Beruflich Dokumente
Kultur Dokumente
A report submitted towards the partial fulfillment of the requirement of the two years full-
time Mater of Business Administration (International Business)
Submitted to:
Mr. PRABHASH GOKARN
Project Guide
Head FAMD Tata Steel
Tata centre, Kolkata
ACKNOWLEDGEMENT
This is a short note of thanks to all the employees at TATA STEEL, KOLKATA who have
made contribution in the completion of this project. I express my sincere thanks to my project
guide Mr. PRABHASH GOKARN and Ms. SUNITI KHASTIGIR.
The Suggestions and advices given by Mr. PRABHASH GOKAHRN (HEAD, FA & MD)
was very helpful. I also extend my gratitude to Mr. R.K. DAS (CHIEF, FA & MD) and Mr.
WARIS AHMED, for their sincere assistance.
I thank the HRM Department. This training would not have been so smooth without the help
of Ms BHAWAMA M RAJ, MR. SIDDHARTHA SHAH and MR. RATNA SINGH
Last but not the least; I thank my college Management, Mr. B.ASOKUMAR, Dr. BHUSHAN
D. SUDHAKAR, Mr. HIMANSHU TANDON and my friends who helped me to complete
my training successfully.
Contents
Methodology 07
Sources of information 07
FAMD division 11
BISRA 28
Analysis of BISRA 35
XSTRATA 40
Analysis of XSTRATA 47
OUTOKUMPU 54
Analysis of OUTOKUMPU 59
Conclusion 67
Tata Steel has faced with an increasingly dynamic business environment today. The rapid
changes in the environment make it very important for companies to have a tough external
perspective while formulating strategy or taking vital Decisions.
It is in recognition of this truth that the Tata Group has decided to implement the term of
FIBRES (Facts and Information Based Reverse Engineering of Strategy) — a Common
framework that will be used across group companies to regulate the process of competitive
monitoring within its group. FIBRES are a unified process and Methodology developed on
the basis of world’s best practices. It is a method to make sure that strategies are formulated
only after gaining a thorough accepting of the competitive environment. The aim is to align
the Company’s strategy with the demands of its business atmosphere. FIBRES will guide
companies by providing a basic framework that can be made to order by them to suit their
specific needs.
The objective of the project is to create databases of competitors, analysis, collating and
taking strategic decisions which can help Tata steel in competitions. It will be an eye to the
External World It will help companies to understand who, what, where, when and how of its
environment.
It will be systematic and principled program for collating and analysing the different
competitive environment and business trends which will serve as a essential input to strategy
formulation.
This project will help at different levels in different ways to give vital inputs to move
organisation smoothly.
To line up the firm’s strategy with its external business environment. And hence gain
a strong competitive advantage
This project will help us to understand different organisational skills, resources and on the
whole capability. It will help to understand talent as well as different recruitment and
retainment strategies. Information about present practices, capabilities and future direction.
It will also help us to understand financial capability of all competitors in terms of access to
their capital, financial position such as leverage, different deployment of funds, about capital
investment levels, product costing.
It will also help in identifying trends & opportunities in the business. It will give ability to
shape market and identify weaknesses in competitors’ strategies.
Thus objective of this project is to create a competitive intelligence which is going to help to
track competitor’s moves and gain competitive advantages while doing business.
Methodology
First we have to collect fact and information from various internal and external sources about
the competitors’ organisations.
Then we have to compile the information in a systematic way which can be easy to
understand about competitors.
Then we have to form it in the form of intelligence through reverse engineering strategies.
At last we have to take strategic decisions which will help Tata Steel to gain competitive
advantages in the market and to predict the competitors’ behaviours.
Product and services: types of product, product features, product lines, production volumes,
sales levels, turnovers, new product developments, franchise, capacity, market segmentations.
Pricing: pricing list, future pricing considerations, pricing strategies, target customers and
suppliers of competitors
Financials: sources of cash, Balance sheet, revenues, cash and fund flows, taxes, CAGR.
Sources of information
Internal sources: Internal databases, sales team reports, employees, group companies, etc.
Industry sources: Associations, trade shows, research centers, journals, libraries, books, etc
Regulatory sources: Regulatory bodies, state and central government websites, ministry
publications, etc.
Registrar of companies: Annual report filed with the registrar of companies under the
Companies Act, 1956
FIBRES: INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the
competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the 'who, what, where, when and
how' of the external competitive environment
FIBRES framework
Collation of facts and information: Collection and collation of data and information from
legally and ethically permissible sources.
Analysis: A thorough analysis of inputs to convert them into knowledge of the external
Environment (in terms of patterns, trends and interrelationships). By tailoring the output of
the analyses towards the needs of the top management/decision-makers, this knowledge is
converted into 'actionable intelligence' for decision-making.
FIBRES have been designed specifically to assist decision-makers and personnel interfacing
with the external environment.
� Personnel interfacing with the external environment: These include the sales team,
recruitment team, purchase team and legal/regulatory team.
� Others: Other FIBRES users would be need/event based, for example, members of special
projects, IT/systems personnel, operations personnel and R&D personnel.
Objectives of FIBRES
To line up the firm’s strategy with its external business environment. And hence gain
a strong competitive advantage
It will help us to understand different organisational skills, resources and on the whole
capability. It will help to understand talent as well as different recruitment and retainment
strategies. Information about present practices, capabilities and future direction. It will also
help us to understand financial capability of all competitors in terms of access to their capital,
financial position such as leverage, different deployment of funds, about capital investment
levels, product costing.It will also help in identifying trends & opportunities in the business.
It will give ability to shape market and identify weaknesses in competitors’ strategies.
The output of the FIBRES process would depend on the type and scope of FIBRES
Implemented in the organisation.
Competition tracking: Competitor profiles are prepared for each of the leading
players (for every market segment).The focus of these profiles is on analysing
competitors' current and past strategies with a view to predict possible and likely
future moves — thus enabling pre-emptive actions to counter rivals' moves. For
example, the launch of a product by the competition can be delayed or prevented by
reading the signals correctly and taking preemptive measures.
The systems for the FIBRES process are designed at this stage. These include systems or
information collection, analysis, communication, planning, feedback and storing. To ensure
A Timeless Vision
“The nation which gains control of iron soon acquires the control of
gold. “ -- These were the words that inspired a young Jamsetji
Nusserwanji Tata envisages a bold new dream for India.
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata; Tata Steel is
world 6th largest, Asia’s first rank steel and India’s largest integrated private sector of steel
company. After many years, it emerged as a successful, quick, steel enterprise, due to its
ability to make over and ability to meet different challenges of high competitive global
economy and obligation to become a supplier of choice by delighting its customers with best
services and products.
Tata Steel’s has made four phase Modernization program in the steel works that has enabled
it to acquire the most modern and best steel making services in this world. The company has
been known as Asia’s most accepted Knowledge Enterprise at the World Knowledge Forum,
Seoul, Korea. It has recently embarked on program for expansion of its existing steelmaking
capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum.
The CII-EXIM Award for its corporate excellence and also the Corporate Governance
Award, instituted by the Union Finance Ministry for best and excellence in corporate
governance, are its testimony to the tata steel for commitment to excel in all activities that it
undertakes.
Till date, there are eight divisions, including its steel works and its mines and its units have
been ISO-14001 certified for the environment. This certification is a reaffirmation of
company’s belief that will guide betters environmental management leads to superior
business performance in future.
Tata Steel has been acknowledged by World Steel Dynamics as a “world class” steel maker.
Tata Steel is the only first steel company in the world to receive the certificate by Social
Accountability (SA) 8000 by Social Accountability International (SAI), USA. It is a global
supportable standard for managing the work place in most effective behavior by improving
the work place conditions. The natural strength of the company such as low operating cost, as
well as special managerial culture and good profitability has been widely respected and this
has led to establishing strategic partnership with different international players in the world
market such as Nippon Steel Corporation of Japan; Arcelor of France; POSDATA of South
Korea; Ryerson and Paul Wurth of Luxemburg.
Consistent with the vision and values of Tata Steel to strengthen India’s industrial base
through the effective utilization of men and materials. It means that envisaged to attain this
are high technology and also productivity, consistent with modern best management
practices. Tata Steel believes that while honesty and integrity are essential ingredients for a
strong and stable organisation; the profitability provides the main flash of economic activity.
Overall the company seeks to scale heights of excellence in all that is does in an enviourment
free from fear, and thus it encourages innovativeness and creativity.
BUSINESS UNITS
Parts from the main Tata steel Division; Tata Steel’s operations are grouped under the
following different Strategic Business Units:
Bearings Division
Agrico Division
Tubes Division
Wire Division
Corus
Tata Metaliks
TRF Limited
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials
Division of Tata Steel, as it Profit Centre in the year 1993 to have greater center of attention
on the Ferro Alloys and Minerals business.
As part of its beginning and initiatives to raw materials security and growth in different Value
Added Products, FAMD division has been also identifying new opportunities for the smooth
business and pursuing it to the point of promoting them as a new company or business.
Example such as TSKZN in South Africa for the production of its Charge Chrome, it has
Chrome mines at Iran, acquisition of Raw met Fe Alloy biz, From April’07. This FAMD
division is having chrome ore mines, Manganese Mines & Ferro Alloys Plants located at
various locations of Orissa at different location. Company has exchange agents to convert
raw materials given by them at conversion cost.
There are few more plants at different parts of the world (owned by Difffrent Company) who
have signed contracts with FAMD to convert their raw material at nominal conversion cost
and make Ferro Chrome. Two important raw materials Chrome ore and coke are given by
FAMD. Chrome requirement has been assessed and supplied to these plants by their sales
unit who are in charge for the co -ordination with these conversion units. Coke requirement
for several plants are assessed and imported by this department and is supplied to different
plants
other resources & various inputs like power, water, etc are arranged by the conversion agents
at their own cost. Mines transport the raw materials to FAMD plants and conversion plants at
cost price. The price of different raw material is not a concern
the recently acquired Raw material plant (Raw-Met), is a 100 % subsidiary of Tata Steel. As
regard to this department is concerned it is treated just like a conversion plant. It has similar
type of agreement contracted with raw met Company Ltd. As regard to supply of material is
concerned, it is coordinated by Tata steel’s FAMD sales office at Kolkata.
Business profile of FAMD:
– Charge Chrome,
It has various Global reach and strong presence in Japan and Korea,
It has now China & Europe and recent venture into US market.
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1997-98: it introduced customized Chrome conc. For different refractory and
chemical sectors. Developed for more customized products for HCFeCr consumers.
In year 1995-96 it introduced low impurity Ferro Chrome in the global market.
In year 1993-94 FAMD established long term business relationship with premier stainless
steel mills worldwide and expanded its business for long run.
In year 1991-92 it introduced new products like Chrome, manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMD’S Customer Base
International Customers:
SINOCHEM, China
Avesta Polarit, UK
Glencore, Switzarland
KTN, Germany
Posco, Korea
FIBRES 2009: (FA & MD) 200
9
Domestic Customers:
Shah Alloys
ISIBAR
Viraj Alloys
FACOR
Sova Ispat
Srinavasa FA
Panchmahal Steel
2008 2010
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese
value long-term biz relations
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its
complementary strength
It has Multi-locational & multi-unit production base which are reliable and flexible
FIBRES 2009: (FA & MD) 200
9
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
Reductants - + +++ -
Information Parameters
Incorporated in
Founder
Location
Key Persons
Mining Related Details
Capacity (MTPA)
Production trends (tpa)
Manpower used
- Permanent
- Contract
Type of manpower
- Skilled
- Unskilled
No.of shifts operated
Average no. of people per shift
Labour Productivity (including contract staff)
Labour Productivity (excluding contract staff)
Cost of ore produced
- Cost/ton of ore production
- Cost/ton of over burden removal
Technology suppliers
Safety requirements
Mining equipment capacity utilization
Area of mines
- Lease (Hectares)
- Forest area (Hectares)
Total reserves available for mining (in Tonnage)
Various Mine operational parameters –
- Total Depth
- Maximum Depth of working
- Bench Height
- Strike Length
- Slope angle
- Average Dip
- Thickness of ore body
FIBRES 2009: (FA & MD) 200
9
- Total tunelling (for underground mine)
- No. of levels
- Stripping ratio
- Explosives used
- Powder factor
- Explosives cost
- No.of Quarry
- Ore inventory at mines
- Cr/Fe ratio
Transportation and despatch related details
- Transportation cost
- Wagon loading cost
- Amount of ore despatched through road and rail
- No of sidings being used
- Reliability of quality of despatched ore
- Inventory at railway siding
- Turnaround time for rake
- Availability of rakes
- Vehicle waiting time
- No.of truck movements/day
- % of rejection in sorting of ore
- Utilisation of fleet
Ferro Alloy Plant Related Details
Manpower details (overall)
- Executive
- Non-Executive
Manpower details – plant wise/furnace wise
- Permanent
- Contract
Manpower productivity (including contract staff)
- Output/Manshift (MT)
- Production/Manday (MT)
Manpower productivity (excluding contract staff)
Operations which are outsourced and no. of contract employees used
Furnace availability (without breakdown)
- Plant availabilty in % terms
- Time utilisation in % terms
Cost data
% fines generation in processing
FIBRES 2009: (FA & MD) 200
9
Power Factor
Load Factor
Method of Casting of Tapping material
Customer feedback system
Power consumption (Million KwH)
- 2003-04
- 2002-03
Power Cost (Rs/unit)
- 2003-04
- 2002-03
Power Consumption Norms (Kwh/MT)
- HC FeMn
- MC FeMn
- SiMn
- FeCr
- FeSi
Maintenance cost
Capacity utilization
- 2003-04
- 2002-03
Mn/Fe ratio
Cr/Fe ratio
Mn/SiO2 ratio
Chrome recovery %
Mn recovery %
Cr % in ore
Mn % in ore
Fe % in ore
SiO2% in ore
Mn % in alloy
Cr % in alloy
% MnO in slag
% Cr2O3 in slag
% losses in fume
Raw material consumption details
- Manganese Ore (MT)
- 2007-08
- 2006-07
- Chrome Ore (MT)
FIBRES 2009: (FA & MD) 200
9
- 2007-08
- 2006-07
- Coke (MT)
- 2007-08
- 2006-07
Raw material consumption norms
- Specific Mn ore consumption (Kg/MT)
- Specific Cr ore consumption (Kg/MT)
- Specific Carbon consumption (Kg/MT)
Market
Exported to
Future Plan
Expantion Plan
Capital Outlay Required
FIBRES 2009: (FA & MD) 200
9
FIBRES 2009: (FA & MD) 200
9
Competitor-1
The Bisra limestone and dolomite company was established in the year 1910. It has the share
capital of Rs. 50 crore. It is doing business in mining and marketing of Dolomite and Limestone
of various varitites. The organisation has its mining leases in the District of Sundargarh called as
Birmitrapur, located in Orissa. Due to alteration in steel making technology the demand for
BSLC’s products has reduced in recent years considerably resulting in poor financial imbalance
arising out of sharp fall in the organisation turn over.
After this company came under the strong administrative control of the Ministry of Steel, which
comes under Government of India, the Government extended its full support to the Bisra in the
form of different Plan Loan, Non Plan Loan as well as Grant in aid for validation of
manpower. The company’s product mix was also altered and some measures were taken to
improve for good quality of products. Following upon taking such decisions the organisation
have earned positive gross margin in its business. That is called margin before charging its
depreciation and its interest on Government Loan in the year 1996-97. The position however
deteriorated once again from 1997-98. At the beginning due to some labour problem and there
after due to demand constraints since 1998-99 arised out of recession in Steel Industry.
With the Indian Government’s support the Bisra has taken vital major steps for rationalization of
manpower through execution of Voluntary Retirement Scheme (VRS). The BISRA has been able
to separate 3095 number of their employees through VRS from the period span of 1.4.1992 till
31.03.2007. it had previously manpower strength of 5200 approximately as on 1.4.1992 the
strength now as on 31.03.07 stood at only 1234. This has enabled company to control the wage
related and other types of cost to some significant extent.
But now Recessionary trend in the steel sector are over and demand position has little bit
improved, the Bisra has been making effort to step up production and dispatch of its
products. The company has taken appropriate best steps for development of the new business
areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional
crushing capacity and also modification and up gradation of the present Crushing Plants and
Railway siding. It has signed MOU with Steel authority of India for delivery of its products to
SAIL Steel Plants in the Eastern areas. With all these important steps the organisation position
has improved and it has been getting positive gross margin in the business before charging the
interest on Government provided loan and its depreciation.
FIBRES 2009: (FA & MD) 200
9
Information Parameters
BISRA
Incorporated in 1910
Founder bird groups
The Bisra Stone Lime
Company Limited
Location FD-350, Sector – III,
Salt Lake City,
Kolkata – 700 106
Shri K. L. Mehrotra
Key Persons Shri M. S. Barpanda
Shri Tapan Biswas
PRODUCTION & DESPATCH
Limestone (MT)
Output 282690
Dispatch 242340
Dolomite(MT)
Output 830638
Dispatch 827017
Land (Free hold) (RS) 864,068
Land (lease hold) (RS) 1,597,111
Buildings (RS) 10,862,507
Machinery & Plant (RS) 142,334,156
Earth Moving Equipment (RS) 44,847,219
Electric Machinery & Plant (RS)
& General Electrification 9,768,039
Siding (RS) 5,229,900
Pipe Line (RS) 785,190
Furniture (RS) 1,021,723
Motor Car, Lorries & Bus (RS) 2,106,299
Tractors (RS) 1,036,661
Bridge (RS) 73,690
Water Supply (RS) 2,255,157
Mines Office:
Birmitrapur, Dist. -
Sundargarh (Orissa)
Tel (0661) 2610270/2610236,
Fax (0661) 2610270
FIBRES 2009: (FA & MD) 200
9
CaO 28-30%
1
MgO 9-20%
SiO2 6-7%
Al2O3 1.40%
Fe2O3 0.90%
Total alkali 0.40%
Market
domestic organizations
Exported to nilanchal,adhunik steel etc.
Future Plan
due to loss till date no
Expansion Plan expantion plan
Capital Outlay Required NA
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs. 4632 lakhs
during the year under assessment registering an increase by 22.87% from that of the last year
(Rs.3770 lakhs). This rise in its sale value has been possible because of over-all improvement in
the condition. Both production and dispatch of dolomite and limestone have been augmented.
There has been also various rise too in selling prices of its products and which has also
contributed to the increase in sales value in present year.
The Bisra achieved during this year positive gross margin before charging its depreciation and
interest on government loan to the amount of Rs.120.31 lacs .However their net loss has greater
than before to Rs. 8261.33 lakhs for the year against Rs.6764.74 lacs for the last year due to
some compounding effect of interest and penal interest on the government provided loan. The
cumulative loss amounted to Rs.62089.42 lakhs from Rs. 53928.09 lakhs for the previous year.
FIBRES 2009: (FA & MD) 200
9
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has
remained stable in recent years. The demand for dolomite and limestone is expected to be
encouraging the position in coming years also unless there is any big change in the steel making
technology. In the current situation of booming Steel Industry organisation performance is
expected to be remaining at moderate and satisfactory level. The company is making all practices
to gear it up to meet the challenges of favorable market for running business. With abundant
reserves of good cement grade limestone in the leaseholds, the company has kept its hard work
on for diversification either by entering into a different contract of sale of cement making
limestone and setting up a cement plant on its own. Bisra future steps will depend on the planned
re-structuring and re-organization method of the organisation as well as the whole groups.
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of
Department of Steel and Mines, which is under Government of Orissa. Now it will be permitted
by the Steel Minister of Government of Orissa for grant of lease renewal.
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers
of employees could be removed till 30-06-2007 with an outgo of Rs. 31.93 crores. It has Rs.
20.42 crores towards funding in aid and Rs.1.52 crore towards non-plan loan received from the
government of India. The Bisra has next programme for rationalization of their skilled and
unskilled manpower with a view to decreasing the manpower cost.
a) Conservation of Energy:
The Bisra Company consumes purchased electricity for production. Vital steps are taken by the
Bisra Company to decrease the power consumption.
b) Technology Absorption:
The Bisra Company has not absorbed any new specific technology for its operational activities
for making its products.
FIBRES 2009: (FA & MD) 200
9
c) Foreign Exchange Earnings and Outgo:
There were no transactions in foreign exchange during this year.
8. PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975 as amended is not concerned in respect of remuneration
of any employee of the organisation.
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the
different welfare activities for its employees and their families for employee satisfaction and also
for local villagers who live nearby the mines areas in reflection of the socio-economic needs of
the region.
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good
quality drinking water; it has constructed many dug-well, renovation of different ponds, and
maintenance of the roads of nearby area and free education facilities and free hospital facilities
for the family members of the employee as well as local villagers of that particular area.
ii) Bisra company participates in various Health related Care Camps throughout the year which
is organized in that area such as eye testing camp, family related planning camp, children pulse
polio drive etc.
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for
development of new roads, construction of ponds and cleanliness in the local area.
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere
the following different steps have been taken by the company:
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck
mounted with water sprinkler.
FIBRES 2009: (FA & MD) 200
9
iii) Time to time Environmental monitoring have been done to study the pollution towards
different areas such as water, air and noise to take appropriate protection and steps
through approved agency and their reports are sent to MOEF and State Pollution
Control Board of India
iv) During the year 2007-08, 6500 numbers of saplings have been planted at the road-
side of Office to Lime furnace Siding to capture the flow of harmful dust towards National
Highway.
FIBRES 2009: (FA & MD) 200
9
FIBRES 2009: (FA & MD) 200
9
competitor-2
XSTRATA ALLOYS
Information Parameters
XSTRATA
Incorporated in 1926
Founder Willy Strothotte, Chairman
Location
Bahnhofstrasse 2, P.O. Box 102. Xstrata
Alloys headquarters are located at Portion 27,
Waterval 306 JQ, Rustenburg, South Africa.
CEO: Micheal L. Davis
CFO: Trevor L. Reid
Key Persons
ANALYSIS
Xstrata Company is a global world diversified mining group, it has been listed on the London as
well as Swiss Stock Exchanges, Xstrata has headquarters in Zug, located in Switzerland.
Xstrata’s businesses has made a top position in seven major international commodity markets
throughout the globe like copper, Ferro chrome, coking coal, thermal coal, nickel, vanadium and
zinc, with their latest recycling facilities, additional exposures to gold, cobalt, lead as well as
silver and a suite of top class global technology products, many of which have made them
industry leaders.
The Xstrata Group's business operations and their projects are spanning in different 18 countries
of the world : they are Canada, Argentina, Australia, Papua New Guinea Brazil, Chile,
Colombia, Philippines ,the Dominican Republic, Spain, Germany, New Caledonia, Norway,
Peru, the, South Africa, Tanzania, the USA and also UK. Xstrata employs near about 43,000
people both skilled and unskilled, including contractors.
The Xstrata company exports coal from and makes Ferro chrome & vanadium at South Africa
and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in
Germany, and it has mines anthracite also in Swaziland.
Xstrata plc was established in year 2002, when Xstrata bought Glencore International's coal
assets for entering into business. In this year the company acquired MIM Holdings a deal that
increased approximately doubled Xstrata's coal and zinc holdings in market.
Coal accounts for not fairly half of its sales, and Xstrata is among the world’s largest and top
coal exporters. Credit Suisse Group and Glencore has share of 24% and 16%, respectively, of
Xstrata coal business.
FIBRES 2009: (FA & MD) 200
9
3 major and top level companies which are named as Cerrejon Coal, Tintaya Copper and
Falconbridge Ltd. acquired in year 2006, which created an exceptional wide range of organic
growth option in business. Cash acquisition of total $19.6 billion was completed and also
maintaining grade credit rating of products. It has a ratio of 42% at year ending and Performa
operating cash flow of approximately $9.5 billion.
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition
by the company. Cost of mining inputs like labour, mining consumables and equipments
continued to increase in the year 2008. $57 million of real cost saving was achieved during
the last financial year.
Due to Confirmed increased resources at different parts like Wandon for thermal coal ,
Antapaccay, Mount Isa , Alumbrera , , Las Bambas &Tampakan for copper , Raglan ,
Kabanga , Araguaia for nickel productions New Projects are also commissioned such as on
time & on budget at Rolleston Thermal Coal , Wollombi coking coal ,Lion Ferrochrome ,
Mototolo PGM and Lennard Shelf zinc-lead.
Sales by Percenta
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the
Western Belt in year 1987.
Mine Details
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine, acquired in the
year 1992.its Production was again restarted in year 1994, and a surface treatment plant was
made in March of year 1995.The Waterval capacity was quoted as 61,000 tpm run-of-mine
(500,000 tons per annum) in year1997, but it was subsequently downgraded to 30-40,000 tpm in
year 1998 and year 1999.From year 2000 its operations were merged into those of the Purity
mine to create an operation which is called as Waterval East having a theoretical capacity of
61,000 tpm run-of-mine basis, though the production at the start of year 2002 was just near about
one-third of this level. A latest mining operation known as Waterval West began production in
year 2001 and is likely to reach full capacity of 100,000 tpm from by the end of year 2003.
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and
sixth Fe Cr furnaces. The run of mine capacity is around 60,000 tpm. Ore from the plant is
carried and transported to the short distance to the smelter by means of a conveyor belts.
Productions and Operations at Wonderkop have been scaled back since year 1998, in preference
to using ore from other mines it has been sourced from platinum mining. In year 2001 there was
no production at Wonderkop mines, and the mine remained closed at the starting of year 2002.
Thorncliffe mines
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore
requirements of the Lydenburg plant which is 60 km away. The mine production was displaced a
longstanding contract that CMI Lydenburg held with Samancor’s Winterveld mine for the supply
of ore fines in the international market. Open cast operations started at Thorncliffe mines in year
FIBRES 2009: (FA & MD) 200
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1996 at a fast rate 40,000 tpm run-of-mine to a depth of 30 meters. Underground mining started
in month of May 1997, and in year 1998 the ratio of open pit to underground ore extracted was
1:2 Open-cast mining at Thorncliffe stopped completely from month of April 1999.Three incline
shafts provide access to the ore body up to 300 meters below the surface. These Reserves are
sufficient for at least next 40 years at the recent level of mining. The total capacity at Thorncliffe
is near about 120,000 tpm run-of-mine. Yields at Thorncliffe are up to 86% as opposed to 70% at
the Rustenburg mines because of the thicker seams of 1.8-2 meters, it has higher ratio of the
lumpy ore and low angle of the seam of 11°.
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near
Rustenburg, but its development was subsequently delayed by third party claims.This deposit has
been estimated to contain up to near about 100m tones of ore, and it is likely to be developed in
conjunction with good infrastructure at the Purity mine. The production capacity has been
estimated approximately to 100,000 tpm run of mine. Three incline shafts were providing access
to the ore body up to 300 meters below the surface. It has Reserves which are sufficient for at
least next 45 years at the current level of mining. The total capacity at Thorncliffe mines is near
about 120,000 tpm run of mines. It has Thorncliffe mines are up to 85% as opposed to 70% at
the Rustenburg mines due to the thicker seams of 1.8-2 meters, higher ratio of the lumpy ore and
low angle of the seam 11°
Xstrata was started development in year 2007 with outstanding organic growth prospects, a
strong and fair balance sheet and a diversified portfolio of cash generation and and efficient
operations for production. Xstrata has a very highly motivated and well efficient entrepreneurial
team for managing business efficiently throughout globe .year 2007 was a seminal year for
Xstrata. With its strong commodity prices and increase in base metal prices Xstrata had a very
good sustainability.
1 Company transforming
2 incremental acquisitions were integrated at the end of year 2007.The group spend about $20.2
billion for this work. Xstrata’s transformation and growth has taken place during an exceptional
time when in commodity market their commodity prices near their all time low.
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Xstrata Alloys continues to make market leadership in the Ferro chrome market as an
international player. In February of year 2007 the group concluded ZAR 575 million contracts
with the Bakwena Ba Mogopa community. This added value to Xstrata Alloys for doing
smooth business. The Lion project and Falconbridge acquisition has boosted the market position
greatly up to higher levels.
Xstrata’s commodity business continued to grow towards their goals of zero harm in the world
market. Xstrata’s Kroondal Mines, Waterval Mines East & West together Thorncliffe Mine and
Wonderkop Mine together have total reserves up to of 300 MT. So this huge potential lies within
to expand further by Xstrata. With their ongoing operations and mine capacities has increased
due to recent acquisitions. Xstrata continues an excellent market positioned is expected to grow
further in coming years.
FIBRES 2009: (FA & MD) 200
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FIBRES 2009: (FA & MD) 200
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competitor-3
OUTOKUMPU
Information Parameters
OUTOKUMPU
Incorporated in
Founder
Location Corporate Management
Riihitontuntie 7 B
P.O. Box 140
02201 ESPOO
FINLAND
Key Persons VICTOIRE DE MARGERIE,ANNA
NILSSON-EHLE,LEO
OKSANEN,LEENA SAARINEN
Sales (2008)
Stainless steel deliveries (2008) 1 423 thousand tons
Main products Cold and hot rolled stainless steel coil,
sheet and plate, quarto plate, thin
strip, tubular and long products.
Grades Full range of standard and high
alloyed austenitic grades, as well as
ferritic
duplex, and manganese grades
FIBRES 2009: (FA & MD) 200
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Dimensions Cold rolled flat products in thickness
range from 0.12 mm to 6.5 mm. White
hot strip and hot rolled plate in
varying widths and thicknesses. Full
range of tubular products from
hygienic tubes to heavy walled pipes.
Main production facilities Finland, Sweden, the UK, the US, the
Netherlands
Sales companies and service centers A comprehensive network of sales
companies and service centers in some
30 countries
Financial data
Sales € million 5 474
Operating profit -63
Non-recurring items in operating profit € million -83
Profit before taxes € million -134
Non-recurring items in financial income € million -21
Net profit for the period from continuing operations € -110
million
Net profit for the period from discontinued operations € -79
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million
Net profit for the period € million -189.00
Capital employed on Dec. 31 € million 3,867.00
Return on capital employed % -2
Net cash generated from operating activities € million 656
Capital expenditure € million 544 190
Net interest-bearing debt on Dec. 31 € million 1072
Equity-to-assets ratio 52.4
Debt-to-equity ratio % 38.4
Earnings per share € -1.05
Earnings per share from continuing operations € -0.61
Earnings per share from discontinued operations € -0.44
Equity per share € 15.5
Dividend per share € 1
Share price on Dec. 31 € 8
Market capitalization on Dec. 31 € million 1,502.00
Stainless steel deliveries 1 000 tons 1,423.00
Stainless steel base price 2) € /ton 1,185.00
Personnel on Dec. 31, continuing operations 8,471
Electrical energy 43%of total production costs
OUTOKUMPU STAINLESS STEEL 15
DELIVERIES
32
cold rolled 739
White hot strip 330
Quatro plate 120
Tubular products 70
Long products 55.00
Semi-finished products 109
Total deliveries 1,423
Sales/person, € million 0.6
Incentives of total remuneration costs, % 4.90
Training costs of total remuneration costs,% 1.4
Training days/person 3
EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant
class of emission from the steel
FIBRES 2009: (FA & MD) 200
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industry,emissions of dust by
Outokumpu have decreased in the past
years despite an increase in production
levels.The majority of particulate
emissions by Outokumpu originate
from the steel mills in Tornio and
Avesta and the hot-rolling mill in New
Castle in the us.
In 2008, Outokumpu’s carbon dioxide
emissions totaled 871 000 tons(2007:
932 000 tons).
WASTE The major waste streams from
Outokumpu’s stainless steel
operations are slags, sludges, dusts
and scales. Wherever
practicable, wastes are collected
and recycled to recover valuable
alloying elements such as nickel,
chromium and molybdenum.
INJURIES 9
(EMPLOYEES AND CONTRACTORS)
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel. Its long
term vision is to be the undisputed number one in stainless steel producers, with success based
on operational excellence at different levels. It has Customers in a wide range of industries with
worldwide use of their stainless steel products and services. It is Being fully Recyclable and
maintenance of free, as well as very well-built and durable material, stainless steel are one of the
key building blocks for ustainable expectations. Outokumpu’s does business in mostly 30
countries and employs near about 8 000 people. The Outokumpu’s head office is located at
different places like Espoo and Finland. Outokumpu’s has also been listed on the NASDAQ and
OMX Helsinki since year 1988.
The global stainless steel market totals 27 million tons or some euro 80 billion. During its past
twenty years, Outokumpu’s consumption has grown at near about rate of 5–6% per year. In
Europe, the Outokumpu’s Group’s main business market places, the market size are total of 4.23
million tons and its consumption has grown up by 2.5% yearly. In recent years, the prime growth
globally has occurred in country China with a growth rate of about 15% yearly.
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Outokumpu’s is one of the world’s best quality steel makers of world. Top manufacturer of
stainless steel with main manufacturing as well as production facilities are located in different
parts of the world like Sweden, Finland, UK, US and Netherlands. Outokumpu’s melting
capacity is near about of total 2.56 million tons per annum and its finished products capability
for cold rolled material as well as white hot strip rolled material is 1.6 million tons per year.
Outokumpu’s have also yearly production capacity of 0.3 million tons of long products and plate
of different sizes and varieties. In global method, Outokumpu’s biggest workplace is Tornio
Works which is located at Finland; it is one of the top world’s most economic cost levels and the
best integrated single-site of Stainless steel production facilities.
At work place of Tornio Works at Finland, Outokumpu mainly produces high volume standard
quality and grades of stainless steel as well as Avesta integration which is located in country
Sweden is focusing greater on customer required special grades and products. Outokumpu’s has
an 18% of total share of the stainless steel coil market in continent of Europe and just a 6%
share on the other parts of world. Outokumpu’s main markets are basically located European
markets it has achieved 78% of sales in year 2008, in Asia it has achieved 8% as well as in
North and South America is 11% of sales.
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important
necessary raw materials which are used in production of stainless steel. Ferro chrome, and
mainly nickel, are the most vital raw materials for manufacturing steel. Outokumpu has its own
chromite mine at place called Kemi and a ferro chrome smelter at Tornio, both are located in
Finland. Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are
brought from open market.
ENERGY
Electrical energy consumption accounts for approximately 4% of its total production and
manufacturing costs. The more electric energy are mainly consumed by its Tornio ferro chrome
smelter and the stainless steel melt shops in Tornio which is located in Finland, Avesta at
Sweden & Sheffield at Britain.
SHORT-TERM ACTIONS
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Outokumpu is facing this situation from a strong financial condition. It has a healthy Balance
sheet, its debt maturity profile is properly balanced and their cash flow is sounds good for current
business scenario. As a top organization, however, they have to be ready for a situation in which
business in the markets will remain poor for some time ahead. So we can say that outokumpu has
made some decisions on key actions in the month of December and January that plan at
maximizing in their short-term cash flow and ensuring financial flexibility.
It has focused in Cost reductions in both variable and fixed costs they have reduced. The main
target for fixed cost savings is in the range of approximately euro 100 million for 2009.
It has done Postponement of investments in huge amount in year 2009. This investment program
was limited up to approximately euro 300 million in the year of 2009, and it has shown reduction
of more than euro 500 million compared to the previous original plan.
STRATEGY
Outokumpu’s strategy mainly aims at making a more balanced and predictable business form.
Some of the important key components in its strategy are increasing it sales to end-users of
products and also to project customers, by making greater stable deliveries to distributors, and
increasing Sales of the special products and ferritic (non-nickel containing) grades. To maintain
the realization of these types of vital strategic goals, a new well maintained commercial
organization structure was made recently. The key concept in this new structure is the making of
a customer segment groups whose main work is to understand the needs and wants of different
types of target customers.
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The segment teams unite the expertise of the customer and product awareness, R&D hold and
supply chain ability. The acquisition of the Italian distributor So GePar during the summer of
year 2008 was a very important and vital step forward in end-user customers of the market. The
acquisition brought United States big customer base and good quality service center operations
in Italy & UK, both of which are strategically important markets for Outokumpu for doing the
business. Their strategy is to develop a more balanced and stable business model which is
remains valid even though some of the related, earlier Decided investments which are now
postponed for some times.
Now at present, Outokumpu’s have sufficient available capacity to sell more special products
and ferritic quality grades, and to increase both project business and end-user their new
organization is well suited for handling this type of challenge.
They have Different types and compositions of stainless steel which are developed for different
end-user working. The four main grades are mainly austenitic, ferritic, ferritic-austenitic, and
martensitic steel. All grades of stainless steel mainly contain of an approximately of 10.5% of
chromium. Outokumpu’s main product is austenitic stainless steel, which mainly has near about
8% nickel in totaling to 18% chromium. Ferritic stainless steel does not have nickel in the
production of steel, but chromium is mixed up to 24%. Martensitic stainless steel contains
mainly around 11–13% chromium in its product. Ferritic-austenitic types of steel mainly contain
1.5–5% amount of nickel, and they are very strong and hard and corrosion Resistant. In the
product of steel. Outokumpu’s duplex steel grades are mainly of ferritic-austenitic, which is
containing only small proportion of nickel in its product..
As of January 1, 2009, Outokumpu’s have made service centers and retail sales have been
organized as a third sector in Group Sales and Marketing for doing the business properly in the
market.
Retail Sales
There is a key channel is made for serving in better way both for end-user and project customers
is the Group’s arrangement of stainless steel as well as service centers. Outokumpu is recently
expanding its capacity at the Group’s service center at Willich, which is located in Germany,
with the expanded capacity coming on full growth in year of 2009. A Greenfield service center
being built in Shanghai, China, its main objective is to process mainly special grades operational
in year 2010. Other service center projects are also planned for different locations of the world
such as Poland, Southern Germany, France and India have been temporarily postponed due to of
the global financial crisis and the weaker stainless steel market. In year 2008, Outokumpu
completed the acquisition of So GePar, it is distributor based of Italy, Which increased the
Group’s service center capacity by near about of 1.6 million tons yearly. The So GePar units
were included into the Group’s commercial organization on January 1, of year 2009.
Outokumpu’s Retail Sales serves a huge number of smaller local customers of service centers
which are not allocated to End-user and Project clusters.
Continuous Outokumpu’s training and development programme is one of the important priority
areas of Outokumpu’s human resources plan. The Group offers much number of different types
of development programs and creates opportunities which will mainly focus on developing
employees’ skills and competence in the work. Outokumpu wants to maintain its position as the
cost leader in the stainless steel market; Outokumpu has been running so called Operational
Excellence programs since 2005. These types of programs mainly consist of new methodology of
theoretical training, real project work & leadership training.
A new type of “Stainless Pro”, an international program for graduates with a university level
degree, was started in year 2007. Few new trainees started the program in September of year
2008. During the period of this two-year program, trainees are given the chance to work in
different parts Outokumpu business units. The total Training costs in year 2008 was 1.4% of
total salaries. The Group almost provided 2.8 training days per employee in the year 2007.
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In December of year 2008, the company employed near about 8471 people in different parts of
the world covering almost 30 countries round the globe. The average period of service was 15
years. Its Personnel turnover in the year 2008 amounted to 7% and the average age of the
company’s permanent employees was near about 43.3.
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which
are approved by the Board of Directors. The risk management policy mainly defines the
objectives of organization, its approaches and also its areas of responsibility of risk management.
Risk management supports the company strategy and it also helps to maintain a balanced risk
profile from the point of view of shareholders as well as other stakeholders such as customers,
suppliers, personnel and lenders which are related with the company in its business.
Company has defined risk to be anything that may have an adverse effect on activities that the
organization has undertaken to achieve its goals. Risks can thus be called as threats or
uncertainties or lost opportunities relating to present or future operations in the business.
On December 31, year 2008, Outokumpu has fully paid and registered its total share capital
amounted near about euro 308468201.10 and it consisted of near about 181451 883 shares in the
market. Each share of the company entitles its share holder to one vote at General Meetings of
Shareholders.
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CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level
competitors while bisra lime and stone is domestic competitors.
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at
cheaper cost. They have the corporate office at different parts of world. Xstrata is currently the
world's largest and amongst the lowest cost integrated ferrochrome producers in the world.
The Group's operations and projects span 18 countries. They have well trained manpower and
management which is doing the business effectively across the globe. Xstrata have made good
infrastructure which are helpful in doing business effectively. Operations at the different mine
have been 100% mechanized there for it has reduced the labour content of its total costs. A huge
prospective lies within to expand further for doing its business across the world, with their
recently ongoing operations and mine capacities and by the recent acquisitions. Xstrata continues
an excellent market positioned is expected to grow further.
Outokumpu is also a global Ferro chrome producer. It has maintained a global leadership in cost
efficiency in high volume of its standard grades due to its integrated economic and with the help
of recent technology production from chrome to stainless steel melting, cold rolling as well as
hot rolling. A majority part of Outokumpu’s sales is reaching to the end-user of stainless steel
through its strong marketing channels and distributors and further processors. The company
recent product portfolio mainly consists to a large extent of nickel containing stainless steel of
FIBRES 2009: (FA & MD) 200
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different grades. As nickel price is very volatile, demand for these grades and products also tends
to vary a lot.
The majority of Outokumpu’s sales and almost all production sites are located in different parts
of Europe. In order to create a more balanced and stable business environment in the market
outokumpu intend to increase the market share of sales to different types of end-user customers
& projects and to key distributors with more predictable order volumes. Their mainly strong and
well trained sales organization has been aligned and their service center network has been
strengthened with the aim to better serve the different industries using stainless steel.
BISRA lime and stone is a very small domestic level organization which produces limestone and
dolomite. It has a small capital comparing to other Ferro alloys market player. Due to change in
steel making technology the demand for BSLC’s products declined sharply at greater level
resulting which financial imbalance arised out of sharp fall in the BISRA turn over. It has signed
into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in
Eastern Sector of India. With all these steps the BISRA position has little bit improved and it has
been achieving positive gross margin of profit before charging the interest on its Government
loan and its depreciation.
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Limited availability of High grade Cr ore for COB, so they should take new mines on
lease for production of high grade cr.
Tata steel has Space constraint for OB & tailing storage so they should try to overcome
this problem for doing business smoothly
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn,
LC SiMn, Mc FeMn etc
IPI
Tata steel FA & MD division should have own video conferencing room where they can
interact with their customer directly at any time and provide support to them.
Tata Steel FA & MD division should work in two shifts (6 am – 2 pm) & (2 pm – 10 pm)
so that they can able to do their business round the globe according to the different
country timings.
Tata steel should do scanning of all types of bills and other documents which they keep in
their file, so that they can be stored in computer for easy access and long term
preservation of data. The backups of data should be kept at different locations of globe.
Tata steel should outsource its work of mining to third party in South Africa so that it will
reduce the cost of production.
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Tata steel should lease the maximum number of mines in Orissa so that they can able to
meet demand.
Tata steel (Tata centre Kolkata) can use high class technological security based on
Biometrics principles so that 100% security can be provided from any type of threats like
terrorist attack, hackings etc.
Tata steel FA & MD division should make a “smoking room” so that employee can
smoke inside freely without any type of hesitations.
REFRENCES
www.tatasteel.com
www.mjunction.com
www.coolavenue.com
www.xstrata.com
www.Outokumpu.com
www.birdgroups.com
www.youtube.com
www.mbajunction.com
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www.scribd.com
www.scip.org
www.fuld.com
www.competitive-intelligence.co.uk
Proven Strategies in Competitive Intelligence: Lessons from the Trenches - John E. Prescott and
Stephen H. Miller
Competitor Targeting: Winning the Battle for Market and Customer Share - Ian Gordon