This slide contains all the departmental approach of Bhushan Steel Limited, and it explains all the face of companie profile and critically examined the reason for decline of the company.
6. Mission & Vision Statement
Mission Statement
“The Company embraces certain core values in order to function ethically,
effectively and prosper further”
Vision Statement
“To create a competitive advantage for all stakeholders through effective people
management”
6
7. Steel Industry Overview
Steel industry plays an important role in the economic development of a
country
India, being the 9th largest steel producer in the world, has a share of about
3.2% in world steel production of a little over 900 million tonnes (MT)
Despite this, the per capita steel consumption in India is one of the lowest,
thus providing the domestic industry with a huge potential to scale greater
heights
steel demand, being derived from other sectors like automobiles, consumer
durables and infrastructure, its fortune is dependent on the growth of these
user industries
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8. The Indian steel sector enjoys advantages of domestic availability
of raw materials and cheap labor. Iron ore is also available in
abundant quantities. This provides major cost advantage to the
domestic steel industry
Steel demand has outpaced supply over the last five years
Driven by rising infrastructure development and growing demand
for automotives, steel consumption is expected to reach 104 MT by
2017
It is expected that consumption per capita would increase
supported by rapid growth in the industrial sector, and rising infra
expenditure projects in railways, roads & highways, etc.
Total consumption of finished steel grew by 3.4 per cent year-on-
year at 6.015 MT during April 2017
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12. Board of Directors and Authority
Brij Bhushan Singhal
(Chairman)
Neeraj Singhal
(Vice Chairman & MD & CEO)
Nittin Johari
(Whole Time Director-Finance)
Prem Kumar Aggarwal
(Whole Time Director-Commercia)
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13. Managing Director
GM-Production AGM-Works AGM-Marketing GM/MD-Finance AGM-Marketing
Purchase
Raw Material
Handling
Planning &
Control
Quality Check
Logistics
Statutory
Compliance
Personnel &
Admin
Maintenance
Factory
Development
Business
Development
Market Research
Client
Co-ordinator
Company
Accounts
Sales-tax
Officers
Excise-Officer
Billing
Information
Technology
Corporate
Communication
Organization Structure
13
14. Concept of Human Resource Management
• Human Capital is an important source of its competitiveness
• Management Practices designed to foster meritocracy
• They strive to attract best available talent ensuring a diverse workforce
14
17. Work Culture
• Freehand in decision making execution of project work
• Fixed working hours
• Responsibility distribution
• Infrastructure is Environmental friendly
• Lack of Hierarchy
• Nepotisms
17
20. Training
& DevelopmentIn House Training
External Training
(Overseas Training
Program)
Input
Process
Performance
Productivity
Training & Development
20
21. Corporate Social Responsibility
House Keeping
Facility
Control Of Air
Pollution
Hospital & Health
Care Program
Environmental
Concern
Control of Water
Pollution
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22. HR Case
• Syndicate Bank Ltd’s chairman and managing director is alleged to
have received bribes to sanction loans. Bhushan Steel is one of the
companies named in this probe. Singhal was arrested on 7 August
• Threat call charge on Bhushan Steel Ltd.
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24. PESTLE
• P- political
• E-economical
• S- social
• T-technological
• L-legal
• E-environmental
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25. Political
Taxation policy, international trade
regulations enforce to change the
strategic implementation in
business
Economical
Down turn of the economic scale the
organization faced loss
Social
With the ethical behaviors and trust
in the leadership the organization is
maintaining their social and ethical
responsibilities considering the
nation’s communities
Technological
•Adaptation towards technologies the
organization is having sustainable
growth in markets with improving
operations and productions
• The technological evolution also
imposes threats in the competitive
measures.
Environmental
Carbon emission and the carbon
footprint during the production has
been impacting over the business
Legal
•Health and safety rules for the
employees and customers
• Monitory and fiscal policies
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27. Bargaining power of
Supplier
The bargaining power of
suppliers is low for the fully
integrated steel plants (their
own mines of key raw material
like iron ore coal)
Bargaining power of buyers
Buyers have low bargaining
power
Threat of Substitute
It is medium to low
Threat of rivalry
It is medium in the domestic steel
industry demand still exceeds the
supply
Barriers to entry
It is low
Following are the factors that vindicates
Capital Requirement: Steel industry is a capital intensive
business
Economies of scale:
•Lowering the costs
• Better bargaining power while sourcing raw materials
Government Policy
Product differentiation
• low barriers in terms of product differentiation
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29. Segmentation
1.Purchasing approaches
• Purchasing Function Organization: Serve the company
with highly centralized purchasing organization
• Nature of existing relationship: Serve companies with
which they have strong relationship
2. Situational factor
• Size or Order: Focus on Large orders
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37. Factors influencing pricing strategy of BSL are:
• Production cost
• Market demand
• Govt. regulation
Price
37
38. Place
Distribution Channel at
BSL
OEM (0 Level)
Order in form of
Schedule
Payment As per
Agreement
Domestic Trading
(1 Level)
No Order
No Payment
Totally based on
Projection
Export
(0 Level)
Order
Payment in
form of LC
Delivering on
Schedule
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42. S
Strength
•Location advantage
• Availability of its own Iron ore
• Integrated values
• Technology
W
Weaknesses
•Availability of raw materials
• Low R&D investment
• Low productivity
• Inadequate infrastructure
• Power shortage is there at BSL
Opportunity
• Industry growth
• Adaptation towards newer
technology
• Growing demand for steel
O
Threats
• Up and down of steel price
•Technological change
•Price Sensitivity and demand
volatility
• International competitors
T42
46. • Proximity to Alibarg and Candla ports. This helps them to export there
goods easily
• Proximity to Mumbai
• The company whose capacity is to produce 425000 MT per annum cannot
be set-up in the city. Thus it is well set away from the residential area but
not too far from the market
• The Khopoli plant is 6kms away from NALCO
• Proximity to river water
• Proximity to railway
Reason Behind Khopoli Plant
46
48. Located near to major automobile and white goods
manufacturing hubs such as Maruti, LG, Samsung and
Honda
Reason Behind Sahibabad Plant
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49. Distribution Channel at
BSL
OEM (0 Level)
Order in form of
Schedule
Payment As per
Agreement
Domestic Trading
(1 Level)
No Order
No Payment
Totally based on
Projection
Export
(0 Level)
Order
Payment in
form of LC
Delivering on
Schedule
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50. Product Imported
Product Name Unit Quantity
Value
Rs crore
% of RM cost
to Total Cost
HR/CR Steel
Strips/Sheets/Coil
>MT 888021 2580.69 79.30
Zinc & Alloys >MT 26502 263.54 8.10
Iron Ore >MT 611143 233.16 7.16
Coal >MT 751576 130.21 4.00
Paints >MT 2179 36.11 1.11
Coal-Purchased >MT 44486 6.12 0.19
Dolomite >MT 33614 4.43 0.14
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51. Raw Materials
Iron ore
• BSL sources 60-70% of its iron ore requirements from NMDC and the balance is
procured from the spot market
• BSL has been allocated Marsua Tirba mines in Keonjhar district, Orissa with
reserves of 70mn tonnes
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52. Contd......
Coal and coking coal
• BSL has been allotted coal mines in New Patrapara, Orissa, in a joint
venture with Visa Steel, SMC Power Generation Ltd, Orissa Sponge Iron
and Steel, Deepak Steel and Power, Sri Metaliks and Adhunik Corp
Total reserves are estimated to be 650mn tonnes, of which BSL's share will
be 325mn tonnes
• In addition, BSL has been allotted the Andal East Coal block in West
Bengal, with estimated reserves of 235mn tonnes, and the Urtan North
coking coal block in Madhya Pradesh, which has an estimated reserves of
55mn tonnes
• The company imports its coking coal requirements from Australia and
thermal coal is sourced from Mahanadi coal fields and e-auction
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53. Product price increase in 2010
• Repercussion- shares were lower by 2.40% at Rs 446.40/-
• Prices are going up because of the pressures of increase in raw material prices.
Coking coal prices have gone up by 8% to 10% in the last quarter and even the iron
ore prices are going up. There is no way that the steel company can absorb these
kind of a price increases, so we definitely have to increase the prices of steel. Most
of the companies have increased the prices this month and we have to see how this
behaves in terms of the demand
Read more at:
http://economictimes.indiatimes.com/articleshow/7064685.cms?utm_source=contentof
interest&utm_medium=text&utm_campaign=cppst
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54. EXPORT
• The secondary products are finished products like colour coating coils, colour
coating sheets, corrugated sheets, GP coils etc
• Export from PAN India basis and the region wise export per month on an
average is as following:
Gulf – 31%
Africa – 40%
Europe – 10%
Far East – 3%
Latin America – 13%
• In export , two major categories, the break-bulk category and the other is
containerized cargo. One of our major products i.e., API pipes which is
produced in the Khopoli plant, Mumbai is exported in break-bulk from the
Bombay port. HR (hot Rolled) coils which is produced in the Meramandali
plant, Orissa is also exported in break-bulk from the Paradip port
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55. Contd.....
• BSL started exporting only through 20 ft containers
• Break-bulk which work out to be more cost effective was used .So they started
exporting to China and Antwerp through it
• Drawback- Inventory cost
We have to keep a minimum of 10,000 MT of cargo in stock which calls for high
inventory cost in comparison with the freight that is being offered to us today and the
rejection rate is moderately high for break bulk cargo. Customers tend to reject about
10% of the commodity on account of unsatisfactory quality or damages etc. So we try
to keep a balance between break-bulk and the containerized cargo.
There was also a turning point of exporting HR coil from the “dead port” called
Paradip port. About 3 years back we have started exporting HR coils from the Paradip
port
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56. Contd......
• Establised distribution Centre at Nigeria which will later be converted into a
plant.Aarti Steel Nigeria Ltd ( Bhushan Steel Ltd Group)
• We already have our own distribution Centre at UAE & Djibouti(East africa)
“BHUSHAN STEEL GLOBAL FZE”
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57. Outsourcing logistic
• An ideal logistics company is one that provides consistency in its services and
provides competitive prices
1. Rates/Freight
2. Long Term Relationship
3. Free Days
4. Credit Terms
Eg: Goodrich (EXPORT), Ptraans Logistics (India) Pvt. Ltd. (DOMESTIC),
Arshiya Logistics Infrastructure(DOMESTIC),Rhenus logistic
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58. Delivery
• Bhushan Steels Management policy is to only work on LC basis(a letter of
credit) whereas other steel manufacturers work on advance basis
• Delivery period is 33 days. Within 33 days the commodity irrespective of the
quantity
• Most of the steel manufacturers take orders in 1000’s, we even take orders for
25 MT. Our aim is to satisfy the needs of our customer
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59. Contd....
• Under the EPCG scheme, steel companies have to meet the six-year export
obligations in blocks of (4years,2years)
• If a company fails to meet the obligation in one block it can carry forward the
deficit to the next two years by paying a penalty. The penalty is the sum of
unfulfilled export obligation and an interest at 15 per cent per year from the date
of clearance of goods. Steel firms say that the penalty is stiff, given the overall
sluggishness in the industry
• While the steel companies have increased capacity by over 10 million tonnes
over the past few months — led by Tata Steel and JSW Steel commissioning 3
million tonnes per annum each and Bhushan Steel adding 1 mtpa — the
industry has sought the Centre’s intervention in relaxing the norms
(July 24, 2016)
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