Tata Innovista Regional Round Winner - Selling branded ferro alloys
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Tata Innovista Eastern Region Winner
Selling Branded Ferro Alloys Selling Branded Ferro Alloys
Selling Branded Ferro Alloys
through an Organized Distribution Network in India
P545313122940 New Tangible Product Innovation
Mr. Subodh Pandey Chief(Marketing & Sales) FA & MD, Tata Steel Mr. Prabhash Gokarn Head, Raw Material Projects, Tata Steel Ms. Suniti Khastgir Sr Manager, FA & MD, Tata Steel Ms Sria Majumdar Manager, FA & MD, Tata Steel Mr. Arik Das Manager, FA & MD, Tata Steel
Tata Innovista, Finals 25th April, 2013
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Going forward,
we expect TATA
SILCOMAG to
continue creating
history
Silico Manganese
(SiMn) is a Ferro Alloy
critical to steel making
Tata Steel has aggressive plans
to ramp up SiMn market share
in India
Focus on SME customers,
who are plagued with product
& service related issues
TSL develops branded sealed bags of SiMn with
desired benefits to serve the SMEs through an
organized distribution network
Launch of TATA SILCOMAG:
World’s first branded Ferro Alloy
Several
hurdles were
overcome
along the way
Sales of ~2300 MT
in 7 months, with
benefit of ~ Rs 16
Lakh to TSL
1 2 3
4 5
6 7 8
3
7
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Long Products Steel Production (Mnt)
Silico Manganese (SiMn) is a Ferro Alloy critical to steel making
• Usage: Critical ingredient in steel making, especially
in long products such as rebars & wire rods
• Value: Manganese improves hardness & increases
the tensile strength, while silicon acts as a de-oxidiser
• Consumption: 5 -10 kg/T of hot metal
100
200
282
SiMn Demand (Kt)
Market Dynamics
• Served by traders
• Prefer small lots
• Opportunistic buy
• Served by manufacturers directly
• Tender based buying
• Spot orders for emergency requirement
• Have own SiMn production units
SME
B2B
Integrated
Players
Segment Wise Demand
37 582
Detailed understanding of the each segment obtained through customer wise mapping of demand, cross
validation carried out with specific consumption estimates 4
7 23 32 59 2
18
36
0
25
45
66
63
69
70
79
70
119
165
260
FY12 FY13 E FY14 FY15
Domestic B2B Domestic SME Exports In House
• Usage of ore limited to High grade and partially
Med Grade
• Dump of Low Grade ore leading to space
constraint at mines
• Challenge: Preserve mineral resource by
utilizing Medium & Low grade ore. Develop
suitable product and market.
Tata Steel, a supplier with 7% market share in Indian SiMn
market, plans to ramp up to 16% by FY15
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Situation at Mn Mines
SiMn Sales Plan (Kt)
55% • Due to limited market for sale of lower
grade SiMn in exports, it was imperative
to increase sales in the domestic market
• SME segment was targeted:
o Large segment with unmet needs
o Development of 50 Grade SiMn in SME
market, to use own MG & LG ore
Excavation:
22.5 LCum Production:
2.8 LMT
High Gr: 0.7 LMT
Med Gr: 1.3 LMT
Low Gr: 0.8 LMT
• Contamination (blending by
traders), leading to inconsistent
grade
• Need for credit
• Pilferage
• Incorrect test certificates
• Absence of complaint redressal
mechanism due to lack of source
authenticity
• Bulk sales in loose, in lots of 15-20
MT leading to greater inventory and
transit loss
• People not educated about benefits
of exact Si & Mn%
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Focus on SME customers who are plagued with product & service
related issues
Nagpur
Mumbai
Bhavnagar
TN Scent
Durgapur
Jalna Rourkela
Raipur Hyderabad
Chennai
Mandi G/Ludhiana
Indore
Delhi/NCR
Giridih
Chandrapur
Paloncha
Demand cluster
Production cluster
Gandhidham
Assam
Goa
Kanpur
Detailed market mapping with ~30 customer interviews in major demand clusters done to understand the SMEs
characteristics and issues, Durgapur cluster was chosen for market entry given proximity to plants & volumes
Customer Needs/Pain Points Rank
1
2
3
4
5
6
7
TSL developed branded sealed bags of SiMn to serve the
SMEs through an organized distribution network
Needs/Issues Solution
Internal Brainstorming, customer interviews
• Set up an organized distribution
network in major demand clusters
• Lower inventory– JIT supply
• Direct access to company
• Authentic test certificates
• Distributor provides credit
• Unitization & standardization of a bulk
commodity
• Bagging – lower transit loss
• Sealing – tackling pilferage &
blending issues
• Guaranteeing consistency
• Smaller/Customized lot sizes
• Contamination (blending by traders),
leading to inconsistent grade
• Need for credit
• Pilferage
• Incorrect test certificates
• Absence of complaint redressal
mechanism due to lack of source
authenticity
• Bulk sales in loose, in lots of 15-20 MT
leading to greater inventory and transit
loss
• People not educated about benefits of
exact Si & Mn%
Organized Distribution
Branded & Sealed Bags
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Thus, “TATA SILCOMAG” was launched World’s first ever branded Ferro Alloy
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The TATA SILCOMAG Promise
50 kg branded & sealed bags Chemical Composition Size
Launched 2 Sizes
Aug: 10-50 mm
Jan: 50-150 mm
Target Customers
• Induction furnace
owners making
Ingot/Billets
• 20-30 MT SiMn
requirement per
month
Several hurdles were overcome along the way
1
2
Unitization / Packaging / Sealing
Customer Mindset Change
Sealing
Exact Weight
• High quality bags and sealing solution
• Weighment systems installed at plants
• SOP for training & training to workers
• Education of customers on the benefits: Consistent
specifications leading to lesser off grade; No need to open
bag on shop floor leading to lesser pilferage & transit loss;
No testing facilities required.
• Interactions with technology group to demonstrate
benefit at shop floor
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• Discovering the correct market price : With multiple
grades, different credit terms, agent commissions etc.
difficult to derive right market price
Bagging
3 Pricing
With sales of ~2300 tons in 7 months, TATA SILCOMAG has
brought ~ Rs 16 Lakh benefit to TSL
1
0
40 70 128 65 200
403
819
602
3% 6% 11%
5%
17%
34%
68%
50%
Aug Sept Oct Nov Dec Jan Feb Mar
Sales Vol (MT) Market Share (%)
Customers (Nos) Sales (MT) & Market Share (%)
Launched 60/14 grade
to capture customers
not sensitive to Si%
Launched 50-150 mm sizes
to capture size sensitive cust
Incremental Benefit from
SILCOMAG Sales (‘000 Rs)
• Savings: 2 kgs of FeSi & 3 kgs of SiMn per
heat, due to the consistent grade of Si & Mn
maintained by TSL.
• Earlier practice of joint testing & issues over test
certificates no longer exist.
• Customers have been able to maintain constant
ratio of SiMn in every heat.
• Savings: 2 kgs of FeSi & 3 kgs of SiMn per
heat, due to the consistent grade of Si & Mn
maintained by TSL.
• Earlier practice of joint testing & issues over test
certificates no longer exist.
• Customers have been able to maintain constant
ratio of SiMn in every heat.
Delighted Customers Savings of
Rs 70
Lakhs per
annum to
customers
Going forward, we expect TATA SILCOMAG to continue
creating history
1
1
Sales Ramp Up Plan for SMEs (Kt)
Remaining Problems
• Exploring and developing the 50 Grade market
• Expanding to new territories
• Bagwise traceability
Way Ahead
• Entry into the north India market – UP,
Rajasthan, NCR, Punjab
• Planned launch of 50 Grade in SME market in
May’13
• Creating entry barriers for competition
Environmental
Impact: Usage
of idle low
grade ore for
50 grade
FY14
Projected
benefit of Rs
1.6 Cr
Potential of
Rs 60 crores
p.a by sales
of 50 Grade
Key Insights:
• Opened up a new market for 50 Grade
• Helped us understand demand clusters and
need of customers
• Paved the way for future innovation in other
products/ product customization
THANK YOU
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