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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

15

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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

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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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