ELECTRO STEEL

CASTINGS
PRESENTED BY
POOJA
HARISH
DEVIKA
ALEX
INTRODUCTION
Largest manufacturers of ductile iron pipes (DIP) and cast iron pipes (CIP) since
1965
Company had rapid growth over the years, also is established in Mumbai
Stock Exchange
Experienced a tough competition from foreign competitors aggressively entering
Indian market
Investment in new production technologies and expansion in international
markets provided strong scope of opportunity
For Europe France , Southeast Asia Vietnam attractive options
ADVANTAGES OF DIP
DIP has been used increasingly from 1965
Metal pipe was less brittle used for easier handling and installation
Enhanced ductility reduced breakage and leakage
CIP two process i.e., castings and finishing was combined , product and
process improvements in DIP
High customer acceptance in spite priced 20% higher than CIP
Faced competition from other materials, such as PVC, mild steel, asbestos
and pre-stressed concrete
ADVANTAGES OF ELECTRO STEEL
Well established brand in India
Extensive local network of agents
Exceeding growth rates in Indian economy
Manufacturing operations, casting, zinc coating and cement lining are
difficult to duplicate
Technological upgrades improved the quality and it reduced cost by
10%
PROBLEMS
Complex political structure in Indian market
High capital investment for a casting operation
Competitors trying to sell on discounted price to maintain minimum
production level at global level
Large scale manufacturers tended to increase
Export volumes with respect to local market was unable to absorb the
installed production capacity
VIETNAM

Advantages
Second largest country in southeast Asia
Mostly companies owned by government, private ownership was increasingly
encouraged
Can reduce shipping cost from India
Credit loan of $3.1 million to open industry in Vietnam
Disadvantages
Lack of proper infrastructure with improper transport facilities
No waste management and treatment plants
Beurocratic government
EUROPE

Advantages
Stable economic environment
Fewer political and bureaucratic problems
Influential local contact will help in minimizing transportation costs
Disadvantages
Issue of operating costs
Expensive labor
Communication challenge French and other local challenges prevail
1) WHAT ARE THE KEY SUCCESS FACTORS FOR
ELECTRO STEEL ? IS INTERNATIONAL EXPANSION A
GOOD IDEA ?
Key Success factors
Operational costs are very low
Skilled labour is available and the employees of Electrosteel are loyal
First Movers advantage given by early entry into market in 1965
Local industry is protected by policies in India
Strong investments from central government and states on the infrastructural projects
Well established brand in India and extensive local network of agents
Accridited by ISO 9002 certification which is recognized by customers
International Expansion
Strong opportunity for continued growth with the added benefits of providing hard
currency for further investments
Become a global player and a global competitor by building an overseas plant
which is attractive
Funding agencies in India were pulling hands from the infrastructural projects and
the demand was supposed to decrease in the coming years
The growth experience during 1990s showed that the domestic market is
stagnating
Small players are emerging in the domestic market and they can become
competitors on the price
WHAT IS YOUR EVALUATION OF THE
OPPORTUNITIES TO EXPAND INTO EITHER
VIETNAM OR FRANCE? HOW DO THE
ALTERNATIVES COMPARE
(OPERATIONAL/MARKETING/FINANCIAL)?
 VIETNAM FRANCE

PROBLEM: No proper PROBLEM: Labour cost

infrastructure, lacking was ten times that of India
transportation facilities, or Vietnam and there would
water and sewage problems. be language barrier for the
OPERATIONAL managers.
OPPORTUNITIES: The
transport cost will be saved
and it will be considered as
local.

PROBLEMS: Weak
administrative structure;
bureaucratic political
POLITICAL system; previous units
failed.

OPPORTUNITIES:
Vietnamese Government
would give incentives and
would be really helpful.
 VIETNAM
FINANCIAL
OPPORTUNITIES: A premium
of 15% on water projects by
international agencies. This
premium would be a saving of
10% if both Casting and
finishing line produced.
MARKETING & Sales office cost
COMPETITION $120,000/year.
Not much marketing effort
required as no competition.
First mover advantage.
FRANCE
PROBLEMS: Increase in cost
by 90% which would be due to
the extra labour cost.
OPPORTUNITIES: Overall
price premium of 12% over
international prices.
Sales office cost is
$400,000/year
Highly competitive but could
gain niche market for itself.
AS DAS WHAT IS YOUR RECOMMENDATION
GOING AHEAD ? HOW WOULD YOU IMPLEMENT
YOUR PLAN ?
Manufacturing and export department should target a total volume of
approx. 60,000 tonnes per year.
Corporate objective of ramping up international volumes by 10,000
tonnes per year.
Additional export volume target are 10,000 , 20,000 , 30,000 tonnes in
2004 . Vietnam would not be able to support this strategic decision
made by higher management.
Forecasted volumes in Europe are 30,000 tonnes annually. Targets can
be met if the projections come true.