CHAPTER-1

THEORETICAL FRAMEWORK
ABSTRACT

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

A Distribution channel is a set of interdependent organization involved in the process of

making a product or service available for use or consumption.

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

This project report entitled "A Study on Distribution Channel with Special Reference to
Visakhapatnam steel plant/RINL in Visakhapatnam District". To determine the dealer
satisfaction of the product and future demands,needs,wants.
 2

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

INTRODUCTION&INDUSTRY PROFILE

PROFILE OFIRON & STEEL INDUSTRY

Steelisaversatile,constantlydevelopingmaterialthatunderpinsallmanufacturing
activity.Ifaproduct is not madefrom steel,thenitis certainlymadeusing steel atsomepoint in
themanufacturingprocess.
OVERVIEW OFIRON ANDSTEEL INDUSTRY
Steeliscrucialtothedevelopmentofanymoderneconomyandisconsideredtobe
thebackboneofhumancivilization.Thelevelofpercapitaconsumptionofsteelistreatedas
oneoftheimportantindicesofthelevelofsocio-economicdevelopmentandlivingstandard
ofthepeopleinanycountry.Itisaproductofalargeandtechnologicallycomplexindustry having
strong forward and backward linkages in terms of material flows and income
generation.Allmajorindustrialeconomiesarecharacterized bytheexistenceofastrong steel
industryandthegrowthofmanyoftheseeconomieshasbeenlargelyshapedbythestrength
oftheirsteel industries intheirinitial stages of development.
HISTORICAL PERSPECTIVE
ThefinishedsteelproductioninIndiahasgrownfromamere1.1milliontonnesin
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1951to 29.27 million tonnes in 2000-2001. Duringthefirst two decades ofplanned economic
development,i.e.1950-60and1960-70,theaverageannualgrowthrateofsteelproduction
exceeded8%.However,thisgrowthratecouldnotbemaintainedinthefollowingdecades.
During1970-80,thegrowthrateinsteel productioncamedownto5.7%perannumand
pickedupmarginallyto6.4%perannumduring1980-90, whichincreasedto6.65%per
annumduring1990-2000.ThoughIndiastartedsteelproductionin1911,steelexportsfrom
Indiabeganonlyin1964.Exportsinthefirstfiveyearsweremainlyduetorecessioninthe
domesticironandsteelmarket.Oncedomesticdemandrevived,exportsdeclined.Indiaonce
againstartedexportingsteelonlyin1975touchingafigureof1milliontonnesofpigiron
exportand1.4million tonnesofsteelexportin1976-77.Thereafter,exportsagaindeclinedto
pickuponlyin1991-92,whenthemainproducersexported3.87lakhstonnes,whichroseto
2.79milliontonnesin1995-96.Thesteelexportsin1999-2000were2.36milliontonnesand
in2000-01itwas2.57milliontonnes.Thegrowthinthesteelsectorintheearlierdecades
sinceIndependencewasmainlyinthepublicsectorunitssetupduringthisperiod.The situation has
changed dramatically in the decade 1990-2000 with most of the growth originating in the
private sector. The shareofpublicsector and private sector in the
productionofsteelduring1990-91was46%and54%respectively,whileduring2000-01the
samewas32%and68%respectively.Thischangewas broughtaboutbyderegulationand
decontroloftheIndianironandsteelsectorin1991.Anumberofpolicymeasureshavebeen
takensince1991forthegrowthanddevelopmentoftheIndianiron&steelsector.
Removalofiron&steelindustryfromthelistofindustriesreservedforthepublic
sectorandalsoexemptionfromtheprovisionsofcompulsorylicensingundertheIndustries
(Development&Regulation) Act, 1951, deregulation of priceand distribution of iron & steel,
inclusion of iron and steel industryin the list of high priorityindustries for automatic
approvalforforeignequityinvestmentsupto74%,loweringofimportdutyoncapitalgoods and raw
materials etc.
TheIndiansteelsectorwasthefirstcoresectortobecompletelyfreedfromthe
licensingregimeandthepricinganddistributioncontrols.Thiswasdoneprimarilybecause
oftheinherentstrengthsandcapabilitiesdemonstratedbytheIndianironandsteelindustry.
During1996-97,finishedsteelproductionshotuptoarecord22.72milliontonneswitha
growthrateof6.2%,whilein1997-98,thefinishedsteel productionincreasedto23.37
milliontons,whichwas2.8%morethanthepreviousyear.Thegrowthratehasdrastically
decreasedin1997-98and1998-99being2.8%and1.9%respectivelyascomparedto20%in
1995-96and6.2%in1996-97.Thegrowthratein2000-2001hasimprovedtoahealthy
9.60%withthetotalproductiontouching29.27milliontonnes.Theproductionoffinished
steelduring 2001-02hasbeen30.61milliontonnes,whichmeansalowergrowthrateof
 4

about4.5%comparedtothepreviousyear.Thisfallinthegrowthrateofsteelproductionhas been
brought about by several factors that, inter-alia, include general slowdown in the
industrialproductionandconstructionactivitiesinthecountrycoupledwithlackofgrowthin
majorsteelconsumingsectors.Thetotalproductionoffinishedsteelandtheshareofmain and
secondaryproducersduring90's andup to 2002-03 are given in the annexure.

THEINTEGRATED STEEL PLANTSIN INDIA ARE:

Rourkela SteelPlant
BhillaiSteelPlant
Bokaro SteelPlant
DurgapurSteelPlant
Tata Iron and SteelCompany(TISCO)
VisakhapatnamSteelPlant( VSP)
ESSARSteel Company
JINDAL SteelCompany

IRON ANDSTEEL PROMOTION IN INDIA

Although iron and steel is one of the most important industries in the Indian
manufacturingsector,Indiaisonlythe15thlargeststeelproducerintheworld.Originating
fromthefirstsetupofasinglesteelplantin1911-12,theironandsteelsectorincluded7
integratedironandsteelplantsin1995-96.Duetotheregulatoryandpoliticaldevelopment
ofthesectoronlyoneoftheseplantsisinprivatehandsaccountingforabout15%oftotal
steelproduction.Theintegratedsteelunitsusuallyusetheblastfurnacebasicoxygen/open
hearthfurnaceprocessrouteforironandsteelproduction.Inaddition,thereareabout180
secondaryproducersemployingtheelectricarcfurnaceprocess.Another500mostlysmaller
unitsrelyon otherprocessessuchasinductionfurnaceprocess,meltingbyre-rollers,and ship
breakingunits.

PROJECTEDPRODUCTION OFIRON& STEEL(Mt/annum)

CrudeSteel
Production (Mt/annum)based on

CrudeSteel Production (Mt/annum) based on

Year GDPtotal GDPindustry Average
 5

2001 28.71 29.53 29.12

2005 35.38 36.93 36.15
2010 45.95 49.07 47.51

Thoughcurrentlytheironandsteelsectorseemstobeonanupwardpathinaworld
offreemarket competitionandprices,thereareseveraldrawbacksthreateningtheIndian
industry.Forexample,thestateoftechnology,despitetheeffortstowardsmodernizationand
upgradation,isstillinferiortothatinothercountries.Lowcostsofprimaryinputshaveso
farledtolowcostsofproductionandeconomicviabilityofIndiansteel.Theseadvantages,
however,maybeerodedinthenearfuturemakingIndiansteellesscompetitive.Therefore,
technologicalprogressandtheadoptionofmoreefficientandimprovedtechnologiesneedto
continuesupported bypolicyandeconomicincentives to the extent possible.

OBJECTIVEOFSTEEL POLICY
Strategic Goal:Thelong-termgoalofthenationalsteelpolicyisthatIndiashouldhavea
modernandefficientsteelindustryofworldstandards,cateringtodiversifiedsteeldemand.
Thefocusofthepolicy would thereforebetoachieveglobalcompetitivenessnotonlyin
termsofcost,qualityandproduct-mixbutalsointermsofglobalbenchmarksofefficiency
andproductivity.Thiswillrequireindigenousproductionofover100milliontonnes(mT)
perannumby2019-20fromthe2004-05levelof38mT.Thisimpliesacompoundedannual growth
of7.3 percent perannum.
Table1: Production,Imports, ExportsandConsumption of Steel

Production Imports Exports Consumption

2019-20 110 6 26 90
2004-05 38 2 4 36
CAGR* 7.3% 7.1% 13.3% 6.9%
(in million tones)

Consumption of Steel = Production+Imports-Exports

INDUSTRYSTRUCTURE
TheironandsteelindustryinIndiaisorganizedinthreecategoriesviz.mainproducers,
othermajor producersandthesecondaryproducers.Themainproducersandothermajor
producershaveintegratedsteelmakingfacilitywithplantcapacitiesover0.5mTandutilize
ironoreandcoal/gasforproductionofsteel. In 2004-05,themainproducersi.e.SAIL,
TISCOandRINLhadacombinedcapacityofaround19.3mTandcapacityutilizationwas
104percent.TheothermajorproducerscomprisingofESSAR,ISPATandJVSLhada
capacityof6.4MTwithcapacityutilizationof97percent.Thesecondarysectorisdispersed and
consistsof:
 6

(a) Backwardlinkagefromabout120spongeironproducersthatuseironoreandnon- coking

coal, with a capacity of around 13 mT, providing feedstock for steel producers.
Thecapacityutilization in 2004-05 was 75 percent.
(b) About650miniblastfurnaces,electricarcfurnaces,inductionfurnacesandenergy
optimizingfurnacesthatuseironore,spongeironandmeltingscraptoproducesteel. Their
capacityis around14.7 mT, and capacityutilization in 2004-05 was 58 percent.
(c) Forwardlinkagewithabout1,200re-rollersthatrolloutsemisintofinishedsteel
productsforconsumeruse.Thesearesmallandmediumenterprises,whosereported
capacityis around15mT, and capacityutilizationin 2004-05 was 55 percent.
SWOTANALYSISOFTHEINDUSTRY
Thestrengths,weaknesses,opportunitiesandthreatsfortheIndiansteelindustry have
beentabulatedbelow.Thenationalsteelpolicylaysdownthebroadroadmaptodealwithall
ofthem.

Strengths Weaknesses
1. Unscientificmining
1. Availabilityofironore and coal 2. Lowproductivity
2. Lowlabourwage rates 3. Cokingcoalimportdependence
3. Abundance ofqualitymanpower 4. LowR&Dinvestments
4. Matureproductionbase 5. Highcostofdebt
6. Inadequate infrastructure

Opportunities Threats

1. Unexplored ruralmarket 1. China becomingnetexporter

2. Growingdomestic demand 2. Protectionisminthe West
3. Exports 3. Dumpingbycompetitors
4. Consolidation

INDIANSTEEL INDUSTRY-A SWOT ANALYSIS

Strengths
Indiahasrichmineralresources.Ithasabundanceofironore,coalandmanyother
rawmaterialsrequiredforironandsteelmaking.Ithasthefourthlargestironorereserves
(10.3billion)afterRussia,Brazil,andAustralia.Therefore,manyrawmaterialsareavailable
atcomparativelylowercosts.Ithasthethirdlargestpooloftechnicalmanpower,nextto UnitedStates
and the erstwhile USSR, capable of understanding and assimilating new technologies.
Consideringqualityofworkforce,Indiansteelindustryhaslowunitlabour
 7

cost,commensuratewithskill. Thisgetsreflectedinthelowerproductioncostofsteelin
Indiacomparedtomany advancedcountries(Table3).Withsuchstrengthofresources,along
withvastdomesticuntappedmarket,Indiansteelindustry hasthepotentialtofacechallenges
successfully.
Weaknesses

Endemic Deficiencies
These are inherent in the quality and availability of some of the essential raw
materials available in India, eg, high ash content of indigenous coking coal adversely
affectingtheproductiveefficiencyofiron-makingandisgenerallyimported.Advantagesof
highFecontentofindigenousareoftenneutralizedbyhighbasicityindex.Besides,certain key
ingredients of steel making, eg, nickel, ferro-molybdenum is also unavailable
indigenously.SystemicDeficienciesHowever,mostofthe weaknessesoftheIndiansteel
industrycanbeclassifiedassystemicdeficiencies.Someofthesearedescribedhere.High
CostofCapitalSteelisacapitalintensiveindustry;steelcompaniesinIndiaarechargedan
interestrateofaround14%oncapitalascomparedto2.4%inJapanand6.4%inUSA.Low labour
Productivity In India the advantages of cheap labour gets offset by low labour
productivity;eg,at comparablecapacitieslabourproductivityofSAILandTISCOis75
t/manyearand100t/manyear,forPOSCO,KoreaandNIPPON,Japanthevaluesare1345
t/manyearand980t/manyear.HighCostofBasicInputsandServicesHighadministered
priceofessentialinputslikeelectricityputsIndiansteelindustryata disadvantage;about
45%oftheinputcostscanbeattributedtotheadministeredcostsofcoal,fuelandelectricity,
eg,costofelectricityis3centsintheUSAascomparedto10centsinIndia;andfreightcost
fromJamshedpurtoMumbaiis$50/toncomparedtoonly$34fromRotterdamtoMumbai. Added to
this arepoorqualityandever increasing prices of coking and non-coking coal.
Other systemicdeficiencies include:
Poor qualityof basic infrastructure likeroad, portetc.
Lack ofexpenditurein researchand development.
Delayin absorption in technologybyexistingunits.
Low qualityof steel andsteel products
Lackoffacilitiestoproducevariousshapesandqualitiesoffinishedsteelon-demand
suchassteelforautomobilesector,parallelflangelightweightbeams,coatedsheets etc.
Limitedaccessofdomesticproducerstogoodqualityironoreswhicharenormally
earmarked for exports, and
High level taxation

Besides these Indian steel makers also lacked in international competitiveness on

 8

determinants like product quality, product design, on-time delivery, post sales service,
distribution network, managerial initiatives, research and development, information
technology and laborproductivity etc. As is evident in Table 4, the weaknesses gets
reflectedinIndiaspoorstanding intheglobalcompetitivenessasmeasuredintermsof indicated
parameters.
Opportunities
ThebiggestopportunitybeforeIndiansteelsectoristhatthereisenormousscopefor
increasing consumptionofsteelinalmostallsectorsinIndia.Table6givesaglimpseof
untappedpotentialofincreasingsteelconsumptioninIndia;eg,eventoreachthecomparable
developingandlatelydevelopedeconomieslikeChinaandotherEurope,aquantumjumpin steel
consumption will be required.

UnexploredRural Market
TheIndianruralsectorremainsfairlyunexposedtotheirmulti-faceteduseofsteel.
Theruralmarketwasidentifiedasapotentialareaofsignificantsteelconsumptionwayback
intheyear1976itself. However,forcefulstepswerenottakentopenetratethissegment.
Enhancingapplicationsinruralareasassumesamuchgreatersignificancenowforincreasing
percapitalconsumptionofsteel.Theusageofsteelincosteffectivemannerispossibleinthe
areaofhousing,fencing,structuresandotherpossibleapplicationswheresteelcansubstitute
othermaterialswhichnotonlycouldbringaboutadvantagestousersbutisalsodesirablefor
conservationofforestresources.OtherSectorsExcellentpotentialexistforenhancingsteel
consumption in other sectors such as automobiles, packaging, engineering Industries,
irrigationandwatersupplyinIndia.Newsteelproductsdevelopedtoimproveperformance
simplifymanufacturing/installationandreliabilityisneededtoenhancesteelconsumptionin
thesesectors.Mainobjectiveherehavetobeimprovementofqualityforvalueadditionin
use,requirementoflessmaterialbyreducingtheweightandthicknessandfinallyreduction in
overa llcos tfor thee nd us er . Latest technolog ymustb e adopted b yIndiansteel
manufacturersforproductionofsuperiorqualityofsteelfortheseapplications.Forexample, pre-
coatedsheetscanbeusedinmanufactureofappliances,furnishings,electricgoodsand
publictransportvehicles.Productionandsupplyofsuperiorgradesofsteelindesiredshapes
andsizeswilldefinitelyincreasethesteelconsumptionasthiswillreducefabricationneed;
therebyreducecostofusingsteel.Fewotherperceivedopportunitiesare:ExportMarket
Penetrationitisestimatedthatworldsteelconsumptionwilldoubleinnext25years.Quality
improvementof Indiansteelcombinedwithitslowcostadvantageswilldefinitelyhelpin substantial
gain in export market.
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THREATS

SlowIndustryGrowth

Thelinkagebetweentheeconomicgrowthofacountryandthegrowthofitssteel industry
isstrong.TheIndiansteelindustryisnoexception.Thegrowthofthedomesticsteel
industrybetween1970and1990wassimilartothegrowthoftheeconomy,whichasawhole
wassluggish.Thissluggishgrowthinthe steelindustryhasresultedinenhancedrivalry
amongexistingfirms.Astheindustryisnotgrowingthe onlyotherwaytogrowisby increasing
onesmarketshare.Consequently,theIndiansteelindustryhaswitnessedspurtsof
pricewarsandheavytradediscounts,whichhasdoneIndiansteelindustrynogoodasa whole.
Threatof SubstitutesPlasticsandcompositesposeathreattoIndiansteelinoneofits biggestmarkets.
Fortheautomobileindustry,theothermaterialatpresentwiththepotential
toupstagesteelisaluminum.However,atpresentthehighcostofelectricityforextraction and
purification of aluminum in India weighs against viable use of aluminum for the
automobileindustry.Steelhasalreadybeenreplacedin somelargevolumeapplications:
railwaysleepers(RCCsleepers),largediameterwaterpipes(RCCpipes), smalldiameter pipes
(PVC pipes), and domesticwatertanks(PVC tanks).

TechnologicalChange

Technologicalchangesoftenforcetheindustrystructuretochange.Foradeveloping
countrylikeIndiawherecapitalitselfiscostly,technologicalobsolescenceisamajorthreat.
PriceSensitivityandDemandVolatilityThedemandforsteelisaderiveddemandandthe
purchase quantity depends on the end-user requirements. The traders discounts. This
volatility ofdemandoftenaffectstheintegratedsteelmanufacturersbecauseoftheirinability to
tunetheirproduction in line with the market demand Fluctuations. Some other threats are:
Ever decreasingimport dutyon steel.
Dumpingof steel bydevelopedcountries.
High quality products from developed countries available for import at very
competitive prices.
Non-availabilityof capital from financial institutions foriron and steel sector.

STRATEGIC
RESTRUCTURING
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A Comparative Analysis
Theeffectofglobalizationonsteelindustriesindifferentregionsorcountrieshasnot
beenuniform.Eachregionisuniqueinitsownwayintermsofrawmaterialsavailability,
technologyadopted,market conditions,tradingpolicies,etc.Consequentlyrestructuringof
steelindustriesindifferentregionshavebeendoneinamannerthatbestsuitstheneedsand situations
o f t h e c o u n t r y o r r e g i o n ( Table 7 ). The divergent strategiesadoptedfor
restructuringbysteel industries in differentcountries/regions providethe right perspective for
buildingaturnaroundstrategyforIndian steel industry

STEEL DEMAND

Urban Areas: Thepresentsteelconsumptionpercapitaperannumisabout30kgin

India,comparedto150kgintheworld,and350kginthedevelopedworld. The estimated urban
consumption per capita per annum is around 77 kg in the country, expected to reach
approximately 165kg in 2019-20, implying a CAGR of 5 percent. Apart from the anticipated
growth in the construction, automobile, oil and gas transportation, and infrastructure sectors of
the economy, conscious promotion of steel usage among architects, engineers and students by
the institute of Steel Development and Growth (INSDAG) and the large producers will drive
this additional consumption. Steps would be taken to encourage usage of steel in bridges, crash
barriers, flyovers and building construction. Benefits of steel usage would be added to the
technical education curricula in the country.

RuralAreas:TheruralconsumptionofsteelinIndiaremainsataround2kgper capitaper
annum,primarilybecausesteelisperceivedtobeexpensiveamongthevillage
folks.Based on the promotional efforts mentionedabove, andan active focus on
openingnew
blocklevelruralstockpoints,atargetissetforraisingthepercapitaruralconsumptionof steel to 4
kgper annum by2019-20, implying aCAGR of 4.4 percent.

Exports:AlthoughthefocusofIndiansteelindustryisonthedomesticmarket,
exportwillbeanotherwindowonthedemandside.ThegrowthofexportsofsteelfromIndia
hasbeenaround10percentperannumoverthepastdecade.Thatspeaksfortheinternational
costcompetitivenessofthesteelsector.Ittakes assiduousefforttocreate,andholdonto
 11

exportmarkets.Whilethebusinessdecisiontoexportwilldependontheprevailingrelative
prices,theGovernmentwouldencouragestrategicallianceswithbuybackarrangementsand
dedicatedexportproductionthrough100%export-orientedunits.Agrowthrateofaround13
percentperannumisenvisagedupto2019-20.Theissuesrelatedtoexportshavebeen discussed in
section 13 on TradePolicy.

INDUSTRYPERFORMANCE

TheperformanceofIndiansteelindustryhasbeenanalysedinthemediumtermfrom
1997to2011.ThesampleforanalysisincludesdatafromSAILandTataSteelamongthe
ISPs andJVSL,Ispat, Essar andLloyds amongthesecondarymajors7.

Categorywise estimateddemand forironand steelallIndia 2002-2003

3
Category Quantity,10 t
Barsand rods 10500

Structural 2500
Railway materials 845
Plates 2250
HRcoils/skelp 6600
HRsheets 500
CRcoils/sheets 3300
GP/GCsheets 1930
Electricalsteel sheets 200
Tinplates 325
Pipes 850
Totalfinishedsteel 29500

UNEXPLOREDRURAL MARKETS
TheIndianruralsectorremainsfairlyunexposedtotheirmulti-faceteduseofsteel.
Theruralmarketwasidentifiedasapotentialareaofsignificantsteelconsumptionwayback
intheyear1976itself. However,forcefulstepswerenottakentopenetratethissegment.
Enhancingapplicationsinruralareasassumesamuchgreatersignificancenowforincreasing
percapitalconsumptionofsteel.Theusageofsteelincosteffectivemannerispossibleinthe
areaofhousing,fencing,structuresandotherpossibleapplicationswheresteelcansubstitute
othermaterialswhichnotonlycouldbringaboutadvantagestousersbutisalsodesirablefor
 12

conservation offorest resources.

STEEL PRICES
Followingde-regulationofpricesforintegratedsteelplantsin1991-92,thedomestic prices
of steel have become market-determined. Market prices remain in step with international
prices, though generallylower. During industry downturns, prices fall and
duringupturns,theyrise.Whilerationalization ofthecustomsandexcisedutystructureis aimed
primarilyat reducing fiscal and revenue deficits, it has an indirect influence on
consumerprices.Atpresent,therearearoundthreethousandunitsmanufacturingsteeland
steelproducts,whicharemarketedbyover100,000tradersforultimateconsumers.Thisdispersal of
thedistribution chain has beenthe principal reason whynopriceregulation of the
steeltradehaseverbeeninforce.GovernmenthasrecentlysetupaCompetitionCommission to look
into complaints of monopolisticpricing.

Steelfutures:Thecyclicalnatureofthesteelindustrydetersfreshinvestmentsdueto
risksofrecession.Themismatchbetweendemandandsupplyalsoleadstopricevolatility
witnessedduringrecenttimes.Stagnationinsteelpricesforlongperiodsfollowedbysudden
spurtalsoaffectstheconsumersandtheinfrastructureindustry.Therefore,theeffortsof
variousstakeholderstodeveloprisk-hedginginstrumentslikefuturesandderivativeswould
besupported.

HUMANRESOURCES
Theanticipatedsteelproductionof110mTby2020wouldrequireanadditional
workforceof220,000afteraccountingfortheexpectedproductivityimprovements.7Further
thecreationof1man-yearofemploymentinthesteelindustrygeneratesanadditional3.5 man-
yearsofemploymentelsewhereinthe economyduetoitsstronglinkageswithother
sectorssuchastransport,mining,construction,machinery, and steelfabrication.Thetotal
additionalemploymentgeneratedintheeconomyduetoexpectedproductionof110mTby
2020would be around1million.

Theprofileoftherequiredhumanresourceswillhavealargershareoftheskilledand semi-
skilledlabourforce.It isamatterofconcernthat availabilityof scientists, engineersand
techniciansperthousandofpopulationinIndiais7.05comparedto113inJapan,90inU.K.,
53inKorea,54inAustraliaand85inGermany.8Further,thetaskisnotlimitedtoincrease
inthestockoftechnicalmanpower.Thetechnicalandprofessionalinstitutesofthecountry
wouldalsoberequiredtoimpartnewcompetenciesandcapabilitiesintunewithchangesin
 13

technologyandtheneedsofglobalization.Theexistingtrainingandresearchinstitutesunder
theMinistryofSteelwouldbebroughtunderanumbrellaorganizationwithrepresentation
fromeachsegmentoftheindustry.Thefunctionsofthisorganization wouldinclude(a)
suitabletrainingprogrammesespeciallyforthesecondarysmallscaleunits,(b)promotionof steel
consumption through dissemination ofinformation on availabilityand suitabilityof steel
forvariousapplications,and(c)collectionandanalysisofdataonimportantparametersof the industry.

TECHNOLOGIES, RESEARCH AND DEVELOPMENT

Though the choice of technologywill be determined by entrepreneurs based on
techno-economicconsiderations,theGovernmentwouldencourageadoptionoftechnologies,
which:
Havesynergywith thenatural resourceendowments of the country.
They are conducive to production of high-end and special steel required for
sophisticated industrial and scientific applications
Minimizedamageto the environment at various stages of steel makingand mining.
Optimize resourceutilization.
Facilitatemodernization ofthesteel industryso as toachieveglobal standardsof
productivityandefficiency.
Development of front end and strategic steel based materials.
IndiasexpenditureonResearchandDevelopmenthasbeennegligiblenotonlyin
absoluteterms butalsoasapercentageofGNPat0.86%.Thiscanbecomparedtothe
developedworldwithanaverage ratioof2.5%.Inthecaseofsteelindustry,theratioof expenditureon
R&D as apercentageof turnovers is only0.26%.

ThelowprioritytoindigenousR&Dhasgivenrisetoadoptionoftechnologiesthat aremore
suitedtoconditionsprevailinginthedevelopedworld.Forexample,resource
positionofrawmaterials requiresdevelopmentoftechnologies,whichcanuseindigenous
cokingcoalsandnon-cokingcoalsandforimprovementinqualityofhighaluminaIndian
ironore.ButlackofinnovationandadaptationtoIndianconditionsisresultinginlarge-scale
importofcokingcoalandlowperformanceinironmaking.AggressiveR&Deffortswould,
therefore,bemountedtocreatemanufacturingcapabilityforspecialtypesofsteel,substitute
cokingcoal,enrichmentandagglomerationofironorefines,developnewproductssuitedto
ruralneeds,enhancematerialandenergyefficiency,utilizewaste,andarrestenvironmental
degradation.PublicsectorsteelcompanieswouldenhanceR&Dexpenditureinthecoming
yearstofinanceinternalR&Defforts andsponsoroutsideresearch,whichmayprovidea framework
f o r i n t e r -disciplinary c o o p e r a t i o n w i t h the private s e c t o r a c r o s s n a t i o n a l
 14

boundaries. Governmentscontribution to fosteringbasicand applied R&Dwillbe enhanced.

STEEL INDUSTRY-MAJORPROBLEMSAND CONCERNS

TheIndiansteelmanufacturersarefacedwithsomemajorproblemsandconcerns,
whichworkas inhibitingfactorstotheirefforttowardsgainingthecompetitiveedge.Afew
oftheseare:Unremunerative PricesStagnatingdemand,domesticoversupplyandfalling
pricesinthelastfouryearshavehitIndiansteelmakers.Barringthesporadicriseindemand in the
recent months, it has suffered from UN remunerative prices to the extent that
companieshavebeenfindingitdifficulttomaintaincapitalcosts.Stagnating Demandfor
SteelAccording toMcKinney andCothedomesticsteelindustryissettowitnessa33%over
capacityin thehot rolledcoil.

THEORETICAL BACKGROUND OF

DISTRIBUTION CHANNEL
 15

Place, distribution, channel or intermediary

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

Bucklin - Theory of Distribution Channel Structure (1966)

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

There are six basic 'channel' decisions:

 16

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

Cumulative length of the multiple channels

Types of intermediary (see later)

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

Spain).

Which companies as intermediaries to avoid intra channel conflict

Selection Consideration - how do we decide upon a distributor?

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

Types of Channel Intermediaries.

There are many types of intermediaries such as wholesalers, agents, retailers, the Internet,
overseas distributors, direct marketing (from manufacturer to user without an intermediary),
and many others. The main modes of distribution will be looked at in more detail,

1. Channel Intermediaries - Wholesalers

They break down 'bulk' into smaller packages for resale by a retailer.

They buy fromproducers andresell to retailers. They take ownership or 'title' to goods
whereas agents do not (see below).

They provide storage facilities. For example, cheese manufacturers seldom wait
fortheir product to mature. They sell on to a wholesaler that will store it and
eventually resell to a retailer.

Wholesalers offer reduce the physical contact cost between the producer and consumer
e.g. customer service costs, or sales force costs.

A wholesaler will often take on the some of the marketing responsibilities.

Many produce their own brochures and use their own telesales operations.
 17

2. Channel Intermediaries - Agents

Agents are mainly used in international markets.

An agent will typically secure an order for a producer and will take a
commission. They do not tend to take title to the goods. This means that capital is not
tied up in goods. However, a 'stockist agent will holdconsignment stock (i.e. will
store the stock, but the title will remain with the producer. This approach is used where
goods need to get into a market soon after the order is placed e.g. foodstuffs).
Agents can be very expensive to train. They are difficult to keep control of due to the
physical distances involved. They are difficult to motivate.

3. Channel Intermediaries - Retailers

Retailers will have a much stronger personal relationship with the consumer.

The retailer willhold several other brands and products. A consumer will expect to be
exposed to many products.

Retailers will often offer credit to the customer e.g., electrical wholesalers, or travel
agents.

Products and services are promoted and merchandised by the retailer.

The retailer will give the final selling price to the product.

Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the USA,
and Alisuper, Modelo, and Jumbo in Portugal
4. Channel Intermediaries - Internet

The Internet has a geographically disperse market.

The main benefit of the Internet is that niche products reach a wider audience
e.g, Scottish Salmon direct from an Inverness fishery.

There are low barriers low barriers to entry as set up costs are low.

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

There is a paradigm shift in commerce and consumption which benefits

distribution via the Internet
 18

CHAPTER-2
COMPANY PROFILE
19
 20

COMPANY PROFILE

Vision
To bea continuouslygrowingworld class companyweshall
Harness ourgrowth potential and sustain profitable growth.
Deliver high quality and cost competitive products and be the first choice of
customers.
Create an inspiringworkenvironment to unleash the creative energyof people.
Achieveexcellencein enterprise management.
Berespected corporate citizen, ensureclean and green environment and develop
vibrant communities around us.
Mission
Toattain16milliontonliquidsteelcapacitythroughtechnologicalup-gradation,
operational efficiencyandexpansion;toproducesteelatinternationalstandardsof cost and
quality; and tomeet the aspirations of thestakeholders.
Objectives
Expandplantcapacityto6.3Mtby2008-09,withthemissiontoexpandfurtherin subsequent
phases as perthe corporate plan.
Sustain gross margin to turnover ratio>25%.
Be amongst top fivelowest cost liquid steel producers in the world by2009-10.
Achievehigher levels ofcustomer satisfaction than competitors.
Instill right attitude amongst employees and facilitate them to excel in their
professional, personal and social life.
Berecognized as anexcellent business organization by2008-09.
Be proactive in conserving environment, maintaining high levels of safety and
addressingsocial concerns.

PROFILE OF VIZAGSTEEL PLANT

Tomeetthegrowingdomesticneedsofsteel,thedecision oftheGovernmentofIndia
tosetupanintegratedSteelPlantatVisakhapatnamwasannouncedbythePrimecommittee
choosesthesitenearBalacheruvucreekandtheprimeministerdidtheformalinauguration
th
andlaidthefoundationstoneon20 January1971.Theconsultant,M/sM.N.Dasturand
Companyltd.,submittedatechno-economicfeasibilityreportfortheplant,withanannual
capacityofabout3milliontonesofliquidsteel,inOctober1977.Theserviceexaminedthe
 21

detailedprojectreportpreparedbyDasturCompanyandofferedTechnicalandEconomic
th
operationforthesame.ThegovernmentanderstwhileUSSRsignedagreementonJune12
1979, for co-operation in setting up a 3.4 million tones integrated steel plant at
Visakhapatnam.Intermsofthisagreement,sovietsandIndiandesignorganizationrevised
theearlierdetailedprojectreportofDasturCo.,jointlyandacomprehensivereviseddetailed
projectreportforVSPwas submittedinNovember1980.Anewcompanyi.e.Rashtriya
IspactNigamLtd.(RINL)wasincorporated to haveindependentdecisiontakingfacility
withmoreconcentrationonthisparticularunit.Theconstructionoftheprojectcommenced
in1982withascheduleof4and6yearforthefirstandsecondstagerespectively.During construction
dueto inadequatefound availability, theproject could not beadhered to, resulting in huge
cost and time overruns. In a bid to reduce the capital investment
Rationalizedconceptwasadoptedin1985.Asperthisonesteelmeltshopandonerolling
milli.e.theuniversalbeammillweredropped.Theothersteelmeltshopof2.2MTPAof liquid steel
without any additional facilities. The Honorable Prime Minister
st
Sri.P.V.NarasimhaRaodedicatedtheplanttotheNationon1 August1992.Unlikeother
integratedsteelplantsinthecountry.Newtechnology,large-scalecomputerizationand
automationetc.,areincorporatedintheplant.Tooperatetheplantatinternationallevelsand
attainssuchlaborproductivity; the totalmanningoftheorganizationhasbeenlimitedto
17500employees.Theplanthasacapacityofproducing3.0MTofliquidSteeland2.656
MTsaleable steel.

HISTORY OFTHEVIZAGSTEEL PLANT

Thedecision of the government of India to set up an integrated steel plant at
VisakhapatnamwasannouncedinparliamentbythePrimeMinisterSmt.IndiraGandhion
th
17 April1970.Theselectioncommitteechosethesitenearbalacheruvucreakandthe prime
minister did the formal inauguration on January 20, 1971. The Consultant,
M/S.M.N.DASTUR&company privatelimitedsubmittedatechnoeconomicfeasibility
reportinFebruary1972,andadetailedprojectreportfortheplant,withanannualcapacity
ofabout3milliontoneofliquidsteelinOctober,1977.Insettingupthe3.4milliontones
integratedsteelplantatVisakhapatnam.IntermsofthisagreementtheearlierDPRof Dastur &Co
was revised jointly by Soviets and India design organizing and a comprehensiverevised
DPR(CRDPR) forVSPwas submitted in November1971.
th
TheprojectwasestimatedtocostRs.8397.28corers,basedonpricesasinthe4
 22

quarterof1981.However,duringtheimplementationoftheprojectitwasobservedthatthe project
cost has increased substantially over the sanctioned cost, mainlydue to prices
escalationsandunderprovisionof DPRestimates.Inviewoftheseandthecriticalfund
situation,alternativesforimplementationoftheprojectwithrationalizationoftheapproved
conceptwerestudiedin1986.Undertherationalizedconcept 3.0 milliontonesofliquid
steeltobeproducedinayearandtheprojectisestimatedtocostRs.5822.17crasonfourth quarter
of1987.

REASONSFORESTABLISHMENT

AllthesteelplantsinIndiawerelocatedinthenoncoastalareaofthecountry;
becauseofthatreasontheplantauthoritieswereincurringhighimportandexportexpenses
intheformoftaxbesidesthe transportationcostoftherawmaterials,finishedproducts,
sparesandotherequipmentsforvariouspurposes.Theconcernauthorityhasgoneindeep
discussiontoreducethistypeofcostforatleasttothelateststeelplantforthisreasonand the political
threat for locating the steel plant in Visakhapatnam are the main points.
st
Compared to theothersteel plants inIndia it is the 1 shorebased steel plant.
In theyear 1979-80 the construction took high speed and in
followingyeari.e.
1981contractsignedwithSovietUnionforpreparationofworkingdrawingforcoke ovens,
blast furnace andsinter plant.
1982,thereweredrasticchanges in themanagement of VSPi.e. from SAILto RINL.

During the year 1985, Govt of India thought of dispensing with the scheme of
installingofsteelplantatVisakhapatnamonceforall,becauseofhighcapitalcostofthe
exerciseandveryownphase gettingreturnsontheinvestment.Athisstagetherewere around 30 to
35 thousand contract labours working in the construction under various contract jobs.

Intheearlystages,theGovt.hasgivenassurancestothepeoplethattheywillbe
givenjobsinthesteelplantwhoselandsarelostintheacquisition.Thetotalareagathered
bythesteelplant,authorityis27000acres.Thelandownersinthisareaweremostofthem
farmers.Mostofthefarmersareuneducated. Thistypeofpeopleisaround6000thatis
performingdifferent nontechnical, inexpensive and transportive etc.

INFRASTRUCTURE OFVISAKHAPATNAMSTEEL PLANT

a)LocationandGeneral layout
 23

TheplantislocatedonthecoastofBayofBengal,16kmsto theSouth Westofthe

Visakhapatnamport.ItlaysbetweenthenorthernboundariesofthenationalhighwayNo.5
from Chennai to Kolkataand 7 kms to thesouth west Howrah Chennai railwayline.
b) Climate
Visakhapatnamhaswarmandhumidclimate.ApriltoJuneisthewarmestmonthsofthe
yearand DecembertoFebruaryarethecoldestmonths.ThebenefitsfromheSouthwest
monsoonandhenortheastmonsoons.Theaverageannualrainfallis873.6mm.highest mean
monthlymaximumtemperatureis 37.8 deg.C.

MAJORPLANTFACILITIES
VSPhas the following production facilities
Threecokeovens batteries of 67ovens, each having41.6 m3 volumes.
T w o sinter machines of 312 sq.marea.
T w o blast furnaceof 3200 m3 useful volumes.
S t e e l meltingshopwiththreeL.D.converters(twooperatingandonestandbybyof150 tons
each ofcapacityeach and 6nos. of four strand continuous blooms casters)
L i g h t and mediummerchant mill (LMMM) of7, 10,000tones peryear capacity
W i r e rod mills (WRM)of8, 50,000 ones percapacity.

A.ModernTechnology

VSPisthemostsophisticatedandmodernplantinthecountry.Moderntechnology
hasbeenadoptedinmanyareasofproductionsomeofthemforthefirsttimeinthecountry.
Amongthem are
Selective crushing of coal
7 meter tall coke ovens
Dry quenching of coke
On ground blending of sinter base mix
Conveyor charging and bell less top for blast furnace
100% continuous casting of liquid steel
Gas expansion turbine for power generation utilizing blast furnace top gas pressure
Hot metal desulphurization
Extensive treatment facilities of effluents for ensuring proper environmental
protection
B.Coke Ovens &Coal chemicalsPlant
Cokingcoalafterselectivecrushingandproperblendingissubjectedtodestructive
distillation (heatingin the absenceof air) in theCokeOvens.Afterheating for nearlyaperiod
of16-18hoursatatemperatureofabout1100degreeC,Cokeisobtainedandisusedasa
 24

fuelaswellasreducingagentintheBlastFurnace.TheCokeOvensofVSPareengineering
featsbythemselves.Theyarethetallestovensmeterconstructedinthecountry.ThePlant
has3batteriesof7meter.Another featureisthedry cooling ofcoke carriedoutbytheinertgas
nitrogen t h u s , r e d u c i n g p o l l u t i o n c o n s i d e r a b l y . Besides bio-chemical plant
separately undertakesthetreatmentofeffluents,by
productslikebenzene,toluene,xylene,naphthalene, coaltar,creosote
oil,pitch,andammoniumgas,VSPproduces,amongotherby-products, pushkala
aprimefertilizer basedon ammoniumsulphate.
C. Steel Melt Shop&Continuous Casting

ThereareTopblownconverterseachof133cu.mVolume,produceatotalof2.7
milliontonesof liquidsteelperannum.Thisliquidsteelthusproducediscastedinsix-4 strand
bloomcasters.
AspecialfeatureinenergyconservationisthecollectionofConvertergastobeused
asafuelintheplant.TheentiremoltensteelasVSPiscontinuouslycastattheradialtype
continuouscastingmachines resultedinsignificantenergyconservationandbetterquality
steel.100%Continuouscastingonsuchalargescalehasbeenconceivedforthefirsttimein India.

D. Rolling Mills
Thecast blooms fromcontinuous castingdepartment areheatedand rolledin thethree
highspeedandfullyautomatedrollingmillsnamelylight&MediumMerchantMill,Wire
RodMillandMediumMerchant &StructuralMill,toproducevariouslongproductslike
Reinforcement bars, rounds squares, flats, angles, channels billets, wire rods etc.
Technologies adoptedat RollingMills includeworld class Steel work and Tem core
process.
SWOT ANALYSIS
TheSWOTanalysisofRINLbringsforththeopportunitiesandthreatsfacingRINL,
withaviewtobuildingsuponthestrengths,exploitingtheopportunitiesimprovinguponthe
weaknessandconvertingthreats intoopportunities.Thestrengths,weakness,opportunities and
threats of RINLareas under.
S-Strengths
1. Stateof-the technology
2. High commitment to achieve capacitylevels
3. Areas of
excellence
4. Economies of
scale
 25

5. High expansion
potential
6. Strongcommitment to conserveenvironment

W-Weaknesses

1. High capital ratedcharges

2. Lowreturn productmix
3. Productivitybelow international levels
4. Practices not as per withinternational standards
O-Opportunities
1. Shorebased
2. Sizeableexport markets
3. Access to import resources
4. Proximityto southern markets
5. Increasingdomesticdemand dueto thrust on infrastructuredevelopment.

T-Threats

1. Availability of iron ore and coal

2. Rising input and costs

3. Increasing competition

4. Sensitive to exchange rate variation

5. Possibility of import duties declining further

6. Excise duties continue to be high

7. Lack of alternatives sources for major raw materials

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

9. Infrastructure continues to be inadequate

VSPsStateofthearttechnology,highexpansionpotentialandeconomiesofscale
wouldbe utilizedforoffsettingthedisadvantagesoflowreturnproductmixandhigh
capitalrelatedcharges. Shore basedlocationofthecompanywouldpromotedexportand
importofqualityrawmaterials.ProximityofVSPtosouthernmakecanhelpincapturing
largermarketshareinsouth.VSPwouldmeettheincreasingcompetitionthroughitsquality
products and customer orientation.
 26

DESIGN ANDENGINEERING
Thesoviet design organization, GIPROMETS designed the coke oven and coal
chemicalplant (excludingthe7-metertallbatteryportion)sinterplantandblastfurnace.
MECONofRanchiengineered the7-metertallcokeovenbatterieswithdryquenching. Dastur
&Co. has designed the remainingfacilities.

a. RawMaterial
RawMaterial Source

Iron orelumps&fines. Bailadilla, MP.

BFlimestone. Jaggayyapeta, A.P.
SMSlime Stone. Dubai
BFDolomite. Madharam, A.P.
SMSDolomite. Madharam, A.P.
Manganeseore. Chipurupalli, A.P.
Boiler coal. Talcher,Orissa.
Cockingcoal. Australia.
MediumCockingcoal (MCC) Gidi/swang/ rajarappa/kargli.

b. Employment Opportunities
Atfulloperationalstage,nowVisakhapatnamSteelPlanthasemployedabout17369
technicalstaff. Theindirectemploymentduetovariousancillaryunitsdevelopmentand
otherservices ismuch more.

c. Training andDevelopment
RINLbelievesthattheemployeesareitsassetsandstrivestorealizetheirpotentialin full
formutual advantage.
Atrainedcadreoftechnicaloperativepersonnelandmanagerialcadreareprovided forthe
successful commissioningand operation ofalargesteel plant like VSP.
Atraininganddevelopmentcentrewithfacilitiesisavailabletodeveloptrainedcadre
oftechnical personnel and managerialcadre.
Employeesaresenttoothersteelplantsonshortdurationtourstofindsolutionstothe various
issues facingthecompany.
Employeesare also sent to suppliers manufacturingunits.
VSPprovides trainingprogrammer for enhancing theirknowledge.
 27

d. Township
AModerntownshipwithallamenitieshasbeendevelopedadjacenttothesteelplant
site,tohousetheplantemployees.Thetownshipishavingprotecteddrinkingwatersupply,
waterbornesanitation,blacktoproads,schoolshospitals,welfarecenters,shoppingcenters,
communityfacilities, parks etc.
e. Watersupply
Operationalwaterrequirementof36mgdisbeingmetfromtheYeleruwatersupply scheme.
f. Powersupply
Operationpowerrequirementof180to200MWisbeingmetthroughcaptivepower
plant.Thecapacityofthepowerplantis286.5mw;VSPisexportingaround60MWPower to
APSEB.
g.Advertising
VisakhapatnamSteelPlantisalsofollowingadvertising,whichisoneamongthe
promotional strategies.
Print media
Brochures andbooklets
Posters andleaflets
Directories
Symbols of logs
Bill boards
Displays

MARKETINGACTIVITIES
Under integrated marketing some of the important activities of the marketing
management areasfollows:
C o l l e c t i o n ofnecessaryinformation regardingmarketing
A n a l y s i s of thedata anddrawingconclusion
S e a r c h and developmentstageof new marketingtechniques
T o chalk outdetailed marketingprogramme
T o implement that marketingprogramme
T o coordinate between thewants of thecustomersand theirsatisfaction.

CHANNELSOF DISTRIBUTION
Distributionchannelscanbecharacterizedbythenumberofchannellevels.Each
 28

middlemanwhoperformssomeworkinbringingtheproductandtitleclosertofinalbuyer constitutes
a channels level.

PROMOTION
Promotionisthescientifictechniquesofcommunicationregardingthequalityof
productsthroughwhichconsumersgettoknowaboutthemeritanddemeritstomortgage
andtooverallinforming thepotentialcustomerspromotionaltechniquesi.e.advertising publicity
and personal selling should be used. These are the real and major tools of
promotionalactivities.According toW.J.Stantionpromotionisandexercisetininformation and
influence.

MAJOR AWARDS WON BY VSP

India Priyadarshini Vrikshmaitra formassiveforestation of RINL1992-93.
National Energyconservation Award 2002, first prizein integrated sector.
AwardfromAndhraPradeshpollutioncontrolBoardforsignificantworkoncalendar
Production technologies.

Second prize forRINLsstallsat international Trade Fair.

Successful Re-CertificateorISO 9001-2000
UdyogExcellencegoldmedal award forexcellencein SteelIndustry
Golden Peacock (1st Prize) National QualityAward-1996.
Nehru Memorial National Award for Pollution control 1992-93 &1993-94.
Best Management Award
Ispact SurakshaPuraskar(1st prize) forlongest accident freeperiod, 1991-1994.
Rollingshield for Ecological protectionbyministryof information &Broad Casting.
GreensticksafetysilverAwardfor2002-2003inSteelSectorforimplementingbest
safetystandards.
INSAANOrganizationalExcellenceAwardinstitutedbytheIndiannationalsuggestion
Schemes associatedfortheyear 2004.
PMsTrophyfor 2004-2005.
29
 30

MARKETING DEPARTMENT

VISAKHAPATNAM STEEL PLANT

I. THE FOLLOWING STEPS ARE FOLLOWED FOR PROCEEDING WITH

ANY SALE

1. Maintaining of database of materials, specification of materials , storage facilities,

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

II. mode of selling :

Selling the finished/semi finished products by any one of the following modes.

a. Free sales
b. Short/long term contracts
c. Tender sales
d. Sales under approved marketing tools(discount/credit sales)
e. Sales on negotiated basis
f. e- auction sales
g. DLD scheme
h. CSA scheme

III. SERVICE OF CONTRACTS/SALES:

Based on production plan, stock holdings and long term contracts on hand, offer letters are
sent to the long term customers. For the balance materials, intimation letters are sent to
prospective customers regarding the availability of the materials and issue offer letters, if the
customers are interested to lift the material. The offer indicates the price of the material and
 31

also indicates concessional rate of sales tax available on submission of statutory forms and
full rate of sales tax applicable otherwise.

IV. DELIVERY ORDER:

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

V. COORDINATION WITH PPM AND PRODUCTION DEPT:

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

VI. CUSTOMER SATISFACTION:

At VSP, customer satisfaction is no longer the ultimate watchword. VSPs business strategies
to-day focus on developing customer loyalty. Customer satisfaction is just the beginning of
this process .VSP focuses on a few critical issues in pursuit of this new loyalty centered
approach, which help in satisfying customer and achieving profitability for the company .

The combination of product quality, supporting services and the ability to provide innovative
and quality products and services define value .VSP strives to efficiently control and strike a
 32

balance between the price, quality innovation and image, which go a long way in determining
customer loyalty as well as companys financial performance .besides these, VSP also takes
into consideration external factors such as business environment and customer characteristics.

VII. DISTRIBUTION NETWORK:

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

VIII. NEW MARKETS:

VSP continuously interacts with structural designers / fabricators and consultants all over the
country and projects and construction authorities of central and state Govts.for broad banding
customer base as well as assess the market for construction steel in the country. An inter
disciplinary group has been constituted for the development of special steel grades to meet
the specific requirements of selected customers.

Thus VSP funnels information on customer requirements into the business systems and
culture of the organization. Lastly, with a view to ascertain the effectiveness of VSPs various
initiatives, customers opinion survey is carried out every year through an external reputed
agency. These surveys bring awareness about the strength and weaknesses of VSP with
regard to key areas determining customer satisfaction level. Concerted efforts are taken to
improve on the required areas. Besides this, VSP also keeps track of competitors efforts
towards customer satisfaction.
 33

IX STOCKYARD ITS ORGANISATION & FUNCTIONS

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

BROAD OBJECTIVES OF STOCKYARD:

A) To ensure movement of material produced at the plant, thereby ensuring continuous

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

TYPE OF STOCKYARDS

i) Own stockyards- the company procures land , developments it , arranges for

railway siding, weighbridge and other facilities and generally opts for a handling
contractor . In such cases the handling agent is responsible for receipt, storage
delivery and custody of materials.
ii) Stockyard with consignment agents in this case the consignment agents arranges
for land and facilities for handling and storage of materials including safe custody
materials.
 34

iii) Stockyard with consignment sales agents in this case, the consignment sales
agents is responsible for receipt, storage, selling, of materials. This stockyard and
infrastructure belongs to him.

HANDLING OF MATERILAS IN STOCKYARDS

Handling of materials in stockyards is generally done by a handling contractor / consignment

agent using his own equipment and labour.

Aspects considered in handling:

1. Type of the product shape , size , length , bundle dimensions , weight per piece /
packet , quality etc.
2. Layout of siding and its capacity.
3. Possible deterioration during storage.
4. Type of wagons likely to be received .
5. average daily deliveries
6. Shape and size of stockyard area.
7. Need to ensure availability of siding at all times to receive in coming consignments.
8. Location of approach road to the stockyard.

FUNCTIONS CARRIED OUT IN THE STOCKYARD

1. Receipt of materials from the plant ,or from other stockyard by rail/road
2. Sorting of materials
3. Stacking in easily identifiable and oderely manner ,product wise ,lot wise , size and
quality wise
4. Weighment and delivery of materials to customers.
5. Production of materials from damaged / deterioration in storage
6. Utilization and maintenance of assets.
7. Control of operating cost in the stockyard.
8. Maintaining records \accounts of receipts, delivery and stock of materials
 35

9. Physical verification of stocks

10. Implementation of various statutory acts and rules

11. Furnishing periodical reports\returns

12. Security of the materials

RECIEPT OF MATERIALS THROUGH OWN SIDING

1. Activities prior to arrival of wagon:

Marketing HQ sends tentative monthly dispatch plan and weekly dispatch advice to
branch through region. With these documents delivery can be taken even without
original documents by executing indemnity bond with the railways

2. Pending wagons

3. Arrival of wagons

4. Unloading of materials

5. Weighment of incoming materials in stockyard

RECIEPT OF MATERIALS THROUGH PUBLIC SIDING

1. Activities prior to arrival of wagons.

2. Unloading at public siding
3. Transportation of materials to stock yard.
STACKING OF MATERIALS

1) Preparation of stacking plan

2) Method of stacking
3) Minimising cost of stacking
4) Demmurage
5) Internal transportation for stacking
6) Sign board/painting
7) Sorting
8) Documentation
 36

STOCK ACCOUNTING

The objectives of stock accounting are to document the receipts issues and stock on
hand

a) To identify periodical shortages and surpluses, if any -Lot card

-Filling receipts in Lot card

-Filling issues in Lot card

-Filling balance in Lot card

-Summery card for daily monitoring

-Stock cum sales statement (SCSS)

STOCK VERIFICATION

Stock Verification helps in the following

a) To exercise check and control on stocks

b) To identify in time, the discrepancies if any in stock and ascertaining reasons for the
same and top ensure recovery from consignments agents\handling contractors
c) To arrive at true & fair valuation of stock for the purpose of stock profit & lose
account and
d) To comply with statutory obligations
DIVERSION OF MATERIAL & ACCOUNTING OF DIVERSIONS

Diversion of materials from one stockyard to another

a) Due to wrong delivery by railways

b) Materials diverted to meet critical situations
c) Inter stockyard transfer of stock

STRUCTURE OF MAKRKETING DEPARTMENT, RINL:

Marketing System at RINL

 37

HQ Sales
MS Functions Byproducts
Collection of
Money Sales
Product
Credit Codes Collection of
Control control Money
Sales of Sales Reports Credit
Trades
Sales Control
Sale to Analysis Sales
project
MS Reports Long Term
customers
to TOP

Regional Sales
Office

5 Regions (AR, SR,

BC GATE ER, NR, WR)
Control of prices
Stock Administration
Transfer to and control
Branches
Sales
Dispatches
Vehicle entry
Branch Sales Office

(23 Branches)
Branch stockyard
Collection of Money
(23 stock yards) Credit Control
Sales to Traders
Handing of Receipt
Sales to Traders
Sales dispatches
Sales to Project
Stock Transfer
Customers
Statutory Registers

THE NETWORK OF VSP

 38

The VSP marketing department has got total manpower of 301 out of which 108 manpower is
at Head Quarters and the rest are in various branches.
 39

For facilitating the sales and increasing the customer base by showing the
presence all over, the whole county is divided into five regions and each region
has a regional office which coordinates with the branch sales offices in their
respective regions. Following are the regions with their head-quarters:
North (Delhi)
South (Chennai)
East (Kolkata)
West (Mumbai)
Andhra (Visakhapatnam)
Altogether there are 24 branches.
Besides they also have consignment sales agencies at three places Jammu,
Guwahati and in Ranchi.
It is also exporting the products to various destinations such as Sri Lanka, US,
Bangladesh, Middle East, Singapore and other.
Export of materials also takes place for Nepal but through road only.

Production Department for various products as per demand in the market, which will be
assessed through various modes. Once the production is completed, material produced is to
dispatch to the designated destination at the right time through various modes of
transportation.

QUALITY MANAGEMENT SYSTEM:

Welcome to the Quality Complaint System(QCS) of Visakhapatnam Steel Plant. This system
is used for registering and settling the customer's complaints. Quality complaint is based on
many factors like dimension, quality, quantity of the material etc., Customers are requested to
make use of this system to settle Quality Complaints of the purchased material

.About QCS: Customer has to enter all the details of the material then complaint number will
be generated. QCS has total 8 stages including the registration stage. After each and every
stage customer will be intimated with the updated status of the complaint and at anytime
customer can track his complaint status with the complaint number.
 40

CHAPTER-3
METHODOLOGY

METHODOLOGY
 41

SIGNIFICANCEOFTHESTUDY

Thestudyisverysignificanttounderstandthedistributionchannels.
Thestudyisimportanttoknowthedealerssatisfactionlevelforthe dealership.
Thestudyisimportanttoknowthedealerssatisfactionlevelinthepriceof thesteel.
Thestudyisimportanttoknowthedealerspreference forthequality.
Thestudyisveryimportanttoknowthesalesvolume.
Thestudyisalsoanalysestheeffectivemediaforimprovingthesales.
Thestudyisimportanttoknowavailabilityofthesteel
Thestudyisimportanttoknowmarginsinthesteelindustries

OBJECTIVES OF THE STUDY

OBJECTIVES:

To find out the distribution channels of vizag steel plant in Visakhapatnam district.
To compare the distribution system of vizag steel with other steel companies.
To find out the advertisement efficiency of Vizag steel.
To find out the marketing situation of Vizag steel from others.
To find out the present problems faced by dealers.
To find out the any new scheme required by the dealers.
To give valuable suggestions to the company for increase the sales volume.
 42

SCOPE OF THE STUDY

Thescopeofthestudyisconfirmedtodistributionchannelwithspecialreferenceto
the"VISAKHAPATNAM STEELPLANT" inVisakhapatnam district.

Thestudycanhelptothemanagement toknowthefactorswhytheirsalesvolumes.

DATA ANALYSIS:
 43

RESEARCH DESIGN:
Since the population runs into several thousands, it is not possible to conduct a census
survey. Therefore a sample survey is conducted using a quota sampling.

SAMPLE SIZE:
The total sample size is 50.

SOURCES OF DATA
To pursue the mentioned objectives, required data had been collected through

a) Primary Data.

b) Secondary Data.

Primary Data is the data, which is collected directly by direct personal interview,
interview, indirect oral investigation, Information received through local agents, drafting a
schedule, drafting a questionnaire.

Secondary Data is the data, which is collected from the various books, magazine
and material, reports, etc. The data which is stored in the organization and provide by the HR
people are also secondary data, various information were taken out regarding that subject as
well other subject from various sources and stored.

DATA COLLECTION METHOD

The information for the study has been obtained from two sources namely:

Primary Data
Secondary Data

Primary Data:
In the due course of the research study the primary data was collected through a structured
questionnaire. The questionnaire is the one in which all questions and answers are specified.
Here there will be less scope for comments made in the own word of the respondents.

Secondary Data:
The secondary data is collected from various sources like magazines, company records,
internet websites,books.
 44

LIMITATION OF THE STUDY

One of the important of the study was lack of time though the respondent to the study

was vast due to the time constraints the sample size was limited.
The researcher has difficulty with most of the respondents who was not willing to

cooperate with study, as they were very busy with their own work.
The research had also difficulty with the respondents because they did not fill up the

questionnaire in proper time.

Another limitation of the study was confined with not only retailers but also

consumers for survey of this study.

 45

CHAPTER-4
DATA ANALYSIS
&
INTERPRETATION

TABLE NO:1
 46

ANALYSIS OF THE STUDY

STEEL DEALERSHIP TAKEN BY DEALERS

BRAND NO OF PERCENTAGE
RESPONDENTS
ROURKELA STEEL PLANT 6 12
BHILAI STEEL PLANT 9 18
DHURGAPUR STEELPLANT 8 16
BOKARO STEEL PLANT 9 18
VISAKHAPATNAM STEEL 18 36
PLANT
TOTAL 50 100

INFERENCE:

From the above table, it is inferred that 12% of the respondents are having the Rourkela steel
plant dealership,18% of the respondents are having the bhilai steel plant dealership,16% of
the respondent are having the dhurgapur steel plant dealership,18% of the respondents are
having the bokaro steel plant and 36% of the respondents are having the Visakhapatnam steel
plant dealership.
 47

STEEL DEALERSHIP TAKEN BY DEALERS

50
45
40
35
30
25
20
15
10
5
0

TABLE NO:2
 48

HIGH SALES VOLUME IN STEEL INDUSTRY

BRAND NO OF RESPONDENT PERCENTAGE
ROURKELA STEEL PLANT 7 14
BHILAI STEEL PLANT 11 22
DHURGAPUR S.P 7 14
BOKARO S.P 10 20
VISAKHAPATNAM S.P 15 30
TOTAL 50 100

INFERENCE:
From the above table,it is inferred that 14% of the respondents feel that Rourkela steel plant
is getting high sales volume,22% of the respondents feel that bhilai steel plant is getting high
sales volume,14% of the respondents feel that dhurugapur steel plant is getting high sales
volume,20% of the respondents feel that bokaro steel plant is getting high sales volume and
30% of the respondents feel that Visakhapatnam steel plant is getting high sales volume.
 49

HIGH SALES VOLUME IN STEEL INDUSTRY

45
40
35
30
25
20
15
10
5
0
 50

TABLE NO:3

MOST VALUABLE SUPPLIERS

BRAND NO OF RESPONDENT PERCENTAGE

ROURKELA S.P 5 10
BHILAI S.P 10 20
DHURGAPUR S.P 11 22
BOKARO S.P 9 18
VISAKHAPATNAM S.P 15 30
TOTAL 50 100

INFERENCE:
From the above table, it is inferred that 10% of the respondents feel that the Rourkela steel
plant is most valuable supplier,20% of the respondents feel that the bhilai steel plant is most
valuable supplier,22% of the respondents feel that the dhurgapur steel plant most valuable
supplier,18% of the respondents feel that the bokaro steel plant is most valuable supplier and
30% of the respondent feel that the Visakhapatnam steel plant is most valuable supplier.
 51

MOST VALUABLE SUPPLIERS

35
30
25
20
15
10
5
0

TABLE NO 4
QUALITY OF THE VIZAG STEEL
 52

OVERALL RATE NO OF RESPONDENTS PERCENTAGE

EXCELLENT 14 28
VERY GOOD 8 16
GOOD 14 28
AVERAGE 8 16
POOR 6 12
TOTAL 50 100

INFERENCE:

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

QUALITY OF THE VIZAG STEEL

 53

35
30
25
20
15
10
5
0

TABLE NO:5
 54

PRICE OF THE VIZAG STEEL

LEVEL OF NO OF THE PERCENTAG

SATISFACTION RESPONDENTS E
HIGHLY SATISFIED 14 28
SATISFIED 11 22
AVERAGE 6 12
DISSATISFIED 8 16
HIGHLY DISSATISFIED 8 16
TOTAL 50 100

INFERENCE:

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

PRICE OF THE VIZAG STEEL

 55

30
25
20
15
10
5
0

TABLE NO :6
 56

FAST MOVING BRAND IN STEEL INDUSTRY

BRAND NO OF THE RESPONDENT PERCENTAGE

ROURKELA S.P 7 14
BHILAI S.P 7 14
DHURGAPUR S.P 10 20
BOKARO S.P 9 18
VISAKHAPATNAM S.P 17 34
TOTAL 50 100

INFERENCE
From the above table ,it is inferred that 14% of the respondents feel that Rourkela steel plant
is fast moving in steel industry,14% of the respondents feel that bhilai steel plant is fast
moving in steel industry,20% of the respondents feel that dhurgapur steel plant is fast moving
in steel industry ,18% of the respondents feel that bokaro steel plant is fast moving in
steel industry and 34% of the respondents feel that Visakhapatnam steel plant is fast moving
in steel industry.
 57

FAST MOVING BRAND IN STEEL INDUSTRY

40
35
30
25
20
15
10
5
0
 58

TABLE NO :7

ORDER AND REPLACEMENT WITH VIZAG STEEL

LEVEL OF NO OF PERCENTAG
SATISFACTION RESPONDENTS E
HIGHLY SATISFIED 17 34
SATISFIED 6 12
AVERAGE 11 22
DISSATISFIED 8 16
HIGHLY DISSATISFIED 8 16
TOTAL 50 100

INFERENCE:

From the above table,it is inferred that 34% of the respondents are highly satisfied with order
and replacement of the vizag steel ,12% of the respondent are satisfied with order and
replacement of the vizag steel,22% of the respondents feel that average with order and
replacement of the vizag steel,16% of the respondents are dissatisfied with order and
replacement of the vizag steel and 16% of the respondents are highly dissatisfied with order
and replacement of the vizag steel.
 59

ORDER AND REPLACEMENT WITH VIZAG STEEL

40
35
30
25
20
15
10
5
0

TABLE NO:8

AVAILABILITY OF THE VIZAG STEEL

 60

LEVEL OF NO OF PERCENTAG
SATISFACTION RESPONDENTS E
HIGHLY SATSIFIED 12 24
SATISFIED 14 28
AVERAGE 8 16
DISSATISFIED 8 16
HIGHLY DISSATIFIED 8 16
TOTAL 50 100

INFERENCE:

From the above table it is inferred that 24% of the respondents are highly satisfies with
availability of the product,28% of the respondents are satisfies availability of the
product,16% of the respondents are average with availability of the product, 16% of the
respondents are dissatisfied with availability of the product and , 16% of the respondents are
highly dissatisfied with availability of the product
 61

AVAILABILITY OF THE VIZAG STEEL

35
30
25
20
15
10
5
0

TABLE NO:9

MARGINS OFFERED BY VIZAG STEEL PLANT

 62

LEVEL OF NO OF RESPONDENTS PERCENTAGE

SATISFACTION
HIGHLY SATISFIED 15 30
SATISFIED 8 16
AVERAGE 13 26
DISSATISFIED 8 16
HIGHLY DISSATISFIED 6 12
TOTAL 50 100
INFERENCE

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

MARGINS OFFERED BY VIZAG STEEL PLANT

 63

35
30
25
20
15
10
5
0

TABLE NO:10
 64

SATISFIED WITH VIZAG STEEL DEALERSHIP

SATISFIED NO OF PERCENTAGE
RESPONDENT
YES 28 56
NO 22 44
TOTAL 50 100

Inference

From the above table, itisinferred that56%ofthe respondents s a t i s f i e d

withtheVizagsteeldealership,andother38%oftherespondentsnotsatisfiedwith
theVizagsteeldealership.
 65

SATISFIED WITH VIZAG STEEL DEALERSHIP

60

50

40

YES
30
NO

20

10

0
1
 66

TABLE NO : 11

ADVERTISEMENT OF THE VIZAG STEEL

ADVERTISMENT NO OF THE RESPONDENT PERCENTAGE

TOO HIGH 15 30
HIGH 9 18
MODERATE 8 16
LOW 9 18
TOO LOW 9 18
TOTAL 50 100

INFERENCE

From the above table it is inferred that 30% of the respondents feel that advt. offered by vizag
steel is too high, 18% of the respondents feel that advt. offered by vizag steel is high, 16% of
the respondents feel that advt. offered by vizag steel is moderate, 18% of the respondents feel
that advt. offered by vizag steel is low, 18% of the respondents feel that advt. offered by vizag
steel is too low.
 67

ADVERTISEMENT OF THE VIZAG STEEL

35

30

25

20

15

10

0
TOO HIGH HIGH MODERATE LOW TOO LOW

TABLE NO:12
 68

SALES PROMOTIONAL EFFORTS OF THE VIZAG STEEL

OVERALL RATE NO OF RESPONDENT PERCENTAGE

EXCELLENT 14 28
VERY GOOD 7 14
GOOD 11 22
AVERAGE 7 14
POOR 11 22
TOTAL 50 100

INFERENCE

From the above table it is inferred that 28% of the respondents feel that sales promotional is
excellent, 14% of the respondents feel that sales promotional is very good, 22% of the
respondents feel that sales promotional is good, 14% of the respondents feel that sales
promotional is average, 22% of the respondents feel that sales promotional is poor
 69

SALES PROMOTIONAL EFFORTS OF THE VIZAG STEEL

30

25

20

15

10

0
EXCELLENT VERY GOOD GOOD AVERAGE POOR

TABLE NO:13
 70

LIFETIME OF THE OVERALL STEEL

BRAND NO OF RESPONDENTS PERCENTAGE

ROURKELA S.P 7 14
BHILAI S.P 13 26
DHURGAPUR S.P 4 8
BOKARO S.P 10 20
VISAKHAPATNAM S.P 16 32
TOTAL 50 100

INFERENCE:

From the above table ,it is inferred that 14% of the respondents feel that Rourkela steel is
having more life time, 26% of the respondents feel that bhilai steel is having more life time,
8% of the respondents feel that dhurgapur steel is having more life time, 20% of the
respondents feel that bokaro steel is having more life time, 32% of the respondents feel that
Visakhapatnam steel is having more life time
 71

LIFETIME OF THE OVERALL STEEL

35
30
25
20
15
10
5
0

TABLE NO: 14

RELIABILITY OF THE VIZAG STEEL

OVERALL RATE NO OF RESPONDENTS PERCENTAGE

EXCELLENT 15 30
VERY GOOD 9 18
GOOD 11 22
 72

AVERAGE 7 14
POOR 8 16
TOTAL 50 100

INFERENCE:

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

RELIABILITY OF THE VIZAG STEEL

 73

35

30

25

20

15

10

0
EXCELLENT VERY GOOD GOOD AVERAGE POOR

TABLE NO : 15

PAYMENT TERMS OF THE VIZAG STEEL

OVERALL RATE NO OF RESPONDENT PERCENTAGE

EXCELLENT 16 32
VERY GOOD 8 16
GOOD 8 16
AVERAGE 11 22
 74

POOR 7 14
TOTAL 50 100

INFERENCE:

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

PAYMENT TERMS OF THE VIZAG STEEL

 75

35

30

25

20

15

10

0
EXCELLENT VERY GOOD GOOD AVERAGE POOR

TABLE NO: 16

MARKET RESEARCH IN THE STEEL INDUSTRY

BRAND NO OF PERCENTAGE
RESPONDENTS
 76

ROURKELA S.P 9 18
BHILAI S.P 10 20
DHURGAPUR S.P 8 16
BOKARO S.P 10 20
VISAKHAPATNAM S.P 13 26
TOTAL 50 100

INFERENCE:

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

MARKET RESEARCH IN STEEL INDUSTRY

 77

30
25
20
15
10
5
0

TABLE NO:17
DELIEVERY PERIOD BY VIZAG STEEL

DELIEVERY PERIOD NO OF THE RESPONDENT PERCENTAGE

1-3 DAYS 14 28
3-5 11 22
 78

5-10 8 16
10-13 8 16
13-15 9 18
TOTAL 50 100

INFERENCE:

From the above table it is inferred that 28% of the respondents answered that within 1-3 days
they are getting their product, 22% of the respondents answered that within 3-5 days they are
getting their product, 16% of the respondents answered that within 5-10 days they are getting
their product,16% of the respondents answered that within 10-13 days they are getting their
product, 18% of the respondents answered that within 13-15 days they are getting their
product.
 79

DELIEVERY PERIOD BY VIZAG STEEL

30

25

20

15

10

0
1-3 DAYS 3-5days 5-10days 10-13days 13-15

CHAPTER -5
FINDINGS, SUGGESTIONS AND CONCLUSIONS
 80

FINDINGS OF THE STUDY

36% of the respondents are having Visakhapatnam steel plant dealership.
30% of the respondents feels that Visakhapatnam steel plant is having high

sales volume.
30% of the respondents are considering most valuable suppliers from the

dealers point of view.

28% of the respondents feel that quality of the product is excellent. And 12%

of the respondents feel quality is poor.

 81

28% of the respondents satisfied with price of the product.and 16% of the

respondent not satisfied with the price of the products.

34% of Visakhapatnam steel plant is moving fast brand in steel industry.
34% of the respondent feel that order and replacement is highly satidfied . and

16% of the respondents feel that highly dissatisfied.

28% of the respondents satisfied with availability of the product , and 16% of

the respondents are highly dissatisfied.

30% of the respondents highly satisfied with margins offered by the product.

And 12% of the respondents feel that margins of the product are highly

dissatisfied.

56% of the respondents satisfied with Visakhapatnam steel plant dealership.

And 44% of the respondents not satisfied.

30% of the respondents feel that advertisement offered by Visakhapatnam

steel plant is too high. And 18% of the respondents feel that advertisement is

low.
28% of the respondents feel that sales promotional efforts of the

Visakhapatnam steel plant are excellent. 22% of the respondents feel that poor.
32% of the Visakhapatnam steel plant products are having more life time. And

8% Dhurgapur steel plant product has less life time from others.
30% of the respondents satisfied with reliability of the Vizag steel. And 16%

of the respondents not satisfied.

32% of the respondents satisfied with the payment terms of the Vizag steel and

14% of the respondents not satisfied.

28% of the respondents satisfied with delivery period of the product within 3

days. And 16% of the respondents not satisfied.

 82

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

required.
 83

CONCLUSION
After analysis of the data we have concluded that Visakhapatnam steel plant has conquered
first place because the sales volume of it is very high compare than others and the awareness
of the Visakhapatnam steel plant is very high in Visakhapatnam district.

Moreover viskhapatnam has good dealership with dealers.

Visakhapatnam steel plant has to improve its sales promotional efforts as well as follow some
strategies through effective market research and get feedback from their consumers and
customers(dealers). And give more advertisement so that move powerful than others and
fixed the standard price.

At the same time quality ,availability and delievery time of the Visakhapatnam steel plant is
good.

IN SIMPLE WORDS VISAKHAPATNAM STEEL PLANT IS IN DEVELOPED

STAGE IN VISAHAPATNAM DISTRICT
 84

BIBLIOGRAPHY
 85

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

Websites Visited:

www.vizagsteel.com
www.indiansteelindustry.com
www.wikipedia.com
www.google.com
 86

ANNEXURE
 87

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

This questionnaire is entirely for the purposes of educational research; its contents will be
kept strictly confidential, will not be made known to anyone known outside of the research
study, and will not otherwise be disclosed or published except in an aggregated form in which
individuals cannot be identified

1. NAME OF THE DISTRIBUTORS:

2. ADDRESS:

WHICH STEEL DEALERSHIP DO YOU HAVE?

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )

C.DHURGAPUR STEEL PLANT ( )

D.BOKARO STEEL PLANT ( )

E.VISKHAPATNAM STEEL PLANT ( )

4. WHICH COMPANY GETS HIGH SALES VOLUME IN STEEL INDUSTRY?

 88

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )

C.DHURGAPUR STEEL PLANT ( )

D.BOKARO STEEL PLANT ( )

E.VISKHAPATNAM STEEL PLANT ( )

5. INYOURPOINTOFVIEWWHOISTHEMOSTVALUABLESUPPLIERS?

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )
C.DHURGAPUR STEEL PLANT ( )
D.BOKARO STEEL PLANT ( )
E.VISKHAPATNAM STEEL PLANT ( )

6.WHAT IS YOUR OPNION ABOUT VIZAG STEEL?

A. EXCELLENT ( )
B. VERYGOOD ( )
C. GOOD ( )
D. AVERAGE ( )
E. POOR ( )

7.KINDLY GIVE YOUR SUGGESTION RELATED TO THE PRICEOF VIZAG STEEL?

A. HIGHLYSATISFIED ( )
B. SATISFIED ( )
C. AVERAGE ( )
D. DISSATISFIED ( )
E. HIGHLY DISSATIFIED ( )
 89

8.WHICH ISTHEFASTMOVINGBRANDINYOURTOWN?

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )
C.DHURGAPUR STEEL PLANT ( )
D.BOKARO STEEL PLANT ( )
E.VISKHAPATNAM STEEL PLANT ( )
9.PLEASERATETHEORDERANDREPLACEMENTOFVIZAGSTEEL?

A. HIGHLYSATISFIED ( )
B. SATISFIED ( )
C. AVERAGE ( )
D. DISSATISFIED ( )
E. HIGHLY DISSATIFIED ( )

10.PLEASERATETHEAVAILABILITY OFVIZAGSTEEL?

A. HIGHLYSATISFIED ( )
B. SATISFIED ( )
C. AVERAGE ( )
D. DISSATISFIED ( )
E. HIGHLY DISSATIFIED ( )

11. AREYOUSATISFIEDWITHTHEMARGINS OFFEREDBYVIZAGSTEEL?

A. HIGHLYSATISFIED ( )
B. SATISFIED ( )
C. AVERAGE ( )
D. DISSATISFIED ( )
E. HIGHLY DISSATIFIED ( )
 90

12. AREYOUSATISFIEDTOTAKETHEVIZAGSTEELDEALERSHIP?

A. Yes( )
B. No ()

13.PLEASEMENTION ADVERTISEMENT OFFEREDBYVIZAGSTEEL?

A. TOOHIGH ( )
B. HIGH ( )
C. MODERATE ( )
D. LOW ( )
E. TOOLOW ( )

14. PLEASE MENTION SALES PROMOTIONAL EFFORTSOFTHE VIZAG STEEL?

A. EXCELLENT ( )
B. VERYGOOD ( )
C. GOOD ( )
D. AVERAGE ( )
E. POOR ( )

15.WHICHSTEELGIVESMORELIFETIMEFROMOTHERS?

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )
C.DHURGAPUR STEEL PLANT ( )
D.BOKARO STEEL PLANT ( )
E.VISKHAPATNAM STEEL PLANT ( )

16.WHATDOYOUUNDERSTANDTHERELIABILITYOFTHEVIZAGSTEEL?
A. EXCELLENT ( )
 91

B. VERYGOOD ( )
C. GOOD ( )
D. AVERAGE ( )
E. POOR ( )

17.HOWDOYOURATEPAYMENTTERMSOFFERD BYVIZAGSTEEL?
A. EXCELLENT ( )
B. VERYGOOD ( )
C. GOOD ( )
D. AVERAGE ( )
E. POOR ( )

18.WHICHCOMPANY GIVESMOREIMPORTANCETOMARKETINGRESEARCH?

A.ROURKELA STEEL PLANT ( )

B.BHILAI STEEL PLANT ( )

C.DHURGAPUR STEEL PLANT ( )

D.BOKARO STEEL PLANT ( )

E.VISKHAPATNAM STEEL PLANT ( )

19.PLEASEMENTION DELEVERYPERIODOFTHEVIZAGSTEEL?

A. 1-3 DAYS ( )
B. 3-5 ( )
C. 5-10 ( )
D. 10-13 ( )
E. 13-15 ( )