BUSINESS MARKETING TERM PAPER ON ADITYA BIRLA MINERALS (ABY) SUBSIDARY OF HINDALCO INDUSTRIES LTD

MBA, 3rd SEM MARKETING

SUBMITTED BY: AJINKYA 1PI10MBA08

ADITYA BIRLA MINERALS (ABY) SUBSIDARY OF HINDALCO INDUSTRIES LTD

INTRODUCTION
1. a ADITYA BIRLA MINERALS (ABY) is an Australian based mining company with a
focus on copper production and exploration; located in Perth, Western Australia. It holds mining and copper exploration activities at the Birla Nifty Copper Operation (BNCO) in the Great Sandy Desert, Pilbara, WA and the Mt Gordon Copper Operation (MGO) located in th e Mt Isa Block, QLD. Aditya Birla Minerals was established in 2003 to pursue copper production and develop copper in concentrate sources in Australia. The company acquired the Nifty copper mine in WA and Mt Gordon copper mine in QLD, alongside adjacent tenements for prospective copper exploration Both Nifty and Mt. Gordon have a long term life of mine off-take agreement with Hindalco for supply of copper concentrate to the copper smelter at Dahej, Gujarat. Aditya Birla Minerals understands that excellence in environmental performance is essential to business success, which is why the companys copper production, underground mining, drilling and exploration meet environmental laws and regulations. The Queensland and West Australian copper production accounts for approximately 20% of Hindalcos concentrate requirements. The company ships copper in concentrate produced from Nifty and Mt Gordon copper mines to the Hindalco copper smelter in India. The company has entered into an agreement to sell the entire life of mine production to Hindalco Industries Limited. (Birla copper) ABY is presently 51% owned by Hindalco,.Hindalco is a member of the Aditya Birla Group, which is one of Indias largest industrial conglomerates.

ADITYA BIRLA GROUP

HINDALCO INDUSTRIES LIMITED
ADITYA BIRLA MINERALS
COPPER PRODUCTS

BIRLA COPPER

COPPER PRODUCTS & DISTRIBUTION

END CUSTOMERS

HINDALCO INDUSTRIES LIMITED Hindalco is one of the leading companies in aluminium and copper production in India and is positioned amongst the top five aluminium majors worldwide. Hindalco acquired the copper mine in WA and QLD in 2003, where, together with Aditya Birla Minerals utilised copper resources and undertook underground mining for enhanced copper production. The company also owns and operates a copper unit in India, producing copper cathodes, cast copper rods and other products including precious metals, fertilisers, sulphuric acid and phosphoric acid. It has an integrated copper smelting and refinery facility located in Dahej, India, (Hindalco Copper). Hindalco Coppers facility was initially commissioned in 1998 with an annual capacity of 100 ktpa and has been progressively expanded to its current commissioned capacity of 500 ktpa. Hindalco Coppers strategy is to source a significant percentage of feedstock from strategic long-term sources BIRLA COPPER It enjoys leadership position in India, having built up-percent domestic market share with in three years of commissioning. It has also made successful forays into the export markets of the Middle East, South East Asia, china Korea and Taiwan. Birla copper has a mega green field copper smelting and refining complex at dahej in the bharuch district of Gujarat, India. With an investment of Rs 1,850. Crore, it is largest of its kind in India. The plant produces world- class copper cathodes, continues cast copper rods and precious metals. Sulphuric acids, phosphoric acid, di-ammonium phosphate, other phosphatic fertilizers and phospho- gypsum are also produced at this plant . Birla copper aspires to be among the worlds foremost cost competitive producers of cooper. To reach this goal, it had under taken a brown field expansion raising its smelter capacity from 65,000 tones per annum to 146000 tones per annum. The copper division is evaluating a further expansion as well, so as to rank among the top 10percent of cost competitive producer globally. To make birla copper an integrated producer of copper, the company believes that upstream expansion through ownership in mines is important for a smelter of its size.

As a first step in this direction, birla copper acquired the nifty copper mines in Australia. Nifty currently has a capacity of 25000 tones per year of copper cathodes, with a large underdeveloped copper sulphide.

1 b. PRESENT STATUS IN INDUSTRY

Aditya Birla Minerals is poised to become the fourth largest producer of copper in Australia with the commissioning of the Nifty sulphide operations it is expected to be one of the richest underground copper operations in the world. Aditya Birla Minerals produced 67,415t and 57,093t of copper in concentrate for the financial year 2008-09 and 2009-10 with a focus on copper production over exploration activities. The concentrate produced from each copper mine in WA and QLD is shipped to Hindalcos 500,000 tpa rated Dahej copper smelter in India.Aditya Birla Minerals provides copper resources to Hindalco, maintaining their position as industry leader. 'Birla Copper is the Market Leader' Birla Copper reported a further rise in market share from 39% in 1998-99 to 48% during 1999-2000 and remained the Market Leader in the domestic copper market. The Company's market share was as high as 50% during the fourth quarter of the last fiscal. The Company turned in an impressive growth in copper sales volumes from 62,962 tonnes in 1998-99 to 98,362 tonnes in 1999-2000, an increase of over 50% YoY. Its strong growth in volumes and market share were primarily due to a positive demand situation, changing consumption pattern, aggressive marketing efforts and continued focus on quality and customer service. BIRLA copper, with an over 45 per cent market share, is India leading copper producer in private sector. Its plant at dahej in Gujarat, produces world class copper cathodes, continuous cast copper rods and precious metals. A part form copper products, euphoric acid, phosphoric acid, di-ammonium phosphate, other phosphates fertilizers and phosphor gypsum are also produced at this plant.

1c. SUMMARY OF BUSINESS AREAS AND PRODUCTS / SERVICES

y Copper Business Hindalco's copper division, with its integrated facility at Dahej in the Bharuch district of Gujarat, enjoys a leadership position in India. The unit has the unique distinction of being the largest copper smelter in the world at a single location with a 500,000 tpa capacity with multiple world class technologies. The facilities comprise copper smelters, captive power plants, utilities and a captive jetty. The company's copper product range includes copper cathodes and continuous cast copper rods. Birla Copper also produces precious metals, sulphuric acid, phosphoric acid, di-ammonium phospate (DAP) and other phosphoric fertilisers, and phospho gypsum

PRODUCTS DISCRIPTION

 Copper cathodes

Hindalco's copper cathodes branded as Birla Copper and Birla Copper II are known for high purity and consistent quality. These are largely used in the manufacture of continuous copper rods for the wire, cable and transformer industries, and copper tubes for consumer durable goods, such as air conditioning and refrigeration, as also other applications in the form of alloys and sheets. Copper alloys such as brass, bronze, cupro-nickel, etc., find application in diverse areas such as defence, mint, construction and the electrical industry.

The Birla Copper laboratory has been accredited by NABL (National Accreditation Board for Testing and Calibration Laboratories) in accordance with the standard ISO/IEC 17025:1999. Birla Copper Cathodes are square shaped, with 99.99 per cent copper purity levels, produced using the Mount ISA electro-refining process. They meet the international quality standards BS 6017 1981 (1989) and u-Cath-1 / ASTM B-115 (1999) and are registered as LME A Grade. They are high grade and boast the lowest levels of various group and individual impurities.

 Continuous cast copper rods

Hindalcos continuous cast copper rods meet all the requirements of international quality standards. Their excellent surface finish makes them suitable for processing to enamelled, coated and plated wires. They are available in diameters of 8, 11, 12.5, 16 and 19 mm. The homogeneous structure and fine grain size of the continuous cast copper rod result in outstanding drawability. It can be drawn to an ultra-fine wire at a high yield rate. The Birla Copper rod is considered suitable for power and communication cables, strips for power and distribution for transformers, magnet wires, and zari manufacturing. Larger diameter rods 11, 12.5 and 16 mm are used to produce profiles and busbars. Birla Copper is the only manufacturer of the 19-mm-diameter copper rod in India. This rod is used for groove conductors and profiles.

 Precious metals

Precious metals are extracted at our precious metals refinery located at Dahej. Gold and silver have an affinity to copper ore and are found in certain quantities in the concentrate supplies. Hindalco pays for the gold and silver content based on the prevailing international bullion market prices and other factors. The precious metals are extracted after copper refining to produce 99.9 per cent pure gold, silver and selenium. The residue contains traces of platinum and palladium, which are sold as platinum group metal mix, commonly known as PGM.

1d.ORGANIZATION STRUCTURE

1e.MARKETING & SALES ORGANIZATIONAL STRUCTURE MARKETING STRATEGY OLD STRATEGY Marketing Head office (Renukoot)

EAST

WEST

NORTH

SOUTH

Vice-President

V-P

V-P

V-P

Extrusions

Rolled

Primary

Sales Manager (Territory Manager)

The new marketing strategy structure is as follows:-

MARKETING HEAD OFFICE (MUMBAI) CMO* (CHIEF MARKETING OFFICER)

EXTRUSIONS Vice-President

ROLLED

PRIMARY

EAST

WEST

NORTH

SOUTH

Regional Manager

T.M T.M T.M (Territory Manager)

2. STRUCTURE OF THE INDUSTRY

Indian Copper Industry is 300 years old, as ancient Indians used copper in Ayurveda for surgical tools. Long back Hippocrates followed the Indian practice for the usage of copper in medicine and is now considered the Father of Medicine.

The Indian industry can be classified into two broad categoriesmanufactures of refined copper (copper cathodes) and manufacturers of copper products

The copper industry is highly dependent on the performance of and demand for products like power and telecommunication cables, transformers, generators, radiators and other anci l lary components. Hence, its growth is closely linked to the country's economic and industrial growth.

Although, the industry is capital and power intensive, entry barriers are moderate. These basically relate to economies of scale, access to ore supplies and environmental issues. In India, copper reserves are mainly concentrated in Bihar, Rajasthan and Madhya Pradesh and only public sector Hindustan Copper Ltd (HCL) has been allocated all these mine having a copper content of just 1.2 - 1.3 percent against the world average of 2 3 percent. Private

copper producers including Hindalco Industries (Hindalco) and Sterlite Industries (SIL), however, import concentrate and then, produce refined metal Into ingots. The Indian copper industry was opened for private sector investment in 1992. Prior to 1992, the industry was dominated by HCL, a public sector undertaking (PSU) incorporated in November 1967 with the objectives, inter alia, to carry out mining operations and produce copper and related products. HCL subsequently took over the copper ore mines from

National Mineral Development Corporation Ltd. (NMDC). These mines are located at Khetri and Kolihan in Rajasthan, and Rakha Copper Complex in Jharkhand Till 1997, the only producer of primary refined copper was HCL. The installed capacity for refined copper production at its two integrated copper plants was (and is) around 47.5 ktpa, which used to meet approximately 25-30 percent of India's requirement for refined copper. The balance demand was met through imports. The other two producers of copper in India now are Hindalco and SIL. Overall, the copper concentrate market is expected to remain in deficit during CY 10 due to an increase in smelting capacity in China and lack of addition of major mining projects. This would put pressure on spot TCRC. Further the demand growth in the Indian copper consumption would be robust particularly in the power cables, transformers and other related segments and also due to the thrust on energy efficiency and infrastructure development.
DISTRIBUTION OF COPPER IN DOMESTIC MARKET

Future Outlook of the Copper Industry:

Copper is a key sector impacting the Indian economy. Copper has a number of applications across several sectors such as telecom, power, construction, transportation, handicrafts, engineering, and consumer durables. The performance of the copper industry is highly dependent on the performance of and demand for products like power and telecommunication cables, transformers, generators, radiators and other ancillary components. Hence, its growth is closely linked to the countrys economic and industrial growth. India has been growing at a steady and sustained compounded average growth rate of 5.6 per cent for the past 20 years. This is expected to improve further to a level of around 8 per cent in the future. The outlook for the copper industry in India is therefore positive.

2b. SIZE AND GROWTH RATES

The size of Indian Copper Industry (consumption of refined copper per annum) is around five lakh tonnes, and now the copper industry in India takes up about 3% of the entire world market for copper Indian copper production capacity in the year 1995 has registered a robust growth after the government allowed private sector companies. In the year 1996 the capacity has grown 16 times from mere 62,000 to 997,500 tones in 2007. The government owned Hindustan copper is a vertically integrated producer whereas Hindalco and Sterlite industries are mainly custom smelters. Copper production has seen a strong growth in India in the last few years. It has increased from 420,000 tones in 2004 to 740,000 tonnes in 2007, registering a growth rate of 21% CAGR. As mentioned before, Hindalco and Sterlite industries account for more than 80% of the total copper production in India.

2b.MAJOR PLAYERS
The Indian industry can be classified into two broad categoriesmanufacturers of refined copper ( copper cathodes ) and manufacturers of copper products. Of the three

manufacturers of refined copper, HCL is the only primary producer, which mines and

refines copper; Hindalco and SIL process

primarly imported copper concentrate to

produce end products like copper bars, rods and wires. Other players include around 1,000 units in the small-scale sector, which are primarily involved in converting scrap consumption. Top Copper Industries Sterlite Industries Ltd. Hindalco Industries Hindustan Copper

2b(i). STERLITE INDUSTRIES (INDIA) LTD.

Company Background: Sterlite Industries (India) Ltd (SIIL) is a leading producer of copper in India. (SIIL) is the principal subsidiary of the Vedanta Resources Group. SIIL pioneered the manufacturing of Continuous Cast Copper Rods in India and established India's largest Copper Smelting and Refining Plant for production of world class refined copper. SIILs main products, Copper Cathodes and Copper Rods meet global quality benchmarks. Products & Its Applications: A] Copper Cathodes Applications  Continuous Cast Copper Rods  Copper Wire Bars, Bus bars, Billets, Ingots, Moulds and Other semis  Copper based alloys and downstream products  Copper tubes, strips and foils

B] Continuous Cast Copper Rods Applications         Jelly Filled Telephone Cables Magnetic wires & Winding wires Power Cables Automobile Wire Harness Communication Cables House wiring Conductors (Rounds and Flats) Transformer

2b(ii)HINDUSTAN COPPER LIMITED (HCL) Hindustan Copper Limited (HCL), a public sector enterprise of the Government of India, incorporated on 9th November 1967. It has the distinction of being India's only vertically integrated copper producing company encomapssing mining, beneficiation, smelting, refining and casting of refined copper metal. PRODUCTS  Copper Wire Rod  Copper Cathode  Sulphuric Acid

2c.Important environmental factors

Copper production is not an environmentally benign activity. From mining and milling through hydro- and pyrometallurgical processing to refining, Copper production can have significant adverse impacts on air quality, surface and groundwater quality, and the land .While these impacts can be severe when the materials handled include toxic or hazardous substances (e.g., ores with a relatively high concentration of arsenic), they also can be modest due to technological and other pollution controls, and because of mitigating features of the climate, geology, and ecology of most copper-producing areas.

Environmental Impacts of Copper Production

INDIAN COPPER MARKET EVIRONMENTAL ANALYSIS

PORTERS MODEL

Threat of Substitutes: Medium to High Copper faces competition from other metals like Aluminium and also experiences shifts in market preferences due to drastic changes in technology (e.g. Fixed line to wireless).

Bargaining Power of Supplier High with respect to secondary producers who do not have captive mines. Low with respect to Primaryproducers who have captive mines. Inter Firm Rivalry Low: Medium Existence of just 3 major players limits market competition. However, declining domestic market enhances competition level.

Bargaining Power of Buyer Low: Medium Fragmented nature of the buyer industry results in limited bargaining power of buyer. However, drastic technological changes is affecting behavior of key buyer i.e. Telecom segment.

Barriers to Entry: High Capital cost and ownership of copper mines are key entry barriers.

3. BUYER BEHAVIOR IN THE COPPER INDUSTRY:There are normally three types of buying behavior exhibited in the industrial buying: New task, Modified Rebuy and Straight Rebuy. In case of Aditya birla minerals ltd. customers most of the purchases are Straight Rebuy and Modified Buy. Sometimes the specifications and quality has to be modified and that comes under the Modified Buy. The role of buying centre is very important while buying the material. The buying centre comprises of people from the organization who have sufficient knowledge about the raw materials. In the purchases of raw materials the major members are the purchase manager, safety engineer, General Manager, vice-president of operations and mining engineer. These people with their specialized knowledge prepare the initial draft of the specifications, identify the raw materials that meet those specifications, shortlist the suppliers, have detailed discussion about the products and negotiate their prices. Lets explain the phenomena with an example: Suppose an Electrical company wants to go for buying of copper cathode for manufacturing their products, the following procedure will be followed: 1. The company will understand the need and characteristic of the need. 2. The company will search for possible suppliers and will contact them.. 3. The supplier like Aditya birla minerals will send their sales representative to interact with the company personnel. 4. The sales representative will brief on the product specifications and suggest the tonnage required after considering various factors. 5. Based on the interaction the buyer may ask one particular company for a proposal or a group of companies to submit their proposals. 6. The buying may be done on the basis of evaluation of the proposals. 7. In case of one company being asked for a proposal there will be a series of negotiations on price as well as specification till the final deal is struck. 8. The influencers in this decision maybe the administrative officer who looks after the upkeep and administration of manufacturing department. 9. The Gate keeper will be the Public relationship department of the company and also the secretary of the manager who filter the information reaching the buying centers.

10. The decider will be the director of the company who has the formal authority to finalize the deal and actually will make the final decision. He will communicate his decision to the manager who in turn will finalize the deal. 11. Once the deal has been finalized contract will be signed between the parties. Example of buying behavior: BUYING BEHAVIOUR IN CONSTRUCTION MARKET Construction is the main market for wire, cable and copper products including building wire, power cable, copper plumbing and air-conditioning tube, copper sheet and alloy products. Building wire is the largest of the wire and cable markets, accounting for around 37% of wire rod consumption. Brook Hunt estimates building wire consumption to grow at approximately 5% annually over the 2006 to 2010 period, as a result of demand for greater numbers of electrical outlets at home and at the workplace and the use of more or heavier copper conductors in response to the increasing need for enhanced electrical energy efficiency and greater power quality. Similarly Brook Hunt estimates global demand for power cable in the power utility market to grow at 5% annually over this period. Copper tube, predominately in the plumbing and heating systems in air conditioners and refrigeration systems, accounted for an estimated 14% of world refined copper consumption in 2005, and is the second largest of the copper product markets. Brook Hunt estimates demand for copper tube to increase from 2.8 mt in 2005 to just under 3.6 mt in 2010. ELECTRICAL AND ELECTRONIC PRODUCTS containing copper include

telecommunication cable, power cable, transformer windings, semiconductors and motors for heavy appliances. While copper has largely been substituted by fibre optic (FO) cable in long distance networks, owing to the high cost of FO cable, copper telecommunication cable has remained the preferred link between the main network and consumers. Brook Hunt estimates demand for copper from structured wiring and other technological advancements to support growth in telecommunication cable demand at an average annual rate of 4.4% during the five years to 2010. The other main wire and cable segment to supply the electrical sector is winding wire, which is estimated to have accounted for around 14.1% of copper wire rod consumption in 2005, making it the second largest wire and cable market. Applications include transformers, generators, stereos, television sets and motors.

Overall, the pattern of copper consumption in the end-use markets shows that demand for copper typically moves closely with changes in industrial production.
The breakdown of copper by use is as follows:

Copper Consumption Pattern in India Sector Electrical Electronics & Telecom Transport Applications Motors, Pumps, Generators, Transformers, Switchgears, power and control cables Telecom, Cables, Telephone wires, Electronics % share 30 22 8 6 9 25

Auto-electrical, Railway, Electrification, Electric Locomotives, etc Consumer Durables Fans, washing machine, batteries, bulbs, wiring, etc Building & Housing Wiring, pipes, etc Construction General Engineering., Process Industries Defense, Others Mints, handicrafts

4. MARKET SEGMENTS AND POSITIONING:

Aditya Birla Minerals is well positioned for the ongoing delivery of copper products into the growing Asian construction, electrical and industrial markets. The Asian region accounted for around 42 per cent of the world's copper consumption in 2005 and is expected to account for around 39 per cent of global consumption growth over the next five years.

4a. Market segments in the industry:

The market for copper products in India is very widespread Geographically By diversified of end user

Further, there are a large number of small and medium consumers and a select a few large consumers. The smallest consumer would be consuming as little as 1MT/Month. However, the largest numbers of Hindalcos customers are in the consumption range of 5-50 Mts./Month. Hence there is large potential for introducing the new uses and the increasing the consumption. As a strategy thereof or, companies decided to cater to as many consumers as possible. Their distribution system therefore, is designed to the object.

The companies manufacture the products with very specification as desired by the various customers.

4c&4d. Market segmentation & Positioning of Hindalco (Birla minerals & Birla copper)
(A)Market segmentation based on the product group

On the basis of product groups, Hindalco market may be segmented in the following manner :  Copper  Gold and silve  Acid  Fertilizers  Processing of metals (B)Market segmentation on the basis of product wise keen consumers. (C) Market segmentation based on the demand pattern. Based on size & frequency of order, Hindalco(BIRLA MINERALS & BIRLA COPPER market may be segmented as follows:  Bulk customers o Bulk customers are those customers, whose demand is very high and consistence.  Small & Medium o Small & medium customers may be bracketed as those customers, whose demand is comparatively low and not so consistence, some of the small customers of Hindalco included ITI Allahabad, Defense Organization, Dockyards etc. (D)Market segmentation based on the priority: On the basis of priority given to various orders Hindalco market may be segmented in the following manner:  Routine customers Routine customers are those customers, who are regularly sourcing the company. Their orders are processed in the normal course of working.

 Special customers Special customers are those customers, whose orders are for products under developments. Since their demand is usually urgent in nature they are given priority under routine customers. Examples: Export Customers, Government organization like Defense, Establishment etc. continue this category. (E)Market segmentation based on consumption sector.  Electrical  Transportation  Building & constructions  Industrial Machinery (F)Market segmentation based on geographical areas
Copper consumers are spread all over the country. Different area has different type of industries, whose are used copper in different quantity. Here, segment the market in geographical areas based on consumption or demand pattern.

5a&5b. Products / Services strategies:

MATURITY STAGE The products of Aditya Birla mineral are in Maturity stage of the product lifecycle. As the products as already enters the maturity stage, the number of competitors entering the market increase resulting in the decline in the growth of profits. The marketing strategy when a product is in maturity stage of Aditya Birla minerals is: i. ii. iii. Enter new markets Keep the existing customers satisfied Cut marketing, production and other costs to maintain profit margins.

It is applicable for all the products of Hindalco industries limited, as it has long existence in the copper market.

Conceptual framework Industrial Product Life-Cycles The product life-cycle is a series of different stages a product goes through, beginning from its introduction into the market and ending at its discontinuation and unavailability. These stages are commonly represented through the sales and profit history of the product itself, although there can be many other variables that affect the lifespan of a product line. Between the initial growth and concluding maturity stages, the profit curve usually reaches its peak. During the maturity phase of the life-cycle, sales volumes for an established product tend to remain steady, or at least do not suffer from major declines, but the rate of profit drops. In most cases, the trajectory and behavior of the product life-cycle is determined by a set of factors over which manufacturers and marketers have little control, forcing them to react to changing circumstances in order to keep their product development strategy viable. These external factors include shifting consumer requirements, industry-wide technological advances, and an evolving state of competition with a companys market rivals. The fluctuating patterns of a life-cycle indicate that a different marketing and product development approach may be needed for each stage of the cycle. Understanding life-cycle concepts can aid in long-term planning for a new product, as well as raising awareness of the competitive landscape and estimating the impact that changing conditions can have on profitability.

The Life-Cycle Curve Industrial products usually follow an S-shaped life-cycle curve when sales and profits are plotted over time. However, certain products, such as high-tech goods and commodities, may follow a different life-cycle pattern. High-tech products often require longer development times and higher costs, making their growth stages long and their decline stages short, while commodities, such as steel, tend to have relatively static demand with sales that do not appreciably decline from an absence of competition. Sales would drop, though, from an increase in competing products.

Under most life-cycle conditions, profits typically peak before sales do, with profits reaching their peak level during the early growth stages and sales reaching their peak in the maturity stages. Competition tends to be lower at the beginning of the life-cycle, but as competing companies start to offer lower prices, newer services, or more appealing promotions in the maturity phase, the initial product must be made more attractive. This often results in comparable price drops or increased spending on advertising and promotions, as well as greater investment in distribution and modifications to the existing product. The initiatives improve sales, but drive up costs and lower profits. The Introductory Stage After being introduced into the market, a new industrial product will yield varying degrees of acceptance. Some products may find acceptance soon after release, while others may take longer to develop a customer base. One of the reasons for this disparity involves the skill set required to make full use of a new product. Goods that need relatively little training and do not obligate users to learn new skills or refine existing ones typically find market share more rapidly than complex products. A company that introduces a product requiring a high degree of learning and expects a relatively low rate of acceptance can focus on market development strategies to help build consumer appeal. Conversely, products with a low learning curve and a quick route toward acceptance may need a marketing strategy designed to offset rival products, as competition at these levels tends to be higher. The Growth Stage When an industrial product enters a period of higher sales and profit growth, the marketing plan often shifts to focus on improvements to the design and any added features or benefits that can expand its market share. Increasing the efficiency of distribution methods can help improve product availability by reaching more customers, and some degree of price reductions, particularly for large-scale operations, can be introduced to make the product more appealing for purchase. Maintaining the higher price set at the introductory stage increases the risk of competitors entering the market due to the wider profitability margin. Similarly, without stronger distribution efforts the product may have limited availability, which encourages rival companies to encroach on market share.

The Maturity Stage The maturity stage of a life-cycle is characterized by an increase in the number of market competitors and a corresponding decline in profit growth as a percentage of sales. To compensate for the level of saturation that occurs during this phase, the product development strategy revolves around entering new markets, often through exports. It may also be helpful to increase efforts to satisfy existing customers in order to preserve the customer base. Reducing spending on marketing and production can help maintain profit margins. The Decline Stage In the decline stage, the competition for product pricing tends to escalate, while profits and sales generally decrease. When working with industrial products, marketers sometime opt to discontinue a product when it has reached this level or introduce a replacement product that renders the previous version obsolete. Marketing and production budgets are typically scaled back to save on costs, and resources may be shifted to newer products under development. Product decline usually proceeds more quickly among industries that rely on rapidly changing technologies, with newer advances periodically driving existing goods out of the market:

6. CHANNEL AND DISTRIBUTION STRATEGIES:

CONCEPTIUAL FRAME WORK
Generally two methods of distribution are in practice. 1) Direct marketing channel 2) Indirect marketing channel Direct marketing channel: when there is no intermediary levels of manufacturers or sellers it is called direct marketing channel.

Manufacturer Customers

Indirect marketing channels: Indirect marketing channel is channel containing one or more intermediary levels. Manufacturers or sellers are appointed various type of marketing intermediaries in context of nature

Types of channel members 1) Clearing and forwarding agents 2) Distributors 3) Wholesalers 4) Merchandising agents and brokers 5) Commission merchants

6a. GENERAL INDUSTRY DISTRIBUTION CHARACTERISTICS:

MANUFACTURER MANUFACTURER

DEPOTS, WAREHOUSES

BUSINESS DISTRIBUTORS

RESIONAL SALES OFFICES, AREA SALES EXECUTIVES

CUSTOMERS

CUSTOMERS

CUSTOMERS

6b. VARIOUS MODES OF DISTRIBUTION IN HINDALCO(BIRLA MINERALS AND BIRLA COPPER)

Hindalco emphasizes on , Taking the product to the market Distribution of products in Hindalco is carried out through a network of zonal offices, Area offices, Agents, Stockiest and company operated Depots, located through the country.

ZONAL OFFICE

CUSTOMER

HINDALCO

AGENT/STOCKIST

PLANT

PRODUCTION

INSPECTION & PACKAGING GODOWN WAREHOUSE CUSTOMER DESPATCH AGENT/STOCKIST

A brief description is given below: (A) ZONAL AND AREA OFFICES: Hindalco has established five zonal offices, in various part of country. There is a network of area offices, functioning under various zonal offices. Zonal offices carried out various Marketing Sales functions of company.  They provide following functions:  Signed a contract between the zonal offices and customers, regarding to details of products such as quality, packing, transportation, destination, etc.  Clearly mentions about the mode of payments.  Eliminating intermediaries.  Make a direct contact with the customers  Help the company to cater to the need of customers.  Helpful the company to earn additional profits (B) AGENTS Agents are those persons/institutions, who provide orders to Hindalco, on behalf of the customers. The company has appointed a number of agents, all around the country to sell the products. They are paid commission on the generated sales. Agent being a local person/ institution can use his contacts and influence, to generate sales in a local market. Agents function as an important mode of distribution, as they enable the company to minimize distribution costs. (C) STOCKIESTS Hindalco appointed a number of stockiest in various geographical areas across the country. Certain products of the company are sold through the network. Stockiest are made conform sale for the company.  Stockiest is free to make sell to any customer  Free to charge any price from customers  Helps the company to cover the wide geographical market.  Helpful in minimizes extra distribution setup costs.

(D) DEPOTS HINDALCO operate 15 depots in various part of the country. Depots send the various requirements at the work office and thud, maintain suitable inventory to cater to the demand of the market. This is provide the following advantages to the company & also the customers:  TAX-SHIELD: In many states, state sales tax is less then the central sales tax. In these states sales of products through depots, lead to tax saving.  AT RANDOM DELEVERY: Emergency needs of customers full filled immediately by the depots, at a premium price small offtakes of the scattered customers can also be provided easily by the depots.  HELPFUL IN PRODUCTION: Depots provide a foundation to the production department, by keeping inventory of the various products. For example, in the even of surplus stock, products can be transferred to the various depots. Similarly, Production Schedules can be planned with greater accuracy, with the help of estimated requirements, sent by depots.

CONSIGNMENT AGENTS & STOCKIEST

ZONE WAREHOUSES No of CONSIGNMENT AGENTS EASTERN 2 6 8 No of STOCKIEST

NORTHERN

32

SOUTHERN

12

20

WESTERN

26

24

6 B(I)DISTRIBUTION PROCESS AT HINDALCO LTD.

There are different tasks involved in distribution process:These are as follows:  Order processing     Packing & Insurance, Banking, Bills, Ware housing Transportation Godown sales procedure..

Order booking Every purchaser has to book his order giving details which aluminium rolled products they want such as Plain sheet, Cold rolled coils, milk can sheet, circles, etc. Purchaser should be fully disclose about the product such as, product name, quality, quantity, technical data, mode of transportation, desire delivery time, payment mode etc. Technical wing of Hindalco examines their application and if necessary also make inspection of the facing and decided quality to be offered. Thereafter, terms of payment finalised and his order is finally booked. This order is passed to the relevant personnels officials with relevant details. Priority A priority list of all categories of consumers has been fixed in consultation with all concerned. Consumer gets delivery in order to their priority, which is also followed by transporting agents. Order processing: Hindalco procure order either directly from the customers or through the agents/stockiest. The order contains the name of product, quality, size, clearance etc. After the receipt of orders from the customers or agent Company scrutinizes the order. A production planning programmed is prepared for rolled production monthly basis. This monthly report is sent to the respective production department i.e. rolling mills by the end of the preceding month. The produced material is sent to the inspection and packing department.

Ware housing Every has to store to goods while they wait to be sold. A strong function is necessary because production and consumption cycles rarely match. Ware housing is the responsibility of warehouse incharge in Hindalco. The work start when warehouse officials receive finished goods from production. Hindalco warehousing incharge dispatches the material to respective customers on advice of CSMO and follows the guidelines given to them. The guidelines are: At warehouse: While taking delivery from inspection & packing to ensure packages are intact & dry. If packages are damaged or loose condition, get it repacked. If packages are wet, do not accept it. During loading at warehouse Trucks floor should be clear and flat. There should not be any hole or damage in the floor of the Trucks Floor should be covered with Tarpaulin. Packages being loaded should be intact and dry Proper stocking of packages should be done while loading. Heavy packages to be kept at bottom and lighter packages over heavy.

Packages: No vertical stoking of packages. After loading truck should be covered with tarpaulin. During storage  Outdoors storage should be avoided.  Do not store packages directly on the floor, use wooden pallets.  Cheek condition of metal every few hours to ensure no water condensation Delivery of material: They deliver the material as per the delivery order. Then they note down the delivered material in the godown register. Then they send delivery report daily to zonal office. Banking insurance bills & other documents Hindalco enjoys the facilities of three public sector banks & private sector bank in its town Renukoot.

 United Commercial Bank (UCO Bank).  State Bank of India (SBI).  Allahabad Bank.  Industrial Development Bank of India (IDBI). Banking services at Renukoot is punctual. Banks help the company in carrying the documents to the party. It helps in quicker payments relisation. Insurance Every material is dispatched duly insured. There are two types of insurance.  Carrier Risk.  Owner Risk. Hindalco arranges insurance facilities for its customers. If there are any damages in transportation they will issue a damage certificate & the customer can claim its insurance company on the basis of damage certificate. GODOWN SALES PROCEDURE Godown sales procedure describes the sales procedure of Hindalcos products through its godown. The respective zonal head exercise control over all activities related to godowns sales. This sales procedure is followed by all the godown of company situated at Delhi, Faridabad, Chandigarh, Jaipur, Haryana, Bangalore, Hydrabad, Calcutta Gohati, Mumbai, Silvasa, Taloja There is a clearing agent in the godown, which is appointed by Hindalco for the operation & maintenance of the godown.

7.PRICING STRATEGIES: PRICING STRUCTURE

Copper is traded in various stages of processing including concentrate; blister and anode; refined, semi-fabricated, and fabricated products; and scrap Within these stages exists an even broader range of classifications of copper products, such as old and new scrap, wire bars, ingot, cakes, billets, etc. Most copper is tradedand its price determinedas refined cathode and rod (i.e., refined metal at least 99.99 percent copper), however .The price structures for other types of the metal are determined by refined copper prices.

Copper may be sold either through contracts or on-the-spot trading on the commodity exchanges the London Metal Exchange (LME) and the Commodity Exchange of New York (COMEX). Today, around 80 to 95 percent of trade involves contracts between refiners and semi-fabricators for cathode or rod; the remainder is sold in on the spot trading on the two exchanges. 7A.PRICING DETERMINANTS FOR INDUSTRY:  The LME and COMEX The amount of copper traded on the LME is a very small part of all copper trade, but this market plays an important role in setting the price. The LME serves as a hedging marketa clearing market for producers whose output exceeds their contracts, for small producers, and for accumulated inventories. Inventories in the LME are an indicator of the balance of supply and demand in the world copper market .Copper is traded on the LME in the form of electrolytic cathode or high conductivity fire refined copper in 25 tonne contracts. Delivery can be immediate (the next day) or in 3 months from approved LME warehouses. All trade occurs between the LME member and the customer .

 Direct Producer-Customer Contracts Most copper trade involves transactions between refiners and semi-fabricators. Contracts for primary refined copper are usually for 1 year, A contract typically specifies the total annual tonnage and the monthly delivery limits within which the buyer can make purchases.31 Other specifications include point of delivery, packing, etc. Unlike most commodities, the price is not specified, but stated more generally in a pricing clause such as the sellers price at the time of delivery. sz Ores and concentrates usually are sold in longterm contracts of 1 to 10 years. These contracts may be linked to financial agreements in which a smelter may provide financing for resource development in return for a percentage share of the mines output.  Near-Term Price Determinants Near-term prices (1 to 3 years) tend to fluctuate in response to normal business cycles through their effects on consumer demand. Price shifts may be exaggerated by speculative actions,

Near-term copper price movements also are tied to the relative inelasticity of world copper supply and demand, which in turn may mask longer-term effects  Long-Term Price Determinants In the long term (5 years and beyond), prices are determined by the structure of the market, including: the degree of ownership concentration (and thus market control) among producers and consumers; economic forces, such as technological change leading to radical shifts in production costs or consumer demand; and investment patterns, including the extent of government participation. For the copper industry, some noteworthy structural, economic, and technological factors may play an important role in long-run pricing. First, long-term contracts for ores and concentrates are likely to become more prevalent as the location of new smelting capacity is increasingly dictated by environmental concerns. Second, concentration of ownership in the industry, particularly mining, has become more diluted. While the most recent sales of domestic capacity have, for the most part, meant fewer companies involved in domestic production, more countries have entered the market.

7b.Pricing strategies of company Demand for copper metal is mainly related to industrial activity with copper supply historically reacting slowly to changes in market demand, resulting in large swings in the balance between supply and demand unlike metal there is no terminal market for concentrates, with concentrate prices established through negotiations between the buyer and seller. Long-term concentrate contracts can cover one year, or many years (typically up to 13), with most long-term contracts renegotiated annually. When mines sell concentrate to smelters, the mines are paid for a portion of the copper metal and any byproducts, with penalties for impurities (e.g. arsenic, bismuth, fluorine), contained in the concentrate while the smelters will charge the mines a TC/RC, and retain some exposure to movements in the copper price above and below certain agreed trigger prices, through a price participation (PP) mechanism. The level of TC/RCs, which are expressed in US dollars per dry metric tonne (dmt) of concentrate (the TC) and in cents per pound of payable copper (the RC), and PP, are

generally negotiated annually and fluctuate depending on the supply and demand conditions in the concentrate market. Typically copper mine revenue is most sensitive to changes in the TC/RC. Custom copper concentrates are predominantly sold under long-term contracts with the remainder being available to the spot market. Virtually any tonnage can be offered for sale at any time of the year on the spot market and there is normally no PP mechanism for spot sales. Example of pricing for copper cathode: Copper pricing is based on the spot LME A Grade copper price plus an agreed quality premium. Revenue for the sale of copper cathode is based on the expected copper price applicable for the agreed quotation period (varies between one to two months from the date of shipment). 8.MARKETING & SALES structure and analysis
Hindalco has quite a good network for distribution of its products. Finished goods is sold and distributed to the costumers by following means. DIRECT SALES FROM MANUFACTURING UNITS:

MANUFACTURER

CUSTOMERS

SALES THROUGH STOCKISTS:

MANUFACTURE

STOCKISTS

CUSTOMERS

SALES THROUGH AGENTS:

MANUFACTURE

CONSIGNMENT AGENT

CUSTOMERS

SALES THROUGH DEPOTS

MANUFACTURE

DEPOTS

CUSTOMERS

MARKETING STRATEGY OLD STRATEGY

Marketing Head office (Renukoot)

EAST

WEST

NORTH

SOUTH

Vice-President Vice-President

Vice-President

Vice-president

Extrusions

Rolled

Primary

Sales Manager (Territory Manager)

ADVANTAGES y y y Cost effective Geographical area oriented. Focus on all products simultaneously.

DISADVANTAGES y y y y y y The above old structure was not taking much advantage of the new global market. Analysis of the advantage and disadvantage of the regional based marketing strategy, it is not suitable in modern marketing specification era. So that, in 2003 company decided to go for opting the new marketing strategy based on product specification. For this the company transferred its marketing head office from Renukoot to Mumbai Product promotion scheme is not applicable. Lack of information about a particular product. Over work load. No more time & scope for a particular product. Consumer satisfaction is not appropriate.

The new marketing strategy structure is as follows:-

MARKETING HEAD OFFICE (MUMBAI) CMO* (CHIEF MARKETING OFFICER)

EXTRUSIONS Vice-President

ROLLED

PRIMARY

EAST

WEST

NORTH

SOUTH

Regional Manager

T.M T.M T.M (Territory Manager)

ADVANTAGES y y y y y y y Its product based.. Emphasis on more customer satisfactions. Helpful to increasing the sales performance of various products of product line. Helpful to production processes to deliver the products. Accumulation of small customers. Provide quick service to customers. Enhance the sales promotion.

DISADVANTAGES y y Cost ineffective. More men power required.

9.SWOT ANALYSIS OF ADITYA BIRLA MINERAL (HINDALCO INDUSTRIES LTD) MARKETING OPERATIONS
STRENGTH  Global brand image.  Cost effective producer.  Sound financial position.  A high degree quality consciousness is the core competence of the company, ISO 9001 and ISO 14001 have added more prestige to the company.  Company has a well-established distribution network, covering a geographically wide and scattered market.  A well focused human resources development.  Serve maximum customer satisfaction. WEAKNESS  Present production capacity is not adequate to meet the rising high demand.  Technology is not upgraded to mark as compare to global giants in copper industry. OPPORTUNITY  R & D collaboration with universities and another research organization.  More emphasis on downstream production of value added products.  Recycling should be adopted as routine production.  Raising more finance from marketing for more acquisition and merger for consolidating position in the global market.

THREATS;

 Innovative revaluation in plastic and steel industry.  Reduce in exude duty.  Fall in price of copper in neighboring countries.

SWOT ANALYSIS OF DISTRIBUTION CHANNEL

STRENGTH

OPPORTUNITY

DISTRIBUTION CHANNEL

SOLUTION

WEAKNESS

THREATS

STRENGTH
 Product based marketing channel.  Strong dist. channel based on geographically wide & scattered market of India..  Flexible distribution process for customers via direct sales and indirect sales.  Company made more than 50% direct sales.  Convenient road transportation.

WEAKNESS
 Not tapped all the potential areas especially in eastern and southern zone.  A 50-40% sale depends on indirect marketing.  The present distribution system is not adequate to meet the demand of Copper in the coming years. It is in this light, that the present dist. system needs to be updated. Certain recommendations, with regard to the same have been suggested ahead.

OPPORTUNITY
 The demand of the companys products is rapidly increasing. Thus, there is a necessity to expand the dist. network to avail the benefits of the fast growing market.  Indirect sales should be converting in direct sales through TM sales force.

THREAT
 The major threat is from the competitors like sterilitie industries and hcl ltd etc. because the company may lose its market leader position , if it does not take timely steps to modify its present distribution system in the wake of fast growing demand

SUGGESTIONS/RECOMMENDATIONS/CONCLUSIONS
Certain recommendations with regard to distribution channel of HIL are as under:
(A) Northern zone offers the most lucrative sales in last financial year.. In the light of such high sales driven by the factors such as heavy investments in infrastructures and related industries machinery, transportation etc. In this zone our more than 65% sales depends on indirect sales. So that our focus should convert indirect sales to direct sales. Our effort should be here increase the depots in proportionate way, and also made appointment TMs and RMs. (B) Southern zone is also the fast growing market for the company. The zone offers bright prospects to company in terms of future demand driven by rapid industrial expansion. In this zone our more than 60% sales depends on direct sales and also we face cutthroat competition. In maintain the sales need of continuous market research in regard to distribution channel & appoint stockiest instead of consignment agents. (C) Western zone is the key market of the company. This zone is the most advanced zone in industrialization in the country. In this zone our 65%(Approx.) sales is through direct sales. Analysis of sales data, present depots, stockiests & consignment agents, 35% of the sales in this zone is indirectly depending upon consignment agents & stockiest. The demand of this zone is very high. To optimize in this key zone, the company should established additional depots in that areasAhmedabad & Nagpur for enhancing direct sales. (D) In eastern zone companys, indirect sales is approx. 70%. Such a heavy indirect sales reflects that the company is not in direct contact of its customers and their worries and feedback and these are most essential factors for improving level of sales.

In direct sales is not helpful to create, grow & retain the customers. So making the sales customer oriented and to improve the sales, the company can take the following initiatives1. Assign sales representatives to contact all prospects in this area. 2. Design a sale promotion complains focusing on brand awareness. 3. Appoint a regular sales representative with each stockiest. 4. Shift to retail format of business by owning Copper galleries in malls.

CONCLUSION: The above study makes it clear that aditya Birla minerals (HINDALCO )has a wellestablished market for its products. The company is making a reaped progress in the various spheres of its business activities besides the company adopts a favorable attitude towards safety environments and quality consideration. The company has also been undertaking various community developments programs. In the nearby located areas. It has been a learning a exercise to complete this project, working on this project I found the practical knowledge about the industrial organization. It has been an enjoyable and fruitful experience to me. I certainly gained a lot of practical knowledge while on training. Business is undergoing a strategic transformation companies require clear vision and an attunement to balance the need sustainable in doing sum. It is a pointer to the direction in which corporate strategies would need to change in order to make organization function a truly responsible. In other words future belongs to only those organizations that undertake and imbibe well defined SCM. The globalization of SCM with goal of increasing competitive advantage, creating more value-added and reducing costs through global sourcing. In a highly competitive business environment a well established supply chain strategy absolutely essential for ensuring competitive edge in the market place. SCM is the most powerful tool for bringing innovations and maintaining price competitions which is a door step for transferring companies into a power house.

BIBLIOGRAPHY
INTERNET; www.hindalco.com www.aditya Birla.com www.google.co.in www.wikipedia.com
www.adityabirlaminerals.com.au