

12. TURNING & BORING.

(B) OTHERS

1. CARBIDE SLUDGE.

2. U/R AMC/MCB BRICKS.

3. U/R MAJ CHROME MAJ BRICKS.

(C) COAL CHEMICALS AND BY PRODUCT

38

1. MG BENZENE

2. NG TOLUENE

3. LS NAPTHA

4. SB OIL

5. HP NAPHTHALENE

6. ANTHRANCENE OIL

7. EXTRA HARD PITCH

8. HARD MEDIUM PITCH – SOLID STATE

9. HARD MEDIUM PITCH – LIQUID STATE

A. Benzyl products (Benzene)

Place of production- Bokaro steel plant.

Mode of delivery - railway tank wagons , road tankers in

loose condition.

Uses- it is used as an important raw material for various

drugs and dyes. Benzene hexa chloride is used as a pesticide. It

is also used in the manufacturing of phenol, DDT, nylon-6 etc.

B. Toluene (Nitration grade)

Place of production- Bokaro steel plant .

39

Mode of delivery- railway tank wagons.

Uses- It is used as a solvent in many chemical reactions;

artificial

Sweetening; paint manufacturing; rubber industries;

adhesives

Making of printing ink

C. Xylene

Place of production- Bokaro steel plant .

Mode of delivery- railway tank wagons .

Uses- Paints, thinners & varnish, rubber industry and

printing ink.

D. Light solvent naptha

Place of production- Bokaro steel plant .

Mode of delivery- railway tank wagons.

Uses- as a solvent, starting material for dyes and printing

ink.

E. Still bottom oil

Place of production- Bokaro steel plant .

40

Mode of delivery- railway tank wagons/road tankers.

Uses- mixed with other materials and is used various

purposes like roof tar filling to make the roof of buildings

water-leak proof, rubber paint for vehicles, industrial oil

etc.

F. Extra hard pitch

Place of production- Bokaro steel plant .

Mode of delivery- in gunny bags in loose condition.

Uses- in aluminum industries as a binding material for

anode.

G. Soft pitch

Place of production- Bokaro steel plant .

Mode of delivery- in gunny bags in loose condition.

Uses- it is used in production of pitch fiber pipes, roof

binders, in preparation of road tar, building materials,

sheeting, tilling etc. it is also used as refractory brick.

H. Hot pressed naphthalene

Place of production- Bokaro steel plant .41

Mode of delivery- in gunny bags in loose condition.

Uses- Dye intermediate, as an insecticide, dispersing

agent.

DETAILS OF SCRAP

There are various types of scrap, which is generated from the

particular prime products. Some brief summaries are given

here: -

1. PCM SCRAP

This is a scrap generated in the pig-casting machine and

consists of Splashing, PCM runners and fires are in the fix range

of up to 1.0 tones per piece.

2. BF RUNNER SCRAP

Generated in the blast furnace cast houses in the form of

runner jams etc the maximum fix per piece is up to 2 tones.

This scrap contain amount of slag.

3. UNPROCESSED STEEL

Generated in the steel melting shops in slag cups and metal

ladles.

42

4. SBIM SCRAP

This consists of semi broken ingot mould and bottom part as

scrap and is in fix range up to 2 tones per piece.

5. COBBLED SCRAP

The cobbled scrap arises from wire rod mill and includes some

rejected coils and binding wires also.

6. REJECTED ROLLS.

Cast iron rolls rejected steels rolls.

7. MILL CUTTINGNS

Rail and structural mill cuttings, merchant mill cuttings, rail

cuttings, plate end sharing rejected slabs, Slabs cuttings, miss

rolled slabs, and wire rod cuttings are included in this type of

scrap.

COLLECTION OF SCRAP

1. All scraps identify the metallic scrap generated in the

production, process and lying in the shop. The shops collected

the scrap with the help of overhead cranes and stock them for

loading into wagons.

43

2. Rejected rails and sleepers lying near the railways track

inside the plant are collected at such points from where loading

and collection by truck is possible.

3. Crane facility is provided for loading the scrap into the truck

whenever cutting or processing not possible on the spot.

4. Scrap & Salvage department is responsible for over all

coordination of scrap collection from the entire plant. For this

each shop nominate one executive for ensuring the clearance

of scrap from the shop.

5. Head of Marketing and customer service department

requires the progress on scrap collection on weekly basis.

NECESSITY OF SELLING THE ''SECONDARY PRODUCTS

and By-Product"

The net sales realization from all the Secondary products, By-

Products and co-products of BSL is around Rs.600 crores which

is quite more than money the big industries. Out of this Steel

Scarp arising itself brings about Rs.15200 cores of money every

year. Re-production of main products from the; secondary

44

products requires re-melting it again for the required

composition of the materials as per the desired specification.

By selling it to the different Mills/traders/Processors the plant

earn around Rs.4000 per tones of the direct profit than by re-

producing it to the main product. The traders /processors/re-

rollers, use these as a raw materials for different finished

products making huge profits, the plant is also not losing

anything.

Profit is the main aim of every business, and when the

realization of these products for the finished products proves to

be costlier, the management plant decided to sell it to the local

market.

By selling secondary Products to the Local market new

industries are developed for re-rolling the Secondary materials

to make finished products. It has also increased the small-scale

industries and employment opportunities.

Last year average price of scrap product were between

Rs.12000/ton to Rs.16000/ton.

Major customers

45

1. Ma Durga Ispat Udyog, Bokaro.

2. Bokaro Devlopement Area.

3. Kartike Ispat Pvt. Ltd, Kanpur.

4. Amit Steel Corporation, Howrah.

5. Diwan Steel, New Delhi.

6. Nenu Mal & sons, Kanpur.

7. Bhawani Metals, Bokaro.

8. Pandey Metals, Bokaro.

9. Chinar Steel Segment, Bokaro.

10. Mangal Pvt. Ltd., Bokaro.

11. United Iro Coporation, Dhanbad

12. Bharat Supply Company, Kolkatta

13.Anup Steels, Delhi

14. Hanuman & rise Pvt. Ltd, BIADA

15. Amit Metcum Pvt. Ltd. Etc

16. Veer kanwar singh steel Pvt. Ltd.

17. Maa tara steel

18. S M S Enterprises

19. Basuki steel Pvt. Ltd

20. Shalimar steel Udoyog

46

21. Chotanagpur ispat Pvt. Lmt

Latest Price of different By-Product which BSL were sold

in April & May 10 with previous year price

Item 2008-2009 2009-2010 2010-2011

Naphthalene Rs.47864 Rs.42793 Rs.42900

Anthracene oil Rs.13805 Rs.18511 Rs.13200

Crude Benzol Rs.38354 Rs.30961 Rs.33450

Toluene Rs.39603 Rs.39080 Rs.35300

LS Naphtha Rs.32392 Rs.31029 Rs.31050

S Boil Rs.20533 Rs.19588 Rs.1800047

Latest Price of different Secondary Product which BSL

were sold in April & May 10 with previous year price per

MT

Item 2008-2009 2009-2010 2010-2011

HR COIL 27000 29250 32450

CR COIL 31850 30800 33900

AMG HR

PLATE

25850 25300 29850

COBBLED

PLATE

28050 30400 28500

“ROLE OF MARKETING DEPARTMENT”

48

OBJECTIVE OF MARKETING DEPARTMENT

OF

BOKARO STEEL PLANT

Marketing Department is one of the Departments under

Materials Management Division of Bokaro Steel Plant. Marketing

Department is entrusted with the responsibilities to sell BSL’s

Secondary Products, By-Products/Waste Products, and Idle

Assets etc.

The Marketing Departments sales procedures are covered by

the guidelines given by SAIL Corporate office DELHI, and is

given by CMMG (CORPORATE MATERIAL MANAGEMENT GROUP),

the objective of which is “To sell the materials in a fair and

transparent manner to achieve maximum possible revenue to

the company”

49

(a) Marketing of prime products of SAIL’s plant including BSL

is done by CMO (Central Marketing Organisation) which is a

unit of SAIL.

(b) Marketing of secondary products and coal chemicals are

done directly by Marketing Department of BSL. As a matter

of fact, the Secondary & By-Products are marketed by the

individual Plants only.

Marketing of these products are conducted by various sections

by marketing department of Bokaro Steel plants. BSL is

engaged, with marketing of Primary Products for home sale or

export through CMO. The 4.0 Million tones section known as

plate mill section dealing with plates. Now this section has got

ISO - 9002 certificate.

50

ORGANISTATION CHART OF MARKETING DEPARTMENT

(BSL)

FUNCTION OF MARKETING DEPARTMENT

51

DGM (Mktg.)

Audit, Vigilance, RTI, & other queries reply, Contract Cell(MM), Sec. Sales

AGM(Mktg.)

Sec. Steel Ad & Est, QC, ISO, DCA, Contract Cell(MM)

Sr. Mgr.(Mktg.)

Slag, Waste, Iron, Smug. Scheme

Sr. Mgr. (Mktg.)

Idle Assets, U&S, Surplus

Sr. Mgr. (Mktg.)

Coal& Chem., Zinc Dross, Ammonium Sulphate & Ferrous Sulphate

Manager (Mktg.)

Reports, Price Monitoring, MIS

Jr. Mgr. (Mktg.)

Secondary Steel, Safety Officer

Jr. Mgr. (Mktg.)

1. To monitor the orders issued by CMO, So that these orders

can fulfilled.

2. Put pressure on CMO, to get orders for an underutilized mill.

3. To sell all the secondary products directly i.e. directly by

BSL and by CMO.

4. On day to day basis it takes care of the dispatches i.e. daily

dispatch are checked.

POLICIES OF MARKETING

Marketing Planning has responsible function in the working of

marketing department. All the risky developments, taking out

52

solution to cripple `situations, this section carries out product

pricing and related activities, some of the programmes, policies

and procedures are as follows:-

I) Positioning the product a value based place in customer

mind.

II) Finalize annual sales plan and quantity, monthly, weekly,

and daily rolling programme of Rolling mills in consultation

with CMO and mills. This plan is based on the sales forecast

receive from JPU SPL/ Iron and steel controller.

III) Optimizing the product-mix by proper utilization of available

stocks.

IV) Receiving Enquiries and complaints, cancellation of orders

etc.

V) Coordinating the works of mills and traffic department so as

to maximize dispatches.

VI) Co-ordinations with CMO from stages of enquiry, for

exports, development of new Profiles, sections, modification

of product scheduling till the orders are completed.

VII) Development of new qualities of steel.

VIII) Periodical market surveys of products to analyze the

market position.

53

IX) Implementation of suggestions received from the

customers feedback.

X) Ensure customer satisfaction by meeting customers

regularly; provide redress to their problems and fulfillment

of demand.

Pricing policy and Sales Procedure:

PRICING:

Fixing the price of a product is the most vital function in the

whole process of the marketing and it should be done after

proper market study and requires decision making ability. If

price is too low the company will lose revenue and if the price is

too high it will lose customers resulting in loss of revenue

valuable customers. Coal chemicals are the main product which

is to be marketed by the Marketing Department of Bokaro Steel

Plant. Almost all the products are sold on the reserve price and

fixed price basis. This is due to the fact that the company does

not enjoy monopoly in the said market and the price is totally

market driven.

54

The average of the prices offered by the bidder during auction

is taken as the basis to fix the prices of materials to be sold

through marketing department. Further the techniques of

break-up-pricing are adopted i.e. the larger the quantity

purchased lower will be the prices. This technique encourages

the buyers to purchase larger quantity. Finally the managing

director approves the prices set by the pricing committee. On

this basis, a price list is prepared for all the potential buyers.

Price list also indicates the sales tax and Excise duty to be

levied. Thus the interested parties place their orders with the

marketing department on the basis of price list reviewed every

month. Every customer is required to have a security deposit

amount of Rs.1 lakh. The payment for the material required is

to be in advance. The material is supposed to be lifted on the

specified date on account of delay the party has to pay the

difference in the prices, if there is any increase in subsequent

month.

Standing Pricing Committee:

The committee reviews the price of various products and takes

decision in favor of maximizing the revenue. It holds meeting at

least once in a month. But the volatility of the market and pool

55

of different products lead to a number of meeting of the

committee in quick succession.

The committee consists of:

GM (Utility), Chairman

GM (Marketing), Convener

DGM (Finance), member

DGM (Sales Coordination), member

DGM (Stores), member

DGM (BPP), member

For Scrap goods the DGM (SSD) replaces the DGM (BPP). Rests

of all the members are always present in all the meetings.

56

While deciding the price following points are kept in

mind:

Dispatch of the last month.

Material in stock.

Forecast of next month.

General market condition.

Availability of transport facility.

GM (Marketing), as per the need, decides the frequency and

time of meetings to be held. Minute report of all the meetings is

prepared and it contains the existing price and the proposed

price. The final price is moved to the MD through the official

channel including GM (Marketing), Executive Director (MM), GM

(Finance and Accounts), and ED (Works). After the MD’s

approval the price becomes applicable and the circular

indicating the revised price is printed, issued and distribution to

the customers and all the concerned departments.

57

SALES PROMOTION

Sales Promotion consists of a diverse collection of incentive

tools designed to stimulate quicker or greater purchase of

particular product. As a part of promotional activities, BSL is

employing following activities:

a)Discount slabs is provided to boost the sales, description

of which is given below:

Up to 10,000 tones ----- No Discount

10,000 to 15,000 ----- 15% Discount

Above 15,000 ----- 20% Discount

b)To find new customers and to inform customers at far

distant areas Tender Notice given in the newspaper for

sale of scraps. Best among the application is accepted

with a view to get the best revenue.

c) Sometimes when new item is to be sold sales notice is

given in the newspaper. But most of the time local

customers get informed from other customers.

58

MARKETING STRATEGIES OF BSL

Steel being an industrial commodity it is very necessary to

maintain customer relationship for revenue earning and

smooth running of company.

1. Customer Satisfaction

BSL adopts following practices for customer satisfaction.

a. Procedure / process adapted to access current / future

expectation of customers.

b. It induces market research visiting customer premises

attending to customer complaints.

c. CMO has Market Management Group where specialists

monitor changing demand pattern and development in each

Market segment is carried on.

d. It has posted market development officers at various

locations that are its eyes and ears for monitoring current and

future expectation of its customer.

e. The Business-planning department is exclusively meant to

study customer's changing demand scenario and assess

current and future expectation.59

f. To understand customer needs seminars and workshops are

also organized by BSL.

Building Customer Relationship

BSL has adopted the philosophy of recognizing segment of the

market and identifying key customer in segment and giving

them preferential treatment. CMO sales executives have been

trained to use direct selling as tool for building long lasting

relationship with the customers. Easy access to customers to

seek assistance makes proposals send comments and

compliments.

MARKET DEVELOPMENT

BSL has valued customers group in identifying their specific

needs Specific to that group thus segmenting and developing

market segment for our products. Major product modifications

are done as per their specific needs of the Market segment

thereby creating product differentiation packages.

2. STOCK REDUCTION

60

Giving facilities like door delivery, road dispatches, credits

facility and rounds the clock stockyard operation.

4 DESPATICH

As the product is manufactured, this department directs the

stockyards the mode of transport to the destination with

reference to dispatch program and dispatch advice is mode.

5 DOCUMENTATION

With the dispatch of product the Finance department calculates

the total cost of product as per demand order. Certain receipts

and bills quoting the material code, nature, quantity, and all

expenses are sent to connected stockyard. The product will be

then released to the concerned person after proper and

complete payment to the pay-in- authorities is made.

MARKETING OF SECONDARY PRODUCTS

During the sixties and seventies when the plant was one

million-tones and2.5 million-tonnes capacity respectively,

arising of secondary products was limited and such arising was

61

recycled for re-melting. Therefore there was no scope for

marketing in other words it was not economical. The plant

capacity has been increased from 2.5 million tons to 4 million

tones in the late sixties. New technology has been adopted

while increasing the capacity of the plant where by the use of

arising for re-melting drastically reduced. This has given more

impact to the making of secondary product.

In the nineties we have seen lot of changes in the economic

scenario of the country. The concept of more employment in

Public Sector Enterprises has changed to more generating

revenue. There by the plant also has geared up its strategy

towards this end. One of the strategies adopted by the plant for

increasing the is marketing of secondary products.

In the recent years a number of foundries and re-rolling Mills

come into existence throughout the country. These small scales

Sector need the "Secondary products" as input raw material for

their production. The company has engaged in educating them

the use of secondary products for different kinds of end

products for consumption of general public. The plant extends

all types of facilities and assistance to these small-scale units.

This, in turn gives scope for more employment opportunities.

62

The plant for marketing has adopted following strategy:

1. Committed delivery.

2. Competitive price

3. Quick complaint settlement.

4. Culture of customer service.

It is necessary to mentioned here that the companies' profit

consists of 10% turnover of secondary products for the Last two

years.

PLANNING FOR SALE OF SECONDARY PRODUCT

1. Marketing Recovery Department (MRD) works out the

quantum of different types of scrap available for sale on

monthly basis. This is determined by ascertaining the total

scrap stock at the beginning of the month. Scrap arising during

consumption. The remaining quantity is considered for sale. A,

monthly report on availability of scrap is prepared by MRD and

sent to marketing department.

2. Marketing Department finalizes the plan for actual quantity

of scrap to be sold in consultation with MRD. Marketing 63

department finalizes mode of sale, terms and conditions for

sale, locations and commercial aspects.

3. The pricing committee consist of Managing Directors fixes

the price of each type of scrap.

4. Marketing department obtains MD's approval on price fixed

by pricing committee.

PROCEDURE APPLIED FOR SALE OF SECONDARY

PRODUCTS

1. After obtaining approval of quantity and price for sale,

Marketing department scrutinizes the demand from various

parties, examine the Priorities and issue "offer letters" to

respective parties. The terms and conditions for sale are also

enclosed with the "offers Letter"

2. About one third of the quantity of material to be sold during

the year is offered to the actual users, subject to registration of

demand.

64

3. For the balance quantity to be sold at prices fixed by pricing

committee, preference is given to actual users over traders. If

there are no actual users, the material may be offered to

traders giving preference to registered traders over others.

4. First preference is given to the actual users for allotment of

scrap against particular category of users. Scrap processing

units are given second preference for such allotments.

5. The amount received from the party towards advance

payment and security deposit is forwarded to finance

department by marketing department after recording the

details in the register.

6. Parties are allowed to visit the respective location disposals

site, and inspect the scrap offered for sale.

7. Marketing department prepares sale order for the parties

who have accepted the offer. Sale orders are issued party wise

and category wise i.e. individual sale order covers such

categories like C I scrap, steel scrap, re-rollable, slag and waste

products.

65

8. Based on the deposit made by the party, finance

department intimates to marketing department about release

of requisite scrap for supply.

THE STRUCTURE OF THE PROCESS OF SALES AND MARKETING

66

67

PRODUCTS

PRIMARY (SPECIFIC PARAMETER) SECONDARY/BY-PRODUCTS

CMO (KOLKATA) UNITS- BSL, BSS, RSP, DSP etc

BSL MARKETING

METHOD OF SELLING

E-AUCTION SALE TENDER FIXED PRICE SALE

BSL MARKETING (MAIN SECTION)

STEEL CHEMICAL & BYE-PRODUCTS

SLAGS & WASTE PRODUCTS

IDLE ASSETS PRICING

MODE OF SALE OF SECONDARY AND BY-PRODUCT

Selling of Secondary & By-Product

This involves a direct marketing process. The management of

BSL in consultation with the official of the market development

and customer service department work as group for the sale of

these items. Different modes of selling are used for these

products

MODE OF SALE

68

E-auction Fixed Price Sale

Inter Plant Transfer

Tender

E-AUCTIONProcedure of E-Auction

Advertisement/posting of dates and types of materials to be

auctioned in SAIL website and various news papers (Local &

National) every 15th to 20th of the month for the next month,

1. Posting of details of lots to be auctioned one week prior to

the date of auction, on the website of SAIL and metal

Junction.com.

2. Inspection of lots to be auctioned by customers.

3. Auction is held on www. Metal Junction.com.

4. Report of auction conducted is give by Metal Junction.com.

5. Meeting of reserve price opening committee and their

recommendation.

6. Approval for sale of lots recommended by RP opening

committee.

7. Issue of offer to the customers, based on approval of chief

Executives.

In this method the defective materials from all the mills is

arranged in heaps of 100-150 tones to be sold by auction.

69

Generally auction sale takes place ones in a month.

Representative from all the re-rolling mills turn up during

auction and they bid for the available material. The raw

material need of this mill is being made by the plant and the

availability of the re-rollables has increased the re-rolling mill to

develop very fast. The plant extends all types of facilities and

assistance to these small scale units, which to turn give scope

for more employment, and then the material is lifted on the

terms and conditions as mentioned in the tenders.

70

FLOW CHART OF E-AUCTION

71

Advertisement of dates/type of materials

on SAIL

Posting of lot details to be auctioned on SAIL / Metal

Junction website

Auction conducted on Metal junction.com

Inspection of lots by customers

Report of Auction by metaljunction.com

Reserve Price Opening Committee meeting

Recommendations Approval for Sale

Issue of Offer Letter

DEFINITION OF KEY TERMS

Auction.

Auction refers to a forum where the requirement for one/more

lots of an item is stated and the participants (bidders) are

required to bid down the price to be selected to supply the

requirement.

Online Auctions.

Online auctions refer to those auctions conducted through the

Internet with the bidders (from one or more locations)

simultaneously bidding to be selected for supplying the item/s

on auction. In other words, the venue for the auction is on an

Internet website/ platform. The "Service Provider's" website

assigned by "Service Provider" would constitute venue for the

purpose of the online auction.

Award at the Auction.

In a single winner format, only one bidder (normally the bidder

who quotes the highest price) is awarded all the units of the

item being auctioned. The bidder quoting the highest price is

normally allotted the item.

72

Client.

Client is the individual/business entity who has contracted

"Service Provider" to conduct such auction. In case of auction,

the purpose would be the genuine intent to sell the selected

items/Lot to the bidders desiring to buy these items from the

Client.

Bidder.

Bidder is the individual/business entity participating in the

auction, intending to buy the items/Lots from the Client. To be

become a Bidder in the auction, a business entity has to secure

client approval for participation and also provide written assent

to the General Rules and Regulations

Auction Engine.

Auction Engine refers to the software that encapsulates the

entire auction environment, processing logic and information

flows. "Service Provider" is the sole owner of the auction engine

and retains exclusive right over the utilization of the same.

Timings of the Online Bid.

73

All the timings of the Online Bid shall be based on the time

indicated by the Server hosting the Auction Engine. It shall be

the endeavor of "Service Provider" to ensure that the Server

Time reflects as closely as possible the Indian Standard Time

(IST) i.e. GMT + 0530 hrs. However, in the event of any

deviations between the Server Time and the Indian Standard

Time, the functioning of the Auction Engine

(Launch, operation, and closure) would be guided by the Server

Time. Bidders are advised to refresh both the windows of the

Auction Module check the exact Server Time (displayed in both

the windows).

Preview Time.

Preview Time refers to the period of time that is provided prior

to the commencement of bidding. This is to facilitate approved

participants to view the auction details such as item

specifications, bidding details and bidding rules. The purpose is

also to familiarize participants with the functionality and

screens of the auction mechanism. It is not mandatory for

"Service Provider" to provide Preview Time.

Start Time.

74

Start time refers to the time of commencement of the conduct

of the online auction. It signals the commencement of the Price

Discovery process through competitive bidding.

Duration of the Auction.

It refers to the length of time the price discovery process is

allowed to continue by accepting bids from competing bidders.

The duration of the auction would normally be for a pre-

specified period of time. However, the bidding rules may state

the conditions when the pre-specified duration may be

curtailed/ extended. The conditions include:

Shortening of auction duration in the event of no bids for a

specified period of time (Inactivity Time)

Automatic extension in the event of bids being entered towards

the end of the scheduled duration to facilitate the other bidders

to view and react to the bid.

Auto Extension of the Auction Timings.

In the event of bids in the last few minutes of the scheduled bid

time, the Bid Timings are automatically extended for a

specified period from each such bid. Such Auto Extension shall

continue until no bids are placed for the specified period

75

(Engine remains inactive for the specified period). The Inactivity

Time for Auto Extension purpose is normally X minutes.

"Service Provider" however retains the right to change the

same. The Inactivity Time applicable for the particular Online

Bid shall be visible to the bidders under the Bidding Rules

module on the engine.

End of the Auction.

End of the Auction refers to the termination of the auction

proceedings signaling an end to the price discovery process.

76

FIXED PRICE SALE

PROCEDURE OF SALE THROUGH FIXED

PRICE

General Sale notice for different items to be sold is posted

on SAIL website and advertise in various newspapers

(Local and National) between every 15th to 20th of the

month for the next month,

For requisition of materials, applications are invited from

customers bet 25th -30th/31st of every month.

Allocation of material to various customers is done as per

approved procedure of priority allocation.

Offer letters are issued to the customers.

Price applicable will be the price rising at the time of

dispatch.

77

FLOW CHART OF FIXED PRICE

78

Advertisement of type of materials on SAIL

website/Newspaper

Application from customers

Issue of offer letter

Allocation of material

PRIORITY IN BOOKING OF MATERIALS BY MARKETING

DEPTT

Catego

ry

Priori

ty

Buyer Quantity to be

allotted

A 1st Govt. Units/PSUs & its

subsidiaries & joint

ventures of govt. units

having more than 50%

govt. share

Any quantity

required by

them

B 2nd Dependent BIADA units

with MD/BIADA’S

recommendations &

MD/BSL’s approval.

Maximum 70%

of the balance

available

quantity after

meeting the

79

1st priority

C 3rd Consumers/Processes of

Jharkhand state

30% of

balance

D 4th To all other customers Out of the

balance

quantity of

material left if

any

80

TENDER

TENDER DOCUMENT

TERMS & CONDITIONS

1) The parties desirous of purchasing the material have to

quote for entire quantity of the material.

2) The Tenderers are advised to inspect the material , if so

desired, before submitting the quotations.

Parties will be permitted to see the materials from 9.30 Hrs to

4.30 Hrs daily on working days. Necessary entry passes may

be obtained from the Receptionist/ CISF

81

3) Terms of sale: On “As is where is basis ", " No complaint

basis “and” Ex-works basis" No PICK and CHOOSE shall be

allowed other than sorting out Iron/Steel pieces found, if any.

4) The conditional quotations are liable to be rejected.

5) EARNEST MONEY

EMD (Earnest Money Deposit) Rs.100000/- for the item to be

deposited in the form of DD/BC/PAY ORDER in favors of

SAIL/Bokaro Steel Plant, payable at Bokaro, from any

Nationalized / Scheduled banks along with the quotations. Any

variation / demand in such taxes, duties, levies, and charges

and / or any fresh imposition of such taxes, duties, levies and

charges shall also be to the account of the bidder to whom the

tender is awarded.

The tenders should quote their rate in per cubic meter against

the total quantity as asked for in the tender document both in

words and figures.

In case of any mismatch / ambiguity between the two the

higher of the two rates only shall be considered.

The tender should be submitted in the TENDER BOX placed

inside the CONFERENCE HALL OF MARKETING DEPARTMENT . 82

The general terms and conditions of lifting by road and safety

stipulations in force shall be applicable.

6) PAYMENT TERMS:

The successful bidder has to make payment for the quoted

quantity in 12 (twelve) equal installments of 1000 CU. each. 1st

installment is to be deposited within 10 (Ten) days from date of

issue of sale order inclusive of the date of issue of sale order.

Subsequent installments are to be deposited within 30 (Thirty),

50 (Fifty), 70 (Seventy), 90 (Ninety), 110 (One hundred ten),

130 (One hundred thirty), 150 (One hundred fifty), 170 (One

Hundred seventy), 190 (One hundred Ninety), 210 (Two

Hundred ten) & 230 (Two Hundred Thirty) days from the date of

issue of sale order (inclusive of the date of issue of sale order).

However, lifting of entire quantity of material has to be

completed within the validity period of 300 (Three Hundred)

days from the date of issue of sale order (inclusive of the date

of issue of sale order). Payments shall be in the form of

DD/BC/Pay order or acknowledgement note from SBI, IFB

commercial, Branch of Raipur /Bokaro payable at Bokaro from

any of the Nationalized / Scheduled banks in favor of SAIL

/Bokaro Steel Plant. In case of failure of payment as mentioned

83

above and or failure in lifting of material within the validity

period of lifting, the Management reserves the right to cancel

the sale Order and forfeit the security deposit.

7) LOADING AND TRANSPORTATION:

Loading and transportation of the material in the tenderer

vehicle has also to be done by the tenderer at their own cost

and arrangements.

Successful customer will be allowed to lift the material only 4

days in a week.

8) Bokaro Steel Plant reserves the right to accept or reject any

of the tenders or all the tenders or award contract to any other

customer fully or partially without assigning any reason.

9) The management reserves the rights to divide the quantity

offered for sale and allot the material to more than one

tenderer.

10) VALIDITY OF LIFTING:

The successful tenders have to complete the lifting of the

allocated quantity of material within 300 (Three hundred) days

from the date of issue of sale order.

84

11) The offer of the customer would remain valid for a period of

90 (Ninety) days from the date of opening.

12) Loading will be done under the supervision of MRD, the

operating agency of the contract.

13) Evaluation criteria are the highest price for whole quantity

(12000 Cu.) subject to the price being acceptable to the

management.

DATA COLLECTED

SALES OF SECONDARY STEEL (Value in Lacks)

85

1 2 3 40

5000

10000

15000

20000

25000

Series1Series2

PERIOD 2009-

10

2010-11

1st Qtr 15464 17022

2nd Qtr 17179 20564

3rd Qtr 17425 15602

4th Qtr 19194 13159

SALES OF IRON & SCRAP (Value in Lacks)

86

1 2 3 40

200

400

600

800

1000

1200

1400

1600

1800

2000

Series1Series2

SALES BFG SLAG

(Value in Lacks)87

PERIO

D

2009-

10

2010-11

1st Qtr 1358 1726

2nd Qtr 1515 1439

3rd Qtr 1414 1503

4th Qtr 1872 1315

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr1050

1100

1150

1200

1250

1300

1350

1400

1450

Series1Series2

88

PERIO

D

2009-

10

2010-

2011

1st Qtr 1197 1240

2nd

Qtr

1333 1314

3rd

Qtr

1353 1282

4th

Qtr

1340 1398

SALES BY-PRODUCTS (Value in Lacks)

2005-0610%

2006-0713%

2007-0811%

2008-0914%

2009-1019%

2010-1132%

Chart Title

PERIOD 2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-11

1ST Qtr 904 1218 1041 1263 1759 2906

2ND Qtr 1320 1731 1417 1458 2047 2797

3RD Qtr 1145 1038 1312 1295 2104 2041

4TH Qtr 2024 1797 2045 2115 1918 1701

TOTAL 5393 5784 5815 6131 7828 9445

89

SALES MISC OTHERS (Value in Lacks)

1 2 30

200

400

600

800

1000

1200

1400

1600

2009-102010-11

PERIOD 2009-10 2010-11

1st Qtr 961 1457

2nd Qtr 848 1515

3rd Qtr 987 1065

4th Qtr 1182 462

90

E-AUCTION (Value in Lakhs)

1 2 3 40

2000

4000

6000

8000

10000

12000

14000

16000

2009-102010-11

PERIO

D

2009-

10

2010-09

1st

Qtr

8144 13410

2nd

Qtr

12100 10800

3rd

Qtr

9146 11223

4th 12619 6553

91

Qtr

PRODUCTION PERFORMANCE OF BSL

09-10 10-11(MARCH)

TARGET ACTUAL TARGET ACTUAL

HOT METAL 4585 4660 5050 4020

CRUDE

STEEL

4360 4130 4700 3577

SALEABLE

CR-COIL

3655 3600 4210 6479

SALAEBLE

STEEL

3780 3900 4110 3383

92

PROFIT IN BSL

YEAR PROFIT (Rs. IN

CRORE)

2007-08 2737

2008-09 2830

2009-10 1324

20010-11

93

SWOT ANALYSIS

STRENGTH-:

1. Bokaro Steel Plant has a huge pool of skilled and

experienced personnel.

2. Principle of hierarchy is given due respect in BSP enabling

management to ensure proper planning and its

implementation.

3. Flawless corporate image of SAIL enhances the confidence

of managers and customers alike.

4. Record of harmonious customer relation boosts the

revenue graph towards north.

5. Strategic Information System in the organization gives

cutting edge advantage reducing cost and time for every

operation.

6. Huge infrastructure, when provides a strong base for

better production and marketing, since it has countrywide

network of stockyards, dockyard and sales branch offices.94

7. The by-product of Bokaro Steel Plant is coal-based and of

best quality against the petroleum based bye-products,

giving the company a huge advantage against their

competitors.

8. Bokaro Steel Plant has TQP i.e. Total Quality People which

mean a dedicated work force towards serving the

company’s customers.

9. A strong R&D cell of the company keeps on working over

enriching the quality of its bye-products and to reduce the

cost of the whole process.

WEAKNESS:-

1. Lack of teamwork and internal customer orientation

inhibits proper implementation of company’s policy.

2. Complex pre post sale activities repel the probable

customers.

3. Due to its large organizational structure involving

numerous policies and officials, prompt decision making

is a real problem.

95

4. The hard working marketing officials are not given due

recognition and appropriate reward that hurts their

motivation and interest.

OPPORTUNITY:-

1. There is growing demand for secondary and by-products

in both domestic and international market.

2. State government is planning to establish small industries

in and around Bokaro which will increase the list of

probable customers.

3. New markets are to be searched and developed with the

opening of the global steel market.

4. There is a great opportunity in the field of research to

improve the quality of the coal-based products which would

strengthen its well established base among customers.

96

FINDINGS

RELATED TO MARKETING DEPARTMENT

During our 6 weeks of training in marketing department of BSL. We have observed certain

problems in it these problems are findings of our studies.

1. All marketing procedure of prime products are decided by SAIL and carried out by the

Central Marketing Organization (CMO).

2. As the organization is concerned with a large number of productions activities and the

departmental work are done mostly manually from placement of orders to documentation,

which ultimately frustrates the employees.

3. The organization is more concerned with larger orders of steel products by ignoring the

smaller orders.

4. The local customers with business of by-products are sometimes made to wait for days to

get their papers cleared by the department.

5. Most of the existing yards suffers from improper stocking space and siding facility often

they are not well developed due to this the material stored there are rusted and other defects

97

are caused and later they are disposed of by offering some concession or at low rate which

result in loss

SUGGESTIONS & RECOMMENDATIONS:

1. Concept of Key Account Manager should be adopted for better customer satisfaction of

regular customers.

2. Extensive customer contact.

3. The pricing as we well as the distribution policies should be framed by keeping in mind

the requirements of the complete range of manufactures and not only the bulk

consumers. This will encourage the new re-rolling mills to approach BSL for the

material.

4. Price of the material for which 100% payment has been received as advance should not

be changed if the delay in the lifting of the material by the party is due to some fault of

BSL but if is due to deliberate delay in lifting the material by the customer than the

same policy should be applicable.

5. When the customer having rolling mill of a smaller size purchase material, which are

rolled in a bigger rolling mills than this, clearly indicates that the material is being

purchase for trading. This practice can be prevented if BSL obtains a copy of

certificates issued to the owner of every mill by the District industry center specifying

the size of the mill.

98

6. BSL can appoint 2-3 authorized stockiest also to avoid trading practice. In this way the

benefit of break up pricing can be passed on to the one for whom these have been

framed i.e. the actual re-rollers.

7. Price list made available to the various re-rollers every month by BSL should count all

the items but it should clearly indicate the material which is not available so that the

customers requiring that particular material can approach some other source.

8. The infrastructure facilities at the disposal yard should be maintained properly and

needs improvements so that the pace of the lifting process is increased.

9. Fully equipped computers system in marketing department.

10. Proper packing is to be done to safeguard the materials from damage, which is

occurring due to multistage handling and transportation.

11. Refund of excess payment process should be improved and simplified. It. should make

payment in less time. Ensure delivery of the material for which the payment is accepted

so that mills are not closed or shut down for want of material.

12. Alternatively if the material is not available the BSL authorities should not accept the

payment so that the buyer can approach some other source for procuring the material

and should not unnecessarily wait for the material, which is not available.

99

CONCLUSION

BSL marketing network is spread all over India, which helps in collecting, orders of various customers

easily and it can easily interact with its customers.

1. BSL officers posted outside like Kolkata, Delhi, Chennai and Mumbai who work in close

coordination with the Marketing Department.

2. Sales of Secondary Product have reduced compare to previous year.

3. Sales of Iron & Scrap are also reduced compare to previous year.

4. Sales of Blast Furnace Slag are almost same as last year.

5. Sales of Pig Iron are less in this financial year. Last year sales of Pig Iron was nil in the 3 rd

and 4th qtr but in this year its has shown good market which is good sign.

6. Market of By-Product shown good sign in this financial year and sales of By-Product has

increased compare to previous year. The price of By-Product has reduced in this financial

year.

7. BSL has fail to achieve the target which they set for them and unable to meet production of

Hot Metal, Crude Steel, Saleable CR coils and Saleable Steel of the target, its result has seen

on the profit of the company which reduced by 50% compare to last financial year.

100

ANALYSIS OF DATA COLLECTED FROM THE CUSTOMER OF BSL

Question 1:- In which category of customer do you belong?

(a) Trader (b) Manufacturer (c) Processor (d) Others

Table no : -5.1

SALES

Trader 45

Manufacturer 30

Processor 20

Others 05

101

45%

30%

20% 5%

Sales

TraderManufacturerProcessorOthers

Question 2:- Why do you prefer to purchase from BSL?

(a) Quality (b) Cheap Transportation (c) Local Market (d) Low price

Table no: - 5.2

Quality 40

Cheap Transportation 20

Local Market 33

Low price 07

102

Interpretation:- From the above data it show that Trader (45%), Manufacturer (30%), Processor (20%) and others (5%) are involved in trading category with BSL.

Thus, we can say that 45% are involved in trading category with BSL.

40%

20%

33%

7%

Purchasing

QualityCheap TransportationLoacl MarketLow Price

Question 3: - Are you satisfied with the quality of the product?

(a) Yes (b) No

Table no : - 5.3

Yes 78

No 22

103

Interpretation:- From the above data 40% customer are prefer to purchase quality based product from BSL, 33 % are prefer to purchase product because of local market, 20% are prefer product for cheap transportation cost ,7 % are prefer low price of the product.

Thus, we can say that 40% of the total customer prefer to buy the qulity based product from BSL,

78%

22%

Satisfied

YesNo

Question 4: - Are you dealing with any other steel company?

(a) TATA (b) RINL (c) Essar Steel (e) Jindal Steel (d) Others

Table : - 5.4

TATA 50

RINL 10

Essar Steel 12

104

Interpretation: - From the above data 78 % are satisfied with the quality of the product of the BSL, 22 % are not satisfied with the quality of the product.

Thus, we can say that the 78% of the customer were satisfied with of the product of the BSL.

Jindal Steel 15

Others 13

50%

10%

12%

15%

13%

Dealing

TataRINLEssar SteelJindal SteelOthers

Question 5: - What type of product do you purchase from BSL?

(a) Secondary Product (b) By- Product (c) Slag (d) Idle assets

Table no :- 5.5

Secondary Product 55

By-Product 28

105

Interpretation: - From the above data Customers are dealing with some company also like 50% dealing with TATA, 10% with RINL, 12 % with Essar Steel, 15% with Jindal Steel, 13% with others company.

Thus, we can say that 50% of the customer were dealing with the TATA.

Slag 10

Idle assets 07

57%28%

10%

5%

Purchased Product

Secondary ProductBy-ProductSlagIdle assets

Question 6: - Your Company deal with

(a)Customer (b) Wholesaler (c) Other company (d) All of the them

Table no :- 5.6

Customer 30

Wholesaler 50

106

Interpretation: - From the above data 55 % customers prefer to purchase Secondary product from BSL, 28 % are on By- Product, 10 % on Slag, 7 % on the idle assets.

Thus , we can say that the most of the customer prefer to purchase Seconary product from BSL.

Other Company 13

All of them 07

30%

50%

13%

7%

Deal

CustomerWholesalerOther CompanyAll of them

Question 7: - Considering your experience with BSL, how would you rate the overall quality

of the product provided by the selected company?

(a) Excellent (b) Very Good (c) Good (d) Fair (e) Poor

Table no: - 5.7

107

Interpretation: - From the above data Company 50 % deal with there wholesaler, 30 % dealing with there customer, 12 % on other company, rest 7 % dealing with all of them.

Thus, we can say that 50% of them deal with there wholesaler .

Excellent 19

Very Good 18

Good 25

Fair 30

Poor 08

19%

18%

25%

30%

8%

Experience

ExcellentVery GoodGoodFairPoor

Question 8:- Considering the overall quality of product in relation to its price, how would

you rate the value offered?

(a) Good (b) Bad

Table no: - 5.8

Good 60

Bad 40

108

Interpretation: - From the above data As compare to BSL other company 30 % provides fair quality of the product, 25 % provide good quality product, 19 % provide excellent quality, 18% provide very good quality of the product, 08 % provide poor quality of the product as compare to the BSL.Thus, we can say that the BSL provide the fair products to the customer.

60%

40%

Rate

GoodBad

Question 9: - Are you satisfied with your association with BSL?

(a) satisfied (b) Dissatisfied

Table no: - 5.9

Satisfied 72

Dissatisfied 28

109

Interpretation :- From the above data It’s quality as compare to the price of the product was Good according to 60% customer ,& 40% of them says bad as compare to BSL.

Thus, we can say that the more than the average customer were satisfied.

72%

28%

SatisfiedDissatisfied

Question 10: - For what purpose do you use the By-product purchased from BSL?

(a) Trading (c) consumption

Table no:- 5.10

Trading 70

Consumption 30

110

Interpretation: - From the above data 72% customer says satisfied to the association with the BSL and 28 % are dissatisfied with the BSL with there association with the BSL.

Thus, we can say that the customer were satisfied with association with BSL.

70%

30%

Purpose

TradingConsumption

Question 11: - Which mode of sale you/your company prefer from BSL?

(a) Fixed price (b) E-auction (c) Open tender

Table no: -5.11

Fixed price 77

E-auction 13

Open tender 10

111

Interpretation: - From the above data 70% customer uses By-product for trading purpose and 30% using for consumption purpose.

Thus, we can say that the customer uses By- product for trading.

77%

13%10%

Sales

Fixed priceE-auctionOpen tender

Question 12:- Which type of mode of transport are you using?

(a) Railways (b) Road

Table no :- 5.12

Railways 15

112

Interpretation: - From the above data 77 % customers say they prefer fixed price mode of sale, 13 % says they prefer E-auction process and 10% they prefer open tender process.

Thus, we can say that 77% customer prefer fixed price mode of sale.

Road 85

15%

85%

Mode of Transport

RailwaysRoad

ANNEXURE

QUESTIONNAIRE

1. Name (Optional) : ----------------------- 3. Age : --------- 5. Address : ---------------------------2. Company Name : ----------------------- 4. Phone No : --------------------

113

Interpretation: - From the above data 85% customers they using road for transportation and 15% they are railways for transportation purpose.

Thus, we can say that the 85% of customer uses the road for transportation.

Question 1:- In which category of customer do you belong?

(a) Trader (b) Manufacturer (c) Processor (d)Others

Question 2:- Why do you prefer to purchase from BSL?

(a)Quality (b) Cheap Transportation (c) Local Market (d) Low price

Question 3: - Are you satisfied with the quality of the product?

(a) Yes (b) No

Question 4: - Are you dealing with any other steel company?

(a) TATA (b) RINL (c) Essar Steel (e) Jindal Steel (d) Others

Question 5: - What type of product do you purchase from BSL?

(a) Secondary Product (b) By- Product (c) Slag (d) Idle assets

Question 6: - Your Company deal with

(a)Customer (b) Wholesaler (c) Other company (d) All of the them

Question 7: - Considering your experience with BSL, how would you rate the overall quality of the product provided by the selected company?

(a)Excellent (b) Very Good (c) Good (d) Fair (e) Poor

Question 8:- Considering the overall quality of product in relation to its price, how would you rate the value offered?

(a) Good (b) Bad

Question 9: - Are you satisfied with your association with BSL?

(a) Satisfied (b) Dissatisfied

Question 10: - For what purpose do you use the By-product purchased from BSL?

(a)Trading (b) consumption

114

Question 11: - Which mode of sale you/your company prefer from BSL?

(a)Fixed price (b) E-auction (c) Open tender

Question 12:- Which type of mode of transport are you using?

(a)Railways (b) Road

115

ABBREVIATION

1. SAIL - Steel Authority of India Limited.

2. TISCO - TATA Iron and Steel Company.

3. MECON - Methodological & Engineering consultant’s

ltd.

4. HSCL - Hindustan steel works consultants Ltd.

5. NMDC - National Mining Development Corporation ltd.

6. RDCIS - Research and Development Centre for Iron

and Steel.

7. CET - Centre of Engineering and Technology.

8. CPTI - Central Power Training Institute.

9. MRD - Marketing Recovery Department.

10.BFGS - Blast Furnace Granulated Slag.

116

BIBIOLOGRAPHY

BOOKS

Marketing Management Philip Kotler

Marketing Management Willian Stanton

Websites

www.worldsteel.com

www.mysteel.com

www.tisco.com

www.steel.nic.in

www.ispatind.com

www.indiansteelalliance.com

Other Sources

Report given by the companies

Global steel industry news, statistics and information

portal

Research paper

117

Magazines like Steel world.

118