A STUDY ON THE PRICING AND SALES STRATEGY OF SECONDARY AND BY-

PRODUCTS AT SAIL (BOKARO)

Soumya ShrivastavaJaipuria Institute of Management, Indore

STEEL AUTHORITY OF INDIA LTD.

•India’s largest steel producing company

•A turnover of 50,627 crores

•One of the 7 Maharatnas of the country’s Central

Public Sector Enterprises.

•5 integrated steel plants, 3 special plants and 1

subsidiary.

•Produces mild steel, both long and flat, and a wide

variety of special and stainless steels.

BOKARO STEEL PLANT

•The 4th integrated steel plant in the public sector

•Originally incorporated as a limited company on 29th January,1964

•Construction work started on 6th April,1968

•India’s 1st “Swadeshi” plant, built with maximum indigenous content.

•1st phase of 1.7 MT ingots of steel were completed on 26th February, 1978

•The 4th integrated steel plant in the public sector

•Originally incorporated as a limited company on 29th January,1964

•Construction work started on 6th April,1968

•India’s 1st “Swadeshi” plant, built with maximum indigenous content.

•1st phase of 1.7 MT ingots of steel were completed on 26th February, 1978

MARKETING DEPARTMENT

•Country-wide network of over 2000 dealers

•Region-wise distribution: Eastern, Western, Northern & Southern.

•Rural Dealership Scheme: for Talukas/ Blocks/ Panchayats

•Set-up of Central Marketing Organizations is the largest industrial set up in

India

•37 Branch Sales Offices

•67 Warehouses

•10 Customer Contact Offices

•Export to Japan, Korea, China, Vietnam, Philippines, Singapore, Malaysia,

Thailand, Indonesia, Mexico, Australia and Europe

Strong WorkforceTechnical & Managerial Expertise

Strong Supply ChainStrong Financial Resources

Government & Political InterventionHigh Profit Margins Not Allowed

Expansion and GrowthGlobalization & Tie-ups with

International PlayersMergers & Acquisitions

Change in Government Policies and Economic trends

Technological Development in Outside World

SWOT

MERGERS & ACQUISITIONS

•Merger with MEL, a subsidiary of SAIL in 2006, for the

manufacture of Ferro-alloys, a key input for steel making

•Developed linkage with new iron ore mines in Chhattisgarh and

Jharkhand to gain security of iron ore in 2007

•Entered into a MOU with Bharat Coking Coal Ltd. for availability

of indigenous coking coal.

•Formed “International Coal Ventures Ltd.” with equity

participation from SAIL, RINL, CIL, NTPC & NMDC for acquisition

of coal assets in overseas territories

BY-PRODUCTS•Nitration-grade Benzene: Used in rubber industry, oil refineries, chemical

plants, shoe manufacturers and gasoline-related industries.

•Nitration-grade Toluene: Used in paint industry, adhesive industry, printing

and leather tanning

•Light Solvent Naphtha: Used in farming, paint industry, petroleum industry,

textiles industry and disinfectants

•Hot Pressed Naphthalene: Used for dyeing, as dispersing agent and

disinfectants

•Ammonium Sulphate: Used as fertilizer and in pharmaceutical, textile,

welding and leather industries. Also used for making beer.

•Granulated Slag: Majorly used in cement industry

•Liquid Nitrogen: Used in food & beverage industry, healthcare, metal

production, pharmaceutical industry and oil & gas industry

•A street e-sales division of India’s largest e- commerce

company, M Junction, a pioneer in e-auction services.

•Enables small as well as big consumers to buy steel

and by products generated by large corporates such as

SAIL, Tata Steel, etc.

•Has transformed the steel and coal supply chain in

India by bringing in Efficiency, Transparency and

Convenience.

NECESSITY OF SELLING THE SECONDARY PRODUCTS

•Net Sales Realization from all secondary products is over 600 crores annually.

•Selling re-manufactured products by melting secondary products brings

direct profit of 4000 per tonne.

•By selling secondary products to the local market new industries are

developed for re-rolling the secondary products to make finished products.

•Last year average price of scrap product ranged between Rs. 12000/ tonne to

Rs. 16000/ tonne.

ROLE OF MARKETING DEPARTMENT

•Marketing of prime products of SAIL’s plants.

•Marketing of secondary products and coal chemicals

•Marketing development section deals with MIS and strategic planning activities.

POLICIES OF MARKETING•Positioning the product according to the value based in customer’s

mind.

•Finalizing the annual sales plan and quantity monthly, weekly, and daily

rolling program.

•Optimizing the product-mix by proper utilization of available stock.

•Receiving enquiries and complaints, cancellation of orders, etc.

•Coordinating the work of mill and traffic department so as to maximize

dispatches.

•Periodical market surveys of products to analyze market position.

•Implementation of suggestions received from customers’ feedback.

•Ensuring customer satisfaction by meeting customers regularly,

providing redress to their problems and fulfilling demand

PRICING

•Factors considered while pricing the secondary products:

1. Prices offered in the auction sales

2. Quantity of material to be lifted

3. Approval of Managing Director

• The average prices offered by bidders during auction is taken as a

basis to fix the prices.

• Break-up pricing encourages bidders to buy in larger quantity.

• Every customer is required to have a security deposit of Rs. 100000.

• The Standing Price Committee reviews the prices of various

products and takes decisions.

MARKETING STRATEGIES OF SAIL BOKARO

1. CUSTOMER SATISFACTION

• Building customer relationship

• Market development

2. STOCK REDUCTION

3. PRICE FIXATION

4. DISPATCH

5. DOCUMENTATION

MODES OF SELLING

e-Auction Fixed price sale Inter-plant transfer

Tender

OBSERVATIONS

•Majority of the customers say that other steel plants are providing secondary

products at a lower rate.

•Most of the customers find difficulty in dealing with SAIIL.

•E- Auction is the most reliable mode of selling, and the customers are happy

with it.

•Benzene, Toluene and Ammonium Sulphate have the highest number of

customers.

•Roadways are the most common means of transport used because all the

customers are from the local market.

•Quality, availability and transportation are the main benefits that customers

receive.

RECOMMENDATIONS

•SAIL should work on increasing the production of secondary products, as most of the

customers are interested in buying these products.

• The prices should be lowered so as to compete with Tata Steel.

• Products which give Benzene, Toluene and Ammonium Sulphate should be produced in

larger quantities.

BIBLIOGRAPHY

• Magazine published by SAIL

• Training Manual

• www.sail.co.in

• www.metaljunction.com

• Conversation with employees of SAIL, Bokaro and Metal Junction

GRATITUDE

THERE IS A LITTLE BIT OF SAIL IN EVERYBODY’S LIFE!!