You are on page 1of 30

Letter of Transmittal

January 22, 2017


Md. Rashedur Rahman
Assistant Professor
Department of International Business
University of Dhaka
Subject: Submission of report on: The Steel Industry Analysis and the Supply Chain
Management of BSRM
Dear Sir,
It is a great pleasure for me to submit the Report on The Steel Industry Analysis and the
Supply Chain Management of BSRM as per our requirement for course Bangladesh in
International Business, IB-410. Its a descriptive study. Writing this Report has been a
challenging but interesting experience for me. After completing this Report I can say that I have
learnt a lot about the insights of steel Industry. It gave me an opportunity to grasp a thorough
knowledge on the subject matter and I am confident that this knowledge will prove to be of
utmost value and importance to me in future.
I have tried my best for successful completion of this report and I hope that any unintentional
error while preparing this Report will be considered with sympathy.
Therefore, I hope your kind consideration in this regard. I will be very grateful if you find my
effort satisfactory and oblige thereby.
Sincerely,
Hasibur Rahman
ID: 13
Dept of International Business
University of Dhaka
1

Table of Contents
Letter of Transmittal........................................................................................................................1
Executive Summary.........................................................................................................................4
Chapter 01: Introduction..................................................................................................................6
1.1 Origin of the report................................................................................................................6
1.2 Background of the Study........................................................................................................6
1.3 Statement of the Research Problem.......................................................................................6
1.4 Research Objectives...............................................................................................................6
1.5 Methodology..........................................................................................................................7
1.6 Scope of the Study.................................................................................................................8
1.7 Limitations of the Study.........................................................................................................8
Chapter 02: Literature Review.........................................................................................................9
Chapter 03: Industry Information(Bangladesh and Global)..........................................................10
3.1 Bangladesh Perspective........................................................................................................10
3.1.1 History...........................................................................................................................10
3.1.2 Major Players.................................................................................................................11
3.1.3 Customers of the Steel Industry....................................................................................11
3.1.4 Market...........................................................................................................................12
3.1.5 Growth of the Industry..................................................................................................12
3.1.6 Bangladeshs Position in the Global Steel Industry......................................................12
3.2 Global Perspective...............................................................................................................14
3.2.1 History...........................................................................................................................14
3.2.2 Major Players................................................................................................................14
3.2.3 Major Products of Steel Industry:.................................................................................15
3.2.4 Customers of the Industry.............................................................................................15
2

3.2.5 Contribution to the World Economy.............................................................................15


Chapter 04: Global Industry Analysis............................................................................................16
4.1 Porters Five Forces Model:..................................................................................................16
4.2 SWOT Analysis....................................................................................................................19
4.3 Critical Success Factors of the Steel Industry......................................................................20
4.4 Investment Potential Of Steel Industry................................................................................20
Chapter 05: Company Analysis: BSRM Steel...............................................................................21
5.1 About BSRM........................................................................................................................21
5.2 Vision of BSRM:..................................................................................................................22
5.3 Major Products of BSRM....................................................................................................22
5.4 SWOT Analysis of BSRM...................................................................................................23
5.5 Supply Chain Management Of BSRM.................................................................................25
Chapter 06: Findings and Recommendations................................................................................27
Conclusion.................................................................................................................................27
6.1 Findings................................................................................................................................27
6.2 Challenges............................................................................................................................27
6.3 Prospects:.............................................................................................................................28
6.4 Recommendations:...............................................................................................................28

Executive Summary
The report on The Steel Industry Analysis and the Supply Chain Management of BSRM has
been prepared based on the collected information through internet and newspaper publications
and magazines. Its a descriptive research conducted as a requirement of our Bangladesh in
International Business course.
The entire report is divided into six chapters. In chapter one, the introduction, objective,
methodology, and limitations of the report have been described. The objective of the study is to
get experience in industry analysis practices in Bangladesh and Global perspective especially in
developing and least developed countries. The objective of the report is to get experience in steel
industry and complete the course requirements. The sources of the data are mainly internet and
different organizations website.
In Chapter two of the report literature review on the industry analysis has shown. Previous
industry analysis works, article and newspaper reviews and summary have shown in the report.
Industry analysis is a broader concept but in some report it had shown too narrowly as well as the
developing country steel industry has not been studied too much before. Information on the
industry analysis and previous work has also shown in this part.
Chapter three draws some steel industry information from both Bangladesh and Global
perspective. Steel industry is an established and growing industry in Bangladesh. Predominantly
based in the port city of Chittagong, the industry has emerged as a major contributor to the
national economy. In this part the history of Bangladeshi steel industry have shown where the
first ever steel mill was established in 1952 by the H Akberali Group of Industries. Bangladeshi
steel industrys major players, customers, growth of the industry and the position of Bangladeshi
steel industry have shown shortly in this part. Along with the Bangladesh part the Global steel
industry has also shown here where the dominant position is hold by the China producers and
marketers. The history of the modern steel industry began in the late 1850s, but since then, steel
has been basic to the world's industrial economy. The major players, customer groups and the
contribution to the world economy of this industry have shown here.

Chapter four shows industry analysis using different techniques as the Porters Five Forces
model, SWOT Analysis, critical success factors of the Industry. In Porters Five Forces the major
Bargaining power of suppliers is Low cost of switching suppliers, the major Bargaining power of
Buyer are Major players have High bargaining power and large customer group, the major
Barriers to Entry are Capital Requirement and Government regulation regarding the Steel
industry and the other two forces are threat of substitute products and rivalry among established
companies. In SWOT analysis the major strengths of this industry are Abundant resources of
iron ore and Low cost and efficient labor force. The weaknesses of this industry are High cost of
energy Higher duties and taxes, High cost of capital and labor regulations. The critical success
factors of this industry are Access to raw materials at low costs, financial structure and the
Ability to Export. In this part the investment potential of this Steel Industry has also shown.
Chapter five describes a Bangladeshi companys activities and the Supply Chain Management of
the company which produces steel. In this part the Bangladesh Steel Re-rolling Mills (BSRM)s
activities have been described. BSRM is the leading steel manufacturing company and one of the
prominent corporate houses in Bangladesh. The BSRM group was established in 1950 in steel
business under the splendid initiates of five brothers. The vision of the BSRM is to Preserve the
trust of all our stakeholders by adopting ethical business practices and Support the society
through Corporate Social Responsibility initiatives. Here the analysis on BSRM group has also
conducted using the SWOT analysis. The major products of BSRM group and the supply chain
management analysis have been conducted here. BSRM supply chain is there to ensure
uninterrupted supply of plan and materials to manufacturing, finished goods to customers,
indirect goods and services to all through integrated supply chain management of logistics and
sourcing at optimum cost while ensuring customer satisfaction.
Chapter six of the report shows the concluding parts of the report, major findings and
recommendations for the Steel Industry. The major findings of BSRM are Pioneer in steel
industry, Subsidiary of the market leader in the re-rolling industry and experienced management.
The entire report focuses on the Steel industry analysis and the Supply Chain Management of the
BSRM group. The report can be used as guidance in this regard and for further research in future.

Chapter 01: Introduction


5

1.1 Origin of the report


The report on Analysis on Steel Industry was carried out as a part of our Bangladesh in
International Business course. The report was authorized by our course teacher as a part of our
academic requirement. After collecting information according to the teachers instruction and
guidance, I prepared the report according to the teachers guidance.

1.2 Background of the Study


Increasing domestic and global competition, economic downturn, rapidly changing market
trends, and volatile financial markets have all added to the pressure on organizations to come up
with effective responses to survive and succeed. The success of an organization operating in
domestic and global market depends on many factors from planning to execution. The successful
completion of all the tasks depends on choosing and practicing and dealing with proper products,
market structure, competitor analysis, trading process and sharing of information to different
parties.

1.3 Statement of the Research Problem


This report is mainly for searching the answers of the following questions:

What is the process of operating in Steel industry?


What are the various products & services?
Who are the clients of this steel industry?
How widely the global steel industry is spreaded?
What is the range of competition faced by the industry competitors?
What is the main source of profitability?
What are the ways to improve existing operation?

1.4 Research Objectives


The aim of the report is to develop an understanding of Steel Industry of Bangladesh and global
market.

General objective:

To get an experience about Steel Industry. This will give me an opportunity to understand the
different aspects and limitations of steel industry as well as the way to improve the present
condition.
Specified Objective:
The specific objectives of my whole study are as follows:
To fulfill the requirement of our course.
To analyze critically the selected topics.

1.5 Methodology
The study undertook descriptive research approaches. The purpose of the study refers to perform
qualitative analysis using secondary data.
i) Research Design
The purpose of my report is to describe different aspects of steel industry, products & services,
client base, operations type, competition, and ways of improvement of services of----company. It
is a descriptive study. Data mainly came from secondary sources from different websites of the
companies, newspaper articles and internet.
ii) Sample design
According to the teachers guidance of selecting an industry, conducting analysis from
Bangladesh and global perspective, Steel Industry has been selected. In that sense it is a random
sample selection. It is not a representative of all population but it serves a specific purpose and
can be said a purposive sample selection.
iii) Data collection and fieldwork
Data mainly collected from secondary sources, the industry related articles, newspapers,
company websites, annual reports and Magazine preview.

iv) Analysis
7

It is a qualitative and quantitative research and I have done narrative analysis. Based on my
collected information I completed the report.

1.6 Scope of the Study


In preparing this report I tried to cover these topics:
The real picture of the Steel Industry has been provided. It shows not only the
Bangladeshs Steel industry sector but also shows the global steel industry market.
Condition of earnings and profitability.
Cover a broad area and customer expectation.
Role of steel industry sector in the economy.

1.7 Limitations of the Study


The preparation of this report was not an easy task. I had to face some problems & limitations
during the preparation of this report. The limitations were:
Complexity: the data was difficult to analyze.
Lack of primary data: though I collected data taken from internet bases but it would be
better if we had more data.
Lack of experience: lack of personal experience of forming that research and analyzing
data was difficult for me.

Chapter 02: Literature Review


8

Steel-technology.com shows the largest steel producing companies of the world. At the
beginning of the merge, the multinational steel manufacturing corporation announced 35
transactions worldwide and continued to invest, with transactions announced in Australia,
France, South Africa, Canada, Brazil, Turkey, Costa Rica, Sweden, Venezuela, the US and
United Arab Emirates.
ArcelorMittal is operating in more than 60 countries. It produces 10% of the world's steel. The
other major companies are Nippon Steel & Sumitomo Metal Corporation (NSSMC), Hebei Iron
and Steel Group.
Renowned artist Mattar Bin Lahej who has been using steel to create calligraphic sculptures said
that The sculpture consists of signs and symbols in a balanced vision and presents the history of
Arabic calligraphy through the years to its contemporary form as 3D artwork. Designers are
hence resorting to technology for making creativity come alive.
Huajian Gao, teacher of designing at Brown argued that We call it the quality flexibility
tradeoff. He and his associates have discovered a path around that tradeoff in chambers made
with a specific sort of steel called twinning-affected versatility (TWIP) steel.
Anandi Chandrashekhar said that, The increase in cost of raw material would only be a near term
concern for Indian steel companies according to a report by Kotak Institutional Equities.
The Economic Times refers that TATA Groups interim chairman Ratan Tata hailed as the saviour
of the UK steel industry after the Tata Group announced a 10-year commitment of one billion
pounds investement to save thousands of jobs for its embattled steelworks in the country, which
shows a very promising growth in the steel industry of our neighbouring country India.
From the aforesaid literature review, it is evident that on line steel industry analysis can act as a
complementary towards other dominant sectors. With the help of steel industry analysis, the
country can create opportunities as this will help both producers and customers. But these
theoretical observations may not be feasible in this country. As such the study seeks to evaluate
whether the country has proper infrastructure for doing steel industry business? What are the
statuses of steel business in our country? Aforesaid questions arises which the study intends to
examine.
9

This report is important for further researchers in their research. Im pretty sure that this report
will add value to the existing research. This report is prepared in a structured way and it is full of
important information.

Chapter 03: Industry Information(Bangladesh and Global)


Steel is a basic raw material for infrastructural development and multiple other uses. The demand
for steel will inevitably grow in line with the countrys economic and infrastructural
development. Major buyers of mild steel and re-rolled products include individuals, government
and institutional buyers (developers).

3.1 Bangladesh Perspective


Steel industry is an established and growing industry in Bangladesh. Predominantly based in the
port city of Chittagong, the industry has emerged as a major contributor to the national economy.
According to the experts, the growth of steel industry in Bangladesh is mainly induced by the
rapid expansion of the country's shipbuilding and real estate sector, as well as the major
investments in various infrastructure projects throughout the country.
3.1.1 History
The first ever steel mill was established in 1952 by the H Akberali Group of Industries as the
"Bangladesh Steel Re-rolling Mills (BSRM)". Located at Nasirabad, Chittagong, the plant
formed re-enforcing bars and structural sections. The mill gradually prolonged, adopting new
technological know-how by setting up a cross-nation European mill in 1987 which incorporated
a wire-rod mill. The BSRM group added a captive billet manufacturing plants in 1996 so as to
make sure a stable distribution of billets of its plants. In 2006, the company installed pilot cold
rolling mill to make ribbed high strength wires.
By this time, KSRM Steel Plant Ltd emerged. Very recently, they have established Billet Plant at
Chittagong. Their factory situated at Ghoramara, Sitakunda at Chittagong. KSRM is a steel
manufacturing organization belonging to Kabir Group of Industries. One of the largest rolling
mills in Bangladesh.

10

3.1.2 Major Players


Bangladesh Steel Re-rolling Mills (BSRM)
H Akberali Group of Industries
KSRM Steel Plant Ltd
GPH Ispat
RATANPUR STEEL Re-rolling Mills Ltd
AKS Ltd.
Anwar ISpat
HKG Steel Mills Ltd
Rahim Steel Mills Ltd
Seema Steel Re-rolling Mills Ltd
Alam cold rolled steel Ltd.
Confidence stel Ltd.
Islam Steel Mills Ltd.
Meghna Group of Industries
Bashundhara Steels etc.
3.1.3 Customers of the Steel Industry
Contractors
Property developers

11

Export processing zones


Road and bridge construction companies
Real Estate sector
Shipbuilding companies etc.
3.1.4 Market
The domestic consumer demand of steel is growing day by day due to the increased public works
and some ongoing large projects.
The steel exporters of Bangladesh have ensured strong foothold especially in the African
markets. As a result, Bangladesh is now considered as a major emerging player in the global
stage
3.1.5 Growth of the Industry
Bangladesh Steel industry is emerging as one of the major industrial sectors of the country. It
consists of small up to the largest scale of steel melting and re-rolling factories across the country
that mostly produce deformed bar rod of different grade (40, 60, 500), angel, channel and coil for
the construction industry. Though the history of Steel Industry is not older one but it can make a
glorious future. Before 1971 Bangladesh did not have any steel mill and even after the liberation
there were only a few steel factories in the country. In 1990s the actual development began in
this sector through a revolution. During that period the building constructing agencies or
developer companies came forward to build modern infrastructure. Then with the increasing
demand, new investors started investing in steel or rod production. In 2012 we have almost 400
mills across the country including Dhaka, Chittagong. Although most of them are manual steel
plants, 30 mills among them are automated.
3.1.6 Bangladeshs Position in the Global Steel Industry
With an estimated market size of 300 Billion BDT, the steel industry in Bangladesh is currently
experiencing an upsurge in demand. This growth is driven mostly by government spending on
infrastructure projects, which accounts for 40% of steel consumption in Bangladesh. As with the
12

global market, there is also a supply surplus in the local steel industry: the current demand is
around 4 million tonnes, while the total capacity is around 8 million tonnes.
The steel industry in Bangladesh produces mainly two classes of products: flat steel (mainly CI
sheet and CR coil) and long steel (MS rod/TMT bar). Although there are currently over 400
active firms in the industry, the top 20 companies service more than half of the demand.
The steel industry in Bangladesh is still largely dependent on domestic growth drivers such as
government infrastructure projects and the real estate industry. At the moment, per capita steel
rebar consumption in Bangladesh is only 25 kg, compared to 57 kg in India and the world
average of 217 kg in 2012. This is expected to grow to 50 kg by 2022.

Many steel producing companies have gained reputation as a brand. Among them, MSW,GPH
Ispat, BSRM,RSRM,KSRM,Anwar Steel, HKG Steel, AK steel, Rahim steel, Abul khayer Group
are worth mentioning. Today the highest steel producing company is BSRM. They are doing
business for 60 years. Their production is almost six and half lakh ton per year which meets 26%
demand of the local market. Now grade 60 rods are being slowly replaced by g500 rods which a
number of rolling mills in our country are now manufacturing. With g500, the real estate builders
and developers can also save minimum 15% further quantity of steel than g60.

13

Currently, Bangladesh exports 57.9 Million USD worth of iron and steel products and raw
materials. Although big markets such as India currently feature among Bangladeshs top export
destinations for steel products, focusing more on other growing Asian markets as well may be
key to future exports growth. As the global steel industry continues to transition to a new phase,
the local sector has the prime opportunity to not only grow to satisfy the domestic demand but
also secure position in the emerging export markets of tomorrow.

3.2 Global Perspective


Steel is an alloy of iron and other elements, primarily carbon, That is widely used in construction
and other applications because of its high tensile strength and low cost. Steel's base metal is iron,
which is able to take on two crystalline forms (allotropic forms), body centered cubic (BCC) and
face centered cubic (FCC), depending on its temperature.
To major developed nations, the steel industry is often considered as an indicator of economic
progress, because of the critical role played by steel in infrastructural and overall economic
development.In 1980, there were more than 500,000 U.S. steelworkers. By 2000, the number of
steelworkers fell to 224,000
3.2.1 History
The history of the modern steel industry began in the late 1850s, but since then, steel has been
basic to the world's industrial economy. The bulk production of steel began as a result of Henry
Bessemer's development of the Bessemer converter in 1857. Previously steel was very expensive
to produce and only used in small expensive items such as knives, swords and armour.
14

In 1875, Britain accounted for 47% of world production of pig iron and almost 40% of steel.
40% of British output was exported to the U.S., which was rapidly building its rail and industrial
infrastructure. Two decades later in 1896, however, the British share of world production had
plunged to 29% for pig iron and 22.5% for steel, and little was sent to the U.S.
3.2.2 Major Players
ArcelorMittal
Hesteel Group
Nippon Steel and Sumitomo Metal Corporation (NSSMC)
Baosteel Group
Shagang Group
Ansteel Group
JFE Steel Corporation
Shougang Group
Tata Steel Group
HYUNDAI Steel Company
United States Steel Corporation
3.2.3 Major Products of Steel Industry:
The Steel Long Products Market Outlook includes price forecasts for key regions, alongside our
expectations for demand, supply and trade on a country-by-country basis through the 5-year
forecast period for all long products markets:

Rebar

Merchant bar

Wire rod

Beams

Rail

Seamless tube and pipe

15

3.2.4 Customers of the Industry

Engineering industry
Automotive industry
Construction industry
Wind power
Off shore
Sub-contractors

3.2.5 Contribution to the World Economy


Steel has enabled our modern way of life. It has helped lift societies out of poverty, spurring
economic growth, and continues to do so around the world today.
Iron, steels precursor, fueled the industrial revolution starting in 1750, enabling manufacturing
equipment in factories and rail transport. Modern steelmaking was developed 150 years ago with
the invention of the Bessemer process allowing for the affordable mass-production of steel (an
iron alloy). This set off a second industrial revolution, and sustained economic growth.
Worldsteel forecasts that global steel demand will decrease by -0.8% to 1,488 Mt in 2016
following a contraction of -3.0% in 2015. In 2017, it is forecast that world steel demand will
return to growth of 0.4% and will reach 1,494 Mt. On a positive note, some emerging economies
in South and Southeast Asia show resilient growth and along with NAFTA and the EU will
support a recovery in 2017. We expect that steel demand outside China will continue to grow by
1.8% in 2016 and this growth will accelerate to 3.0 % in 2017.

Chapter 04: Global Industry Analysis


The global steel sector has been going through a challenging moment, with crude steel
production down to 1,598 million tonnes in 2015 and estimated to drop further to 1,545 in 2016.
With decreasing steel prices, production value is estimated to have collapsed from US$ 2.5
trillion in 2011 to merely US$ 1.5 trillion in 2015. The decrease in demand and production of
steel in China are in large part to blame and other world markets anticipate a further 2.9%
decrease for 2016.
16

As a result, most of the top steel groups in the world have suffered losses in 2015, and numerous
have decreased their steel sales steadily since 2011. On the other hand, a positive outlook for the
main economic sectors supplied by the steel - construction, automotive, materials - allows
experts to expect a recovery of the industry from 2017. Emerging markets will show the greatest
growth over the next 10 years.

4.1 Porters Five Forces Model:


The most influential analytical model for assessing the nature of competition in an industry is
Michael Porter's Five Forces Model, which is described below:

Bargaining power of suppliers:


Low cost of switching suppliers (Steel Industry Analysis) has a significant impact, so an analyst
should put more weight into it. Low cost of switching suppliers is a difficult qualitative factor to
defend, so competing institutions will have an easy time overcoming it.
Low for integrated plants (Steel Industry Analysis)" will have a long-term positive impact on the
this entity, which adds to its value. "Low for integrated plants (Steel Industry Analysis)" is an
easily defendable qualitative factor, so competing institutions will have a difficult time
overcoming it.
17

Bargaining power of buyers:


Major players have High bargaining power (Steel Industry Analysis)" has a significant impact, so
an analyst should put more weight into it. This statement will lead to an increase in profits for
this entity.
When customers cherish particular products they end up paying more for that one product. This
positively affects Steel Industry Analysis.
When there are large numbers of customers, no one customer tends to have bargaining leverage.
Limited bargaining leverage helps Steel Industry Analysis.
Barriers to entry:
We believe that the barriers to entry are medium. Following are the factors that vindicate our
view.
Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set up 1
mtpa capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn depending upon
the location of the plant and technology used.
Economies of scale: As far as the sector forces go, scale of operation does matter. Benefits of
economies of scale are derived in the form of lower costs, R& D expenses and better bargaining
power while sourcing raw materials. It may be noted that those steel companies, which are
integrated, have their own mines for key raw materials such as iron ore and coal and this protects
them for the potential threat for new entrants to a significant extent.
Government Policy: The government has a favorable policy for steel manufacturers. However,
there are certain discrepancies involved in allocation of iron ore mines and land acquisitions.
Furthermore, the regulatory clearances and other issues are some of the major problems for the
new entrants.
Product differentiation: Steel has very low barriers in terms of product differentiation as it
doesn't fall into the luxury or specialty goods and thus does not have any substantial price
difference. However, certain companies like Tata Steel still enjoy a premium for their products
because of its quality and its brand value created more than 100 years back. Bargaining power of
18

buyers: Unlike the FMCG or retail sectors, the buyers have a low bargaining power. However,
the government may curb or put a ceiling on prices if it feels the need to do so. The steel
companies either sell the steel directly to the user industries or through their own distribution
networks. Some companies also do exports.
Threat of substitutes: It is medium to low. Although usage of aluminum has been rising
continuously in the automobile and consumer durables sectors, it still does not pose any
significant threat to steel as the latter cannot be replaced completely and the cost differential is
also very high.
Rivalry among Competitors:
It is medium in the domestic steel industry as demand still exceeds the supply. India is a net
importer of steel. However, a threat from dumping of cheaper products does exist.

4.2 SWOT Analysis:


Strengths of Steel Industry:
Abundant resources of iron ore
Low cost and efficient labor force
Strong managerial capability
Strongly globalised industry and emerging global competitiveness
Modern new plants & modernized old plants
Strong DRI production base
Regionally dispersed merchant rolling mills
Weaknesses of Steel Industry:
High cost of energy Higher duties and taxes
19

High cost of capital


Quality of coking coal
Labor laws
Dependence on imports for steel manufacturing equipments & technology
Slow statutory clearances for development of mines
Opportunities of Steel Industry:
Huge Infrastructure demand
Rapid urbanization
Increasing demand for consumer durables
Untapped rural demand
Increasing interest of foreign steel producers
Threat of Steel Industry:
Slow growth in infrastructure development
Market fluctuations and China's export possibilities
Global economic slowdown

4.3 Critical Success Factors of the Steel Industry:


The attempt to improve the efficiency and competitiveness of an industrial sector is aided by the
determination of critical success factors (CSFs) which focus efforts in those areas that really
affect the whole industry, thereby conserving limited resources.

20

The attempt to improve the efficiency and competitiveness of an industrial sector is aided by the
determination of critical success factors (CSFs) which focus efforts in those areas that really
affect the whole industry, thereby conserving limited resources.
The major factors that allowed success for the steel industry are following:
Access to raw materials at low costs
Proximity to inputs and market
Financial structure
Diverse product mix and proportion of value-added products
Ability to export

4.4 Investment Potential Of Steel Industry:


Worldwide Iron and steel industry is the most potential industrial sector. And this is the backbone
of construction industry. Because iron and steels are the major raw materials for at least nine
other major industries. These are the automobile, automobile components, construction, defence
manufacturing, electrical machinery, railways, renewable, thermal power, and oil and gas. In
addition, there are thousands of ancillary industries depend on this main industry.
The potential investments may be in following areas:
Iron & Steel Export-Import
Nuts & Bolts
Seamless Pipe Fittings
Stainless Steel Cutlery
Stainless Steel Vessels
21

Staple Pin
Welding Electrodes
Wrought Iron Furniture

Chapter 05: Company Analysis: BSRM Steel


5.1 About BSRM

BSRM is the leading steel manufacturing company and one of the prominent corporate houses in
Bangladesh. Over the years BSRM steel products has been chosen solely for building major
National landmarks and infrastructures. The BSRM group was established in 1950 in steel
business under the splendid initiates of five brothers (African Origin) of a single family. Later
on, the business concerns under of this group were run by the families of late Mr. Akberali. Since
its inception, the Group is involved only in the steel sector. The family has been successfully
running the group for the last 55 years and regarded as the best managed steel units in the
country. The group is also the largest contributor to the national exchequer under the steel sector
and also having largest set up in the country considering its integration in all areas of steel
industry.

22

5.2 Vision of BSRM:


Maintain our leadership positions in the steel industry by-producing the best quality steel
products, continuously enhancing customer satisfaction and becoming a reliable business partner
of our Customers and Suppliers.

Be an employer of choice, with focus on nurturing talent and developing future leaders of
the organization.

Protect the interest of our shareholders through sustainable growth and value creation.

Preserve the trust of all our stakeholders by adopting ethical business practices.

Support the society through Corporate Social Responsibility initiatives.

5.3 Major Products of BSRM:


BSRM is countrys first producer of 500 MPa yield strength re-bar, branded and marketed as
Xtreme 500W, proving BSRMs quest for continuous innovation as nation building partner.
Beside re-bar production, BSRM rolls and markets sectional steels such as angles and channels
and ribbed wire which are manufactured in separate plants of BSRM. The bars, specially Xtreme
500 W and sectional products ranging in various sizes conforming to ISO 6935-2:2015 and ISO
630-3:2012(E) respectively which are the lawful standard of the country. Major products are:

Xtreme
Maxima
Ultrima
Xtrong
Centura

23

5.4 SWOT Analysis of BSRM

A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S) or
weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats
(T).
The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits into
an environmental scan.
STRENGTHs:
Market leader: BSRM is the market leader in the steel Market of Bangladesh. They occupy 12 %
of the total steels market.
Great competitive skills: It has been working consistently in steel production sector. So it has
achieved great competitive skills. It has the ability to face strong competition.
Reliability: Preferred business partner of the customer and suppliers by offering quality and
timely services.

24

Strong employee bonding and belongingness: BSRM employees are one of themajor assets of
the company. The employees of BSRM have a strong sense of commitment towards organization
and also feel proud and a sense of belonging towards BSRM. The strong culture of BSRM is the
main reason behind this strength.
Strong Marketing Lineup: BSRM has developed a sound and effective marketing policy to share
knowledge about their products with design engineers, thus creating more awareness in the
minds of the customers.
Strong Products Distribution Lineup: BSRM has appointed more than 300 dealers all over the
country so that people can get BSRM products within a reasonable time. Besides this they have
several sales and supply depots in Dhaka, Comilla, Borga,Shylet, and Khulna.
Modern Equipment & Technology: The BSRM Xtreme 500wproject has been conceptualized
by the German consultants Badische Stahl Engineering (BSE) and the complete plant and
machineries have been supplied by Danieli Group, Italy one of the three largest suppliers of
equipments and plants in metal industry worldwide. So it has the latest and Modern equipment
and Technology.
Backward-linkage industry:
To strengthen the competitive advantage of thecompany and to minimize the dependency on
obtaining raw materials, BSRM Grouphas taken initiative to establish the largest billet making
plant in Bangladesh under the name of BSRM Iron & Steel Co Ltd (BISCO).BSRM decided to
take over the ownership of BISCO through acquisition of 95% of its entire share holdings from
their existing shareholders.
WEAKNESSES
High interest rates decline profit: BSRM has a large lone from various bank and financial
institutes of Bangladesh. So the interest rates drop down the profits of the company.
Power Crises: In Bangladesh the power crisis is increasing day by day. As BSRM is a heavy
industry it needs lots of power supply and gas in daily production. As the government is failed to
make uninterruptable supply of power and gas the production is decline.
OPPORTUNITIES
Market Dominance: As BSRM occupy 12% of the steel market of Bangladesh and also they are
the market leader. So there is a good probability that they can dominate the market. Moreover
25

they are increasing their production from 375,000 M.Tons to500,000. After the expansion they
can occupy 20 % of the local market.
International Scope: As BSRM is internationally renowned company so its have a strong
possibility to export steels product in near future.
Increased demand for the products: BSRM has a greater opportunity of profit as the demand for
the 500-grade rods increasing day by day in the local market.
Organizational Goal: The goal of the Company is to make life of the people secured and safe by
providing quality products at a cheaper price and to be a partner in the nation building activities.
As BSRM is the market leader they have to opportunity to fulfill their organizational goal.
THREATS
New competitors: In recent days some new companies have started their steel production.
Among them AKS (Abul Khayer Steel) is one of them. They are targeting to produce 800,000
M.Tons of steel per year. But now they are producing only 200,000M.Tons.
Economic crisis: World recession and the socio- political situation that prevailed in2008 in
Bangladesh stagnated all development works in the country. Then the sales of steel decrease to
half due to recession.
Growing Competition: All the big steel producers of Bangladesh wish to increasetheir production
capacity. If they increase the production capacity then their productioncost will decline. So
competition will also increase in the steel market.
Labor Unions: Labor unions are one of the emerging threats of Bangladesh now-a-days.
Power Crisis: Power crisis is increasing day by day and thats why the production of steel in a
decline position. For example Abul Khayer only can produce one forth of their production
capacity due to gas crisis.

5.5 Supply Chain Management Of BSRM


Supply Chain Management means managing the supply chain of inbound and outbound goods
and services in the most cost effective and time sensitive way. This can be done by designing a
strategic route plan for the quickest possible pick-up and delivery regimen, from the appropriate
suppliers, for all points throughout the assembly line, in order to achieve cost and time related
efficiency levels. Then optimum operational smoothness can be guaranteed giving a business an

26

edge over competitors in marketing goods and services by introducing goods and services
quicker than established trend.
Bangladesh Steel Re-rolling Mills (BSRM) is one of the largest groups of companies operating
in Bangladesh. At BSRM, the consumer is at the centre of business. Here people operate in a
high speed environment an under tremendous pressure, so they need the strength of mind to
make quick decisions, often basing them on limited information. They also need to be open to
innovative solutions that can improve their processes and balance supply and demand while
minimizing working capital.
BSRM supply chain is there to ensure uninterrupted supply of plan and materials to
manufacturing, finished goods to customers, indirect goods and services to all through integrated
supply chain management of logistics and sourcing at optimum cost while ensuring customer
satisfaction.
Supply chain department of BSRM is the heart of all the business activities. From procurement
of raw materials to deliver the product to the ultimate consumers is under the supply chain
functions. This report basically focuses on the supply chain strategies practiced by BSRM. .
There are an imitable supply chain strategies and functions which will be role model for every
local & multinational company.
The goal of a supply chain should be to maximize overall supply chain profitability. Supply
chain profitability is the difference between the revenue generated from the customer and the
total cost incurred across all stages of the supply chain. Supply chain decisions have a large
impact on the success or failure of each firm because they significantly influence both the
revenue generated as well as the cost incurred. BSRM follows worlds standard supply chain
strategies where we cant find any inaccuracy or inconsistency. But there are some basic
observations that can be taken into the consideration for further improvement.
Todays shared knowledge and collaborative abilities of BSRM and is supply-chain members are
the results of transparency in information sharing. The clear visibility in material ordering,
production planning, inventory supply and management does lead to significant improvements in
the overall performance of the supply chain of BSRM.
27

Chapter 06: Findings and Recommendations


Conclusion
Steel is an alloy of iron and other elements, primarily carbon, that is widely used in construction
and other applications because of its high tensile strength and low cost. Steel's base metal is iron,
which is able to take on two crystalline forms (allotropic forms), body centered cubic (BCC) and
face centered cubic (FCC), depending on its temperature. Britain led the world's Industrial
Revolution with its early commitment to coal mining, steam power, textile mills, machinery,
railways, and shipbuilding. Britain's demand for iron and steel, combined with ample capital and
energetic entrepreneurs, made it the world leader in the first half of the 19th century. Global
demand for steel has continued to grow in spite of the subdued economy worldwide. While the
global economic downturn challenged the steel industry in terms of declining output, the industry
remains on trajectory towards strong growth to 2020. The analysis of the global steel industry
includes an industry overview, value addition to the economy and a companys supply chain
activities.

6.1 Findings:

Sound equity base


Pioneer in steel industry
Subsidiary of the market leader in the re-rolling industy.
Experienced management
State of the art plant
Huge market vacuum of quality products
Sound infrastructural arrangement

6.2 Challenges:

Increased competition in the industry


Acute gas shortage in the production plant
Change in government policy
Full dependence on import for raw materials

6.3 Prospects:
Huge market exposure
Expansion on forward and backward linkage
Expansion of product line
28

Capacity expansion
Supportive policy of the government.

6.4 Recommendations:
According to the above observations we like to enclose the following recommendation for the
improvement:
Expansion of forward and backward linkage through long term planning
As the new competitors are entering market with improved capacity BSRM should be
concern about capacity expansion
Should minimize the dependency on imported raw material
Maintain collaborative network for raw materials import thus use effectiveness in
purchase strategy
Arrange a utility management team as early as possible for continues operation
Huge market exposure is required to penetrate the market to limiting the fixed cost
burden
Always keep eye on development of innovative technology

References:
1. Steel technology, available at: http://www.sciencedaily.com/, accessed on: 03
January, 2017
2. About steel available at: accenture.com, accessed on: 02 January, 2017
3. GPH Ispat, available at: www.gphispat.com.bd, accessed on: 02 January, 2017
4. About RSRM available at:http://www.rsrmbd.com/, accessed on: 02 January, 2017
29

5. About ksrm, available at:http://www.ksrm.com.bd/, accessed on: 02 January, 2017


6. Steel
industry
development,
available
at:http://archive.thedailystar.net/newDesign/news-details.php?nid=270213 accessed on:

02 January, 2017
7. Steel

industry

development,

available

at:http://archive.thedailystar.net/newDesign/news-details.php?nid=170582 accessed on:

02 January, 2017
8. availableat:http://web.archive.org/web/20110322152932/http://www.thefinancialexpres
9.

sbd.com/more.php?news_id=129861&date=2011-03-20 accessed on: 02 January, 2017


available at: http://ns.bdnews24.com/details.php?id=118220&cid=2 accessed on: 02
January, 2017

10. available at: https://www.worldsteel.org/statistics/top-producers.html accessed on: 02


January, 2017
11. available at:

http://www.businesswire.com/news/home/20160630005563/en/Global-

Steel-Industry-Report-2016---Analysis accessed on: 02 January, 2017


12. five

forces

analysis

of

steel

industry,

available

at:

http://www.wikiwealth.com/five-forces:steel-industry-analysis accessed on: 02 January,


2017
13. https://www.ukessays.com/essays/economics/indian-steel-sector-swot-analysiseconomics-essay.php accessed on: 02 January, 2017
14. http://www.crugroup.com/market-analysis/products/steellongproductsmarketoutlook
accessed on: 02 January, 2017
15. http://bsrm.com/about-us/vision-values/ accessed on: 02 January, 2017
16. Biswas, Dibakar. Assistant Manager, Business Development. BSRM. accessed on: 02
January, 2017
17. Rahman,Anwar. Manager S&D. BSRM accessed on: 02 January, 2017

30