Mansi Desai (11017) Sheetal Kurup (11035) Chandan Pahelwani (11047) Nikunj Gajara (11046) Kruti Pandya (11048)

One of the most useful and versatile material, steel is considered to be the backbone of human civilization. Consumption of steel is taken to be an indicator of economic development. The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the starting point of modern Indian steel industry.

At the end of 2012, the steel production capacity in India is expected to touch 124 million tonnes and 275 million tonnes by 2020.
With development in civilization, various new application of stainless steel have been developed such as: 1. Architecture, building and construction, use in railway coaches. 2. Automotive 3. Chemical, processing and oil & gas industries 4. Power generation 5. Manufacture of LPG cylinders, 6. In portable water treatment plant 7. Food production 8. Medical applications

During the early 90s, the sponge iron industry had been specially promoted so as to provide an alternative to steel melting scrap, which was increasingly becoming scarce.

As per the International Iron and Steel Institute, India has emerged as the largest producer of sponge iron in the world in 2001 and 2003 accounting for about 14.54% and 14.82% respectively

SAL Steel is a versatile steel, Ferro Alloys and Power Company having operations near Kandla Port in the state of Gujarat in Western India. SAL also selling power to various customers from its 40 MW power plant. The company has double advantage of having proximity one of the busiest commercial port and also to the customer of companys finished products.

 Direct Reduced Iron (Sponge Iron) Ferro Alloys Power Plant

Year of Establishment : 2003

Nature of Business: Manufacturer

Major Markets: Indian Subcontinent

To be recognized as the leader in India, in high quality Sponge iron, Ferro alloys, increasingly in the premium segment.

To provide a high level of customer satisfaction through appropriate products, technical support and fair commercial practices keeping safety of the employee and environment at the top priority.

 To be leader in our product portfolio with latest

technology, technical and managerial excellence. To be conscious of our responsibility towards society and environment. To improve continuously our operational norms To provide a fair return to our shareholders. To provide on-going training and development of all the employees Building a corporate culture of learning, trust and fairness.

Business organization

Services

Products

Consumer
Goods

Industrial

Goods

Consumer

Consumer

Non-durable

Durable

Strength

Weakness

Opportuniti es

Threats

Strength
Good quality standards. Sponge iron of our company consist of 84% pure iron Cost competitiveness. Diverse Supplier Base. Long-standing contracts for purchase of raw materials. Strong product design and development. Skilled, qualified and motivated employees Captive Power Consumption.

 Exposure to raw material price fluctuations. Under-utilization of plant capacity. Dependency on third party for raw material.

 Unexplored Markets- The Indian rural sector remains fairly unexposed to their multi-faceted use of steel. The rural market was identified as a potential area of significant steel consumption way back in the year 1976 itself.
Ever-growing demand in Steel Industry- The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India.

 Rising raw material prices. High Cost of Capital. Constraint of Raw Material availability. Global economic slowdown Competitive price of China.

Government are our largest suppliers. Around 90% of our raw material are supplied by government from different states like Orissa , Madhya Pradesh, etc.

 S.A.L Steel Ltd produces power by itself which is an advantage for its. If SAL Steel Ltd had to purchase power as raw material from suppliers it would had cost it to around Rs.15 per unit. But this not the case with SAL Steel Ltd, power in its plant comes at a cost of Rs.3.20

Sponge iron of our company consist of 84% pure iron

Reasons for this strategy:-

In order to expand customer group. In order to increase the scope and spread the risks. In order to its production and efficiency.

S.A.L Steel Ltd

Shah Alloy Ltd.

Power Plant

S.A.L Steel Ltd

The expansion strategy they are adopting is the

expansion of Power Plant from 40 MW capacity to 60 MW capacity.

In order to cut cost, increase productivity and as a measure to increase profitability, S.A.L Steel Ltd is thinking of expanding its power plant capacity of 40 MW to 60 MW

MARKET SIZE
Embryonic

Growth

Maturity

Decline

TIME

 Threats of new entrants Intensity of rivalry among existing competitors The bargaining power of suppliers The threat of substitute products The bargaining power of buyers

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.

 The steel industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports. Steel, being a commodity it is, branding is not common and there is little differentiation between competing products. The 4 major domestic rivals are SAIL, JSW, ISPAT & ESSAR STEEL. Rest are all smallish mills which together accounts for 30 % of the total market share.

Non-integrated or semi integrated industry have to depend on suppliers. An example could be SAL, which imports lignite. Since domestic raw material sources are insufficient to supply the Indian steel industry, a considerable amount of raw materials has to be imported. For example, iron ore deposits are finite and there are problems in mining sufficient amounts of it. Indias hard coal deposits are of low quality. In order to safeguard itself from the high bargaining power of the supplier, SAL had planned much earlier into the strategy of Backward Integration by setting S.A.L Steel Ltd.

 Plastics and composites pose a threat to Indian steel in one of its biggest markets automotive manufacture. For the automobile industry, the other material at present with the potential to upstage steel is aluminium. Perhaps the most attractive alternative to stainless is aluminium.

 Some of the major steel consumption sectors like automobiles, oil & gas, shipping, consumer durables and power generation enjoy high bargaining power and get favourable deals.
However, small and retail consumers who are scattered and consume a significant part do not enjoy these benefits.

Raw material i.e. iron ore, Ferro chrome ore, etc. from mines in Karnataka, Madhya Pradesh, Orissa and Goa for their plant at Bharapar which involves logistical issues, economic decision making in ensuring optimum inventory.

Any delay in supply of raw material to their plant may affect their plants operations, which in turn may hamper the Company in fulfilling its obligation for supply of sponge iron

Further, any rise in the transportation cost may in turn lead to rise in the cost of production.

In case they are not able to pass on the burden of such additional cost to the buyer of our product, our profit margins may be affected.

Maintain minimum inventory for 1.75 months for iron ore and Ferro chrome ore, which the company feels quite adequate in meeting the working capacity of plant in case of logistical delays arising in ordinary course of business or unfortunate circumstances arising in business

Major inputs like limestone in production of sponge iron and Lignite for our Captive Power Plant are in abundance in the surrounding areas and are easily available. Installation of Captive Power Plant reduces the power cost considerably and keeps the production costs, particularly of Ferro-alloys low.

The Project is set up at Village Bharapar, Kutch, which is near the Kandla Port and will result in benefits available at the location under the special package of incentives for sales tax and excise duty declared under the Incentive Scheme 2001 for Economic Development of Kutch District after the earthquake. This as result in cost savings.

The Board of Directors & Senior Management Members shall:

Act honestly, fairly, ethically and with integrity; Act in the best interest of and fulfill their fiduciary obligations to S.A.L Steel Limited and all its stakeholders; Act in good faith, responsibly, with due care, competence and diligence, without allowing their independent judgment to be subordinated; Disclose potential conflicts of interest that they may have regarding any matters relating to S.A.L Steel Limited; Comply with all applicable laws, rules and regulations;

 Comply with all applicable laws, rules and regulations;

Maintain the confidentiality of information relating to the affairs of the Company acquired in the course of their service as Directors, except when authorized or legally required to disclose such information;
Disclose potential conflicts of interest that they may have regarding any matters that may come before the Board, and abstain from discussion and voting on any matter in which the Director has or may have a conflict of interest;

Shah alloys ltd

Organizational Structure

SAL steel ltd

Sponge iron

Ferro alloy

Captive power plant (CPP)

Production Finance Engineering

Production Finance Engineering

Production Finance Engineering

PRODUCT BASE STRUCTURE

SAL steel is having product base structure as grouping of the activities is done on the basis of the product line. The advantages of this company get are, structure that the

Optimum use of the specialized skills and

equipment. Increases coordination and enables fixation of

responsibilities for profit making and usage of

resources.

INTERNAL CONTROL SYSTEM

The Company has adequate internal control procedures with accordance to its size and nature of its business. The objectives of these procedures are to ensure efficient use and protection of the Companys resources, accuracy in financial statements and due compliance of statutes and Companys policies and procedures.

Company maintained healthy, cordial and harmonious industrial relations at all levels. The Board of Directors and management wish to place on record their appreciation of the efforts put in by all employees to achieve good performance.

COMPANYS PHILOSOPHY ON CODE OF GOVERNANCE Corporate Governance is a set of systems and practices to ensure that the affairs of the Company are being managed in a way which ensures accountability, transparency, fairness in all its transactions in the widest sense and meet

its stakeholders aspirations and expectations.

The Company will continue to focus its resources, strengths and strategies for enhancement of the long term

shareholders value while at the same time protecting the

interest of other stakeholders.

SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

Shri Ambalal C Patel Chairman, Shri Jethabhai M Shah and Shri Harshad M Shah are members of the Committee. The Committee is empowered to oversee the redresses of Investors complaints and other miscellaneous complaints. The Company as a matter of policy disposes of investor complaints within a span of five working days. During the year under review, all shareholders complaint received either by Registrar & Share Transfer Agent or the Company were satisfactorily replied and resolved. There were no outstanding complaints as on 31st March, 2012.

INFORMATION SYSTEM SAL steel uses fully computerized information system. They also use transaction processing system and Enterprise Resource Planning software including SAP.

REWARD SYSTEM

Employee of the month Employee of the week Employee of the year

 S.A.L. Steel Limited are committed to satisfy customer

by providing quality products and services. To install and maintain suitable Quality Management System. To achieve continual improvement in technology, products and services. To encourage employee participation at all levels supplemented with continuous training and development.

 Prevention of industrial risk rather than

detection/ rectification and its adverse impact on the environment. Preserve the health, safety and environment of plant and its neighborhood. Follow safe work practices and continually improve the effectiveness of system.

 Creating an environment of teamwork as well

as increase the system awareness to employees. Conserve natural resources by their responsible and efficient use in all operations. Comply with relevant laws and regulations as well as take any additional measures considered necessary.