tata steel mba sip report on fibres 2009: ferro alloys - durgesh kumar, vitbs. mba
DESCRIPTION
This is summer internship project of MBA by Durgesh kumar, VIT business school at TATA Steel , Tata centre, kolkata under the guidence of Mr. PRABHASH GOKARN head FAMD, Tata steel. This report deals with the "FIBRES" strategies which is adopted by TATA groups for monetiring their competitors activities and create competitive interlligence. This is a live project of Tata steel and three competitors analysis is done in detailsMail me personally if u need this project report: [email protected]TRANSCRIPT
FIBRES 2009 (FA amp MD) 2009
Summer Internship Project at TATA STEEL ndash FAMD Department
Project based on FIBRES 2009 FERRO ALLOYS (FAMD)
A report submitted towards the partial fulfillment of the requirement of the two years full- time Mater of Business Administration (International Business)
Project Developed amp Submitted by DURGESH KUMAR
VIT BUSINESS SCHOOL VELLORE wwwvitacin Regn no 08MIB018
MBA (International Business) ACADEMIC SESSION ndash 2008 -2010
Submitted to Mr PRABHASH GOKARN Project Guide Head FAMD Tata Steel Tata centre Kolkata
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 1
FIBRES 2009 (FA amp MD) 2009
ACKNOWLEDGEMENT
This is a short note of thanks to all the employees at TATA STEEL KOLKATA who have made contribution in the completion of this project I express my sincere thanks to my project guide Mr PRABHASH GOKARN and Ms SUNITI KHASTIGIR
The Suggestions and advices given by Mr PRABHASH GOKAHRN (HEAD FA amp MD)
was very helpful I also extend my gratitude to Mr RK DAS (CHIEF FA amp MD) and Mr
WARIS AHMED for their sincere assistance
I thank the HRM Department This training would not have been so smooth without the help
of Ms BHAWAMA M RAJ MR SIDDHARTHA SHAH and MR RATNA SINGH
Last but not the least I thank my college Management Mr BASOKUMAR Dr BHUSHAN D SUDHAKAR Mr HIMANSHU TANDON and my friends who helped me to complete my training successfully
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 2
FIBRES 2009 (FA amp MD) 2009
Contents
TITLE PAGE NUMBER
Objective of FIBERS 2009 04
Methodology 07
Sources of information 07
Introduction of Tata steel 08
FAMD division 11
Standard input templates 21
BISRA 28
Analysis of BISRA 35
XSTRATA 40
Analysis of XSTRATA 47
OUTOKUMPU 54
Analysis of OUTOKUMPU 59
Conclusion 67
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 3
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 FERRO ALLOYS
OBJECTIVE OF THE PROJECT
Tata Steel has faced with an increasingly dynamic business environment today The rapid changes in the environment make it very important for companies to have a tough external perspective while formulating strategy or taking vital Decisions
It is in recognition of this truth that the Tata Group has decided to implement the term of FIBRES (Facts and Information Based Reverse Engineering of Strategy) mdash a Common framework that will be used across group companies to regulate the process of competitive monitoring within its group FIBRES are a unified process and Methodology developed on the basis of worldrsquos best practices It is a method to make sure that strategies are formulated only after gaining a thorough accepting of the competitive environment The aim is to align the Companyrsquos strategy with the demands of its business atmosphere FIBRES will guide companies by providing a basic framework that can be made to order by them to suit their specific needs
The objective of the project is to create databases of competitors analysis collating and taking strategic decisions which can help Tata steel in competitions It will be an eye to the External World It will help companies to understand who what where when and how of its environment
It will be systematic and principled program for collating and analysing the different competitive environment and business trends which will serve as a essential input to strategy formulation
This project will help at different levels in different ways to give vital inputs to move organisation smoothly
At the Group Level
To create a common framework
To institutionalise the process of always monitoring the external business environment
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 4
FIBRES 2009 (FA amp MD) 2009
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
This project will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction
It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costing
It will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
Thus objective of this project is to create a competitive intelligence which is going to help to track competitorrsquos moves and gain competitive advantages while doing business
Methodology
First we have to collect fact and information from various internal and external sources about the competitorsrsquo organisations
Then we have to compile the information in a systematic way which can be easy to understand about competitors
We have to do analysis of different information with available tools and techniques of managements
Then we have to form it in the form of intelligence through reverse engineering strategies
At last we have to take strategic decisions which will help Tata Steel to gain competitive advantages in the market and to predict the competitorsrsquo behaviours
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 5
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
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FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
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FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
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FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
ACKNOWLEDGEMENT
This is a short note of thanks to all the employees at TATA STEEL KOLKATA who have made contribution in the completion of this project I express my sincere thanks to my project guide Mr PRABHASH GOKARN and Ms SUNITI KHASTIGIR
The Suggestions and advices given by Mr PRABHASH GOKAHRN (HEAD FA amp MD)
was very helpful I also extend my gratitude to Mr RK DAS (CHIEF FA amp MD) and Mr
WARIS AHMED for their sincere assistance
I thank the HRM Department This training would not have been so smooth without the help
of Ms BHAWAMA M RAJ MR SIDDHARTHA SHAH and MR RATNA SINGH
Last but not the least I thank my college Management Mr BASOKUMAR Dr BHUSHAN D SUDHAKAR Mr HIMANSHU TANDON and my friends who helped me to complete my training successfully
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 2
FIBRES 2009 (FA amp MD) 2009
Contents
TITLE PAGE NUMBER
Objective of FIBERS 2009 04
Methodology 07
Sources of information 07
Introduction of Tata steel 08
FAMD division 11
Standard input templates 21
BISRA 28
Analysis of BISRA 35
XSTRATA 40
Analysis of XSTRATA 47
OUTOKUMPU 54
Analysis of OUTOKUMPU 59
Conclusion 67
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FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 FERRO ALLOYS
OBJECTIVE OF THE PROJECT
Tata Steel has faced with an increasingly dynamic business environment today The rapid changes in the environment make it very important for companies to have a tough external perspective while formulating strategy or taking vital Decisions
It is in recognition of this truth that the Tata Group has decided to implement the term of FIBRES (Facts and Information Based Reverse Engineering of Strategy) mdash a Common framework that will be used across group companies to regulate the process of competitive monitoring within its group FIBRES are a unified process and Methodology developed on the basis of worldrsquos best practices It is a method to make sure that strategies are formulated only after gaining a thorough accepting of the competitive environment The aim is to align the Companyrsquos strategy with the demands of its business atmosphere FIBRES will guide companies by providing a basic framework that can be made to order by them to suit their specific needs
The objective of the project is to create databases of competitors analysis collating and taking strategic decisions which can help Tata steel in competitions It will be an eye to the External World It will help companies to understand who what where when and how of its environment
It will be systematic and principled program for collating and analysing the different competitive environment and business trends which will serve as a essential input to strategy formulation
This project will help at different levels in different ways to give vital inputs to move organisation smoothly
At the Group Level
To create a common framework
To institutionalise the process of always monitoring the external business environment
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 4
FIBRES 2009 (FA amp MD) 2009
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
This project will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction
It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costing
It will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
Thus objective of this project is to create a competitive intelligence which is going to help to track competitorrsquos moves and gain competitive advantages while doing business
Methodology
First we have to collect fact and information from various internal and external sources about the competitorsrsquo organisations
Then we have to compile the information in a systematic way which can be easy to understand about competitors
We have to do analysis of different information with available tools and techniques of managements
Then we have to form it in the form of intelligence through reverse engineering strategies
At last we have to take strategic decisions which will help Tata Steel to gain competitive advantages in the market and to predict the competitorsrsquo behaviours
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 5
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 6
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
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FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Contents
TITLE PAGE NUMBER
Objective of FIBERS 2009 04
Methodology 07
Sources of information 07
Introduction of Tata steel 08
FAMD division 11
Standard input templates 21
BISRA 28
Analysis of BISRA 35
XSTRATA 40
Analysis of XSTRATA 47
OUTOKUMPU 54
Analysis of OUTOKUMPU 59
Conclusion 67
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 3
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 FERRO ALLOYS
OBJECTIVE OF THE PROJECT
Tata Steel has faced with an increasingly dynamic business environment today The rapid changes in the environment make it very important for companies to have a tough external perspective while formulating strategy or taking vital Decisions
It is in recognition of this truth that the Tata Group has decided to implement the term of FIBRES (Facts and Information Based Reverse Engineering of Strategy) mdash a Common framework that will be used across group companies to regulate the process of competitive monitoring within its group FIBRES are a unified process and Methodology developed on the basis of worldrsquos best practices It is a method to make sure that strategies are formulated only after gaining a thorough accepting of the competitive environment The aim is to align the Companyrsquos strategy with the demands of its business atmosphere FIBRES will guide companies by providing a basic framework that can be made to order by them to suit their specific needs
The objective of the project is to create databases of competitors analysis collating and taking strategic decisions which can help Tata steel in competitions It will be an eye to the External World It will help companies to understand who what where when and how of its environment
It will be systematic and principled program for collating and analysing the different competitive environment and business trends which will serve as a essential input to strategy formulation
This project will help at different levels in different ways to give vital inputs to move organisation smoothly
At the Group Level
To create a common framework
To institutionalise the process of always monitoring the external business environment
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 4
FIBRES 2009 (FA amp MD) 2009
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
This project will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction
It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costing
It will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
Thus objective of this project is to create a competitive intelligence which is going to help to track competitorrsquos moves and gain competitive advantages while doing business
Methodology
First we have to collect fact and information from various internal and external sources about the competitorsrsquo organisations
Then we have to compile the information in a systematic way which can be easy to understand about competitors
We have to do analysis of different information with available tools and techniques of managements
Then we have to form it in the form of intelligence through reverse engineering strategies
At last we have to take strategic decisions which will help Tata Steel to gain competitive advantages in the market and to predict the competitorsrsquo behaviours
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 5
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 6
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 FERRO ALLOYS
OBJECTIVE OF THE PROJECT
Tata Steel has faced with an increasingly dynamic business environment today The rapid changes in the environment make it very important for companies to have a tough external perspective while formulating strategy or taking vital Decisions
It is in recognition of this truth that the Tata Group has decided to implement the term of FIBRES (Facts and Information Based Reverse Engineering of Strategy) mdash a Common framework that will be used across group companies to regulate the process of competitive monitoring within its group FIBRES are a unified process and Methodology developed on the basis of worldrsquos best practices It is a method to make sure that strategies are formulated only after gaining a thorough accepting of the competitive environment The aim is to align the Companyrsquos strategy with the demands of its business atmosphere FIBRES will guide companies by providing a basic framework that can be made to order by them to suit their specific needs
The objective of the project is to create databases of competitors analysis collating and taking strategic decisions which can help Tata steel in competitions It will be an eye to the External World It will help companies to understand who what where when and how of its environment
It will be systematic and principled program for collating and analysing the different competitive environment and business trends which will serve as a essential input to strategy formulation
This project will help at different levels in different ways to give vital inputs to move organisation smoothly
At the Group Level
To create a common framework
To institutionalise the process of always monitoring the external business environment
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 4
FIBRES 2009 (FA amp MD) 2009
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
This project will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction
It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costing
It will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
Thus objective of this project is to create a competitive intelligence which is going to help to track competitorrsquos moves and gain competitive advantages while doing business
Methodology
First we have to collect fact and information from various internal and external sources about the competitorsrsquo organisations
Then we have to compile the information in a systematic way which can be easy to understand about competitors
We have to do analysis of different information with available tools and techniques of managements
Then we have to form it in the form of intelligence through reverse engineering strategies
At last we have to take strategic decisions which will help Tata Steel to gain competitive advantages in the market and to predict the competitorsrsquo behaviours
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 5
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 6
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
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FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
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FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
This project will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction
It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costing
It will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
Thus objective of this project is to create a competitive intelligence which is going to help to track competitorrsquos moves and gain competitive advantages while doing business
Methodology
First we have to collect fact and information from various internal and external sources about the competitorsrsquo organisations
Then we have to compile the information in a systematic way which can be easy to understand about competitors
We have to do analysis of different information with available tools and techniques of managements
Then we have to form it in the form of intelligence through reverse engineering strategies
At last we have to take strategic decisions which will help Tata Steel to gain competitive advantages in the market and to predict the competitorsrsquo behaviours
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 5
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 6
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Input Document Templates
Company profile Owner of company Board of directors and management List of subsidiaries Objectives of company organisation structures manpower
Product and services types of product product features product lines production volumes sales levels turnovers new product developments franchise capacity market segmentations
Pricing pricing list future pricing considerations pricing strategies target customers and suppliers of competitors
Financials sources of cash Balance sheet revenues cash and fund flows taxes CAGR
Legal considerations mergers joint ventures acquisitions government contracts licence agreements trademarks
Sources of information
Internal sources Internal databases sales team reports employees group companies etc
Company sources Annual reports website brochures advertisements press releases speeches etc
Industry sources Associations trade shows research centers journals libraries books etc
Networking Customers vendors industry experts and others
Media Internet print and electronic
Regulatory sources Regulatory bodies state and central government websites ministry publications etc
Hiring expertise Consultants industry experts market research
Registrar of companies Annual report filed with the registrar of companies under the Companies Act 1956
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 6
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 7
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 8
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
FIBRES INTRODUCTION
FIBRES is an institutionalised process for collating and analysing information on the competitive environment and using it as a key input for strategic decisions
FIBRES aids the decision-making process by explaining the who what where when and how of the external competitive environment
FIBRES framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 9
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
The FIBRES framework is based on three critical processes
Collation of facts and information Collection and collation of data and information from legally and ethically permissible sources
Analysis A thorough analysis of inputs to convert them into knowledge of the external Environment (in terms of patterns trends and interrelationships) By tailoring the output of the analyses towards the needs of the top managementdecision-makers this knowledge is converted into actionable intelligence for decision-making
Reverse engineering of strategy Adapting the organizationrsquos strategy to achieve alignment with the external environment based on actionable intelligence
FIBRES mdash target users
FIBRES have been designed specifically to assist decision-makers and personnel interfacing with the external environment
1048580 Top managementdecision-makers They include CEOs the board of directors Strategic planning heads SBUdivisionalprofit centre heads and functional heads(Marketing finance HR RampD purchase IT)
1048580 Personnel interfacing with the external environment These include the sales team recruitment team purchase team and legalregulatory team
1048580 Others Other FIBRES users would be needevent based for example members of special projects ITsystems personnel operations personnel and RampD personnel
Environmental monitoring is not a new concept as many organisations already practice it in some form or other FIBRES introduce the discipline of a holistic rigorous structured and institutionalised process that supports the strategy formulation process
Objectives of FIBRES
At the Group Level
To create a common framework
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 10
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
To institutionalise the process of always monitoring the external business environment
At the Organizational Level
To line up the firmrsquos strategy with its external business environment And hence gain a strong competitive advantage
To help the organization be positive with respect to its external environment
To convert the organizationrsquos implied knowledge into a common pool of explicit knowledge
It will help us to understand different organisational skills resources and on the whole capability It will help to understand talent as well as different recruitment and retainment strategies Information about present practices capabilities and future direction It will also help us to understand financial capability of all competitors in terms of access to their capital financial position such as leverage different deployment of funds about capital investment levels product costingIt will also help in identifying trends amp opportunities in the business It will give ability to shape market and identify weaknesses in competitorsrsquo strategies
The output of the FIBRES process would depend on the type and scope of FIBRESImplemented in the organisation
Competition tracking Competitor profiles are prepared for each of the leading players (for every market segment)The focus of these profiles is on analysing competitors current and past strategies with a view to predict possible and likely future moves mdash thus enabling pre-emptive actions to counter rivals moves For example the launch of a product by the competition can be delayed or prevented by reading the signals correctly and taking preemptive measures
Regulation watch The regulatory environment is as important as the competition FIBRES help keep a vigil on upcoming regulations besides correctly interpreting current regulations and their impact on the business
Early warnings A very important FIBRES deliverable is an early warning system for potential threats Effective use of this system helps companies to better prepare for the future and not be taken by surprise
Strategictactical decision-making A well-informed fact-based decision is much better than one made on the basis of gut feel or on the basis or non-validated information FIBRES with its fact-based approach helps companies make good strategictactical decisions For example the commercial vehicle business unit of Tata Motors advanced the launch of its LPT909 after receiving specific inputs on the strategy of one of its main competitors
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 11
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
The FIBRES process can be explained by the FIBRES cycle
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 12
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
S teps required to build a world-class FIBRES function in an organisation are given below
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 13
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Designing the system
The systems for the FIBRES process are designed at this stage These include systems or information collection analysis communication planning feedback and storing To ensure that FIBRES runs continuously all the processes need to be formalised and systematised The required infrastructure also needs to be put in place
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 14
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
TATA STEEL AN INTRODUCTION
A Timeless Vision
ldquoThe nation which gains control of iron soon acquires the control of gold ldquo -- These were the words that inspired a young Jamsetji Nusserwanji Tata envisages a bold new dream for India
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 15
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
INTRODUCTION OF TATA STEEL
HISTORY OF THE COMPANY
Tata Steel was established in 1907 by its founder Jamshedji Nasarwanji Tata Tata Steel is world 6th largest Asiarsquos first rank steel and Indiarsquos largest integrated private sector of steel company After many years it emerged as a successful quick steel enterprise due to its ability to make over and ability to meet different challenges of high competitive global economy and obligation to become a supplier of choice by delighting its customers with best services and productsTata Steelrsquos has made four phase Modernization program in the steel works that has enabled it to acquire the most modern and best steel making services in this world The company has been known as Asiarsquos most accepted Knowledge Enterprise at the World Knowledge Forum Seoul Korea It has recently embarked on program for expansion of its existing steelmaking capacity by 2 million tones to reach at rated target capacity of 5 millions tones per annum
The CII-EXIM Award for its corporate excellence and also the Corporate Governance Award instituted by the Union Finance Ministry for best and excellence in corporate governance are its testimony to the tata steel for commitment to excel in all activities that it undertakes
Till date there are eight divisions including its steel works and its mines and its units have been ISO-14001 certified for the environment This certification is a reaffirmation of companyrsquos belief that will guide betters environmental management leads to superior business performance in future
Tata Steel has been acknowledged by World Steel Dynamics as a ldquoworld classrdquo steel maker
Tata Steel is the only first steel company in the world to receive the certificate by Social Accountability (SA) 8000 by Social Accountability International (SAI) USA It is a global supportable standard for managing the work place in most effective behavior by improving the work place conditions The natural strength of the company such as low operating cost as well as special managerial culture and good profitability has been widely respected and this has led to establishing strategic partnership with different international players in the world market such as Nippon Steel Corporation of Japan Arcelor of France POSDATA of South Korea Ryerson and Paul Wurth of Luxemburg
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 16
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
MISSION STATEMENT OF THE COMPANY
Consistent with the vision and values of Tata Steel to strengthen Indiarsquos industrial base through the effective utilization of men and materials It means that envisaged to attain this are high technology and also productivity consistent with modern best management practices Tata Steel believes that while honesty and integrity are essential ingredients for a strong and stable organisation the profitability provides the main flash of economic activity Overall the company seeks to scale heights of excellence in all that is does in an enviourment free from fear and thus it encourages innovativeness and creativity
BUSINESS UNITS
Strategic Business Units of Tata Steel
Parts from the main Tata steel Division Tata Steelrsquos operations are grouped under the following different Strategic Business Units
Ferro Alloys and Minerals Division (FAMD)
Bearings Division
Agrico Division
Tata Growth Shop (TGS)
Tubes Division
Wire Division
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 17
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Joint Ventures Associates
Corus
Tinplate Company of India Limited (TCIL)
Tayo Rolls Limited
Tata Ryerson Limited (TRYL)
Tata refractories Limited (TRL)
Tata Sponge iron Limited (TSIL)
Tata Metaliks
Tata Pigments Limited
Jamshedpur Injection Power Limited (Jamipol)
TM International Logistics Limited (TMILL)
TRF Limited
Jamshedpur Utility and Service Company Limited (JUSCO)
Durgesh Kumar VIT BUSINESS SCHOOL VELLORE TAMILNADU Page 18
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FAMD Division
Ferro Alloys and Minerals Division of Tata steel were formed out of its Raw Materials Division of Tata Steel as it Profit Centre in the year 1993 to have greater center of attention on the Ferro Alloys and Minerals business
As part of its beginning and initiatives to raw materials security and growth in different Value Added Products FAMD division has been also identifying new opportunities for the smooth business and pursuing it to the point of promoting them as a new company or business Example such as TSKZN in South Africa for the production of its Charge Chrome it has Chrome mines at Iran acquisition of Raw met Fe Alloy biz From Aprilrsquo07 This FAMD division is having chrome ore mines Manganese Mines amp Ferro Alloys Plants located at various locations of Orissa at different location Company has exchange agents to convert raw materials given by them at conversion cost
There are few more plants at different parts of the world (owned by Difffrent Company) who have signed contracts with FAMD to convert their raw material at nominal conversion cost and make Ferro Chrome Two important raw materials Chrome ore and coke are given by FAMD Chrome requirement has been assessed and supplied to these plants by their sales unit who are in charge for the co -ordination with these conversion units Coke requirement for several plants are assessed and imported by this department and is supplied to different plants
other resources amp various inputs like power water etc are arranged by the conversion agents at their own cost Mines transport the raw materials to FAMD plants and conversion plants at cost price The price of different raw material is not a concern the recently acquired Raw material plant (Raw-Met) is a 100 subsidiary of Tata Steel As regard to this department is concerned it is treated just like a conversion plant It has similar type of agreement contracted with raw met Company Ltd As regard to supply of material is concerned it is coordinated by Tata steelrsquos FAMD sales office at Kolkata
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
Business profile of FAMD
It has Leadership position in India in Ferro alloys
It is mass Producer and supplier of
ndash Charge Chrome
ndash High Carbon Ferro Chrome
ndash High Carbon Silicon Manganese and
ndash High Carbon Ferro Manganese
It has various Global reach and strong presence in Japan and Korea
It has now China amp Europe and recent venture into US market
It is among the top five Global Ferro chrome players of the world
MILESTONE of FAMD
In year 1999-00 Tata steelrsquos FAMD got ISO 14001 Certification
In year 1997-98 it introduced customized Chrome conc For different refractory and chemical sectors Developed for more customized products for HCFeCr consumers
In year 1995-96 it introduced low impurity Ferro Chrome in the global market
In year 1993-94 FAMD established long term business relationship with premier stainless steel mills worldwide and expanded its business for long run
In year 1993-94 it has received ISO 9002 Certification
In year 1991-92 it introduced new products like Chrome manganese and fluxes
In year 1989-90 FAMD steps into the export market in a major way
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FAMDrsquoS Customer Base
International Customers
Sumitomo Metal Industries Japan
Nippon Steel Corporation Japan
Japan Future Enterprise (Formerly KSC)
SINOCHEM China
Hitachi Metals Ltd Japan
Avesta Polarit UK
Shanghai Shenjia Ferro Alloys Works
China Zhejian Hengshan Ferro Alloys Works China
Glencore Switzarland
Ugine SA France
KTN Germany
Yieh United Taiwan
MTC South Africa
China Steel Corporation Taiwan
Posco Korea
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Domestic Customers
Jindal Steel amp Power Ltd
Shah Alloys
ISIBAR
Sri Vasavi Industries
Viraj Alloys
Jindal Strips Ltd
Nava Bharat Ferro Alloys
FACOR
Corporate Ispat Alloys
Balasore Alloys Ltd
Sova Ispat
GMR Technologies amp Ind Ltd
Srinavasa FA
Panchmahal Steel
Monnet Ferro Alloys
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Major FeCr Producers in the World
Country Country Capacities (Mill Mt)
Competitive Advantage
Major Players
Capacities ( Mill Mt)
Resources Mkt Share (2007)
S Africa 350
Resource Rich Low- Cost Mkt amp Price Leaders
Xstrata 18 Mines utility power
52SrsquoCor 11
Kazak 095
Cost Leaders Proximity to China Europe
Alloys2000
010 Mines CPP
20
Zimbabwe
032Resource rich Low Cost
ZimascoZimAlloys
022005
Mines utility power 6
China 067
Dom growth Proximity to other Asian Mkts
JilinShanghai Shenjia
020013
Mines utility power
-
India 121
Adequate resources low overheads Proximity to Asian markets
TataSteel 011 Mines
8
IMFAICCL 014 Mines + CPP
FACOR 012 MinesNBFA 007 CPPISPAT 009 MinesJindals 021 Mines + CPP
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Worldwide Major players in FeCr mining
Company Name Capacity
( In LMT)
Present
Rank
Future
Rank
2008 2010
Xstrata 1800 2150 1 1
Samancor 1185 1135 2 2
Hernic 27 43 3 4
Kazchrome 10 113 4 3
Outokumpu 26 26 5 6
Tata Steel Group 225 305 6 5
Global Ferrochrome demand Forecast (lsquo000 MT)
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Strengths of Tata Steel (FAMD) to be a major player in SE Asia
It has Synchronized Biz philosophy and Cultural alignment both TATA and Japanese value long-term biz relations
It is 6th largest capacity in the world capable
It is Only Producer and Supplier of both Charge and High Carbon Ferro Chrome by its complementary strength
It has Integrated production facilities Reliable and competitive
It has Multi-locational amp multi-unit production base which are reliable and flexible
It Offer wider range of products both Generic and Niche Complementary specs
It has formed TATA Brand image for superior Product Quality and Service level
It has In-house logistic support like bulk and container reliable and competitive
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Indiarsquos strength comparing to other producing nations
KSF SA Kazakh China India
Power +++ +++ + -
Chrome ore reserves ++ ++ - +
Reductants - + +++ -
Proximity to markets + +++ +++ ++
Basic infrastructure ( ports Railroad)
++ - + -
Government Support +++ ++ - +
Overall Cost of production ++ +++ + +
Indicators - [+++] Strongly positive[-]Negative
STANDARD INPUT TEMPLATES OF TATA STEEL
Information Parameters
Incorporated inFounderLocation
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Key PersonsMining Related Details
Capacity (MTPA)Production trends (tpa)
Manpower used - Permanent - Contract
Type of manpower - Skilled - Unskilled
Noof shifts operatedAverage no of people per shiftLabour Productivity (including contract staff)
Labour Productivity (excluding contract staff) Cost of ore produced
- Costton of ore production
- Costton of over burden removalTechnology suppliersSafety requirementsMining equipment capacity utilizationArea of mines
- Lease (Hectares)
- Forest area (Hectares)Total reserves available for mining (in Tonnage)
Various Mine operational parameters ndash - Total Depth - Maximum Depth of working - Bench Height - Strike Length - Slope angle - Average Dip - Thickness of ore body
- Total tunelling (for underground mine) - No of levels - Stripping ratio
- Explosives used - Powder factor - Explosives cost - Noof Quarry - Ore inventory at mines
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
- CrFe ratio
Transportation and despatch related details - Transportation cost - Wagon loading cost - Amount of ore despatched through road and rail - No of sidings being used - Reliability of quality of despatched ore - Inventory at railway siding - Turnaround time for rake - Availability of rakes - Vehicle waiting time - Noof truck movementsday - of rejection in sorting of ore - Utilisation of fleet
Ferro Alloy Plant Related DetailsManpower details (overall)
- Executive - Non-Executive
Manpower details ndash plant wisefurnace wise - Permanent
- ContractManpower productivity (including contract staff)
- OutputManshift (MT) - ProductionManday (MT)
Manpower productivity (excluding contract staff)Operations which are outsourced and no of contract employees usedFurnace availability (without breakdown)
- Plant availabilty in terms - Time utilisation in terms
Cost data fines generation in processing Power Factor
Load FactorMethod of Casting of Tapping materialCustomer feedback systemPower consumption (Million KwH)
- 2003-04
- 2002-03Power Cost (Rsunit)
- 2003-04
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
- 2002-03Power Consumption Norms (KwhMT)
- HC FeMn - MC FeMn - SiMn - FeCr
- FeSiMaintenance costCapacity utilization
- 2003-04
- 2002-03MnFe ratioCrFe ratio
MnSiO2 ratioChrome recovery Mn recovery Cr in oreMn in ore
Fe in oreSiO2 in oreMn in alloyCr in alloy
MnO in slag Cr2O3 in slag losses in fumeRaw material consumption details
- Manganese Ore (MT) - 2007-08 - 2006-07
- Chrome Ore (MT) - 2007-08 - 2006-07
- Coke (MT) - 2007-08 - 2006-07
Raw material consumption norms - Specific Mn ore consumption (KgMT)
- Specific Cr ore consumption (KgMT) - Specific Carbon consumption (KgMT)
Market
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Exported to
Power Generation Related DetailsManpower details ndash Equipment wise Operations which are outsourced and the contract employees usedPower cost ndash breakup at various stages (including interest and depreciation)
Technology supplierEfficiency of the unit
Capacity and various equipment usedCost of various input usedMethod of waste disposal(qty of waste generationday)Capital cost of the projectPlant availability
Other DetailsAccreditationAccident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious - Reportable
No of accidents per million hours workedFrequency (per thousand employed)
- Fatal - Serious - Reportable
CIFR (no per million hour worked)Sick leave days (per million hours worked)No of cases of occupational illnessTraining cost as of total remunerationTraining dayspersonNo of saplings planted every year at mines and Ferro alloy plant
- 2003-04 - 2002-03
Quality of water emitted from ferro alloy plantQuality of air emitted from ferro alloy plant
Noise level Illumination level at mines and alloy plantInstrumentsprocess used for different quality testsShareholding PatternsCycle time for carrying out different quality testsCSR
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Future Plan
Expantion PlanCapital Outlay Required
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Competitor-1
BISRA LIMESTONE AND DOLOMITE
The Bisra limestone and dolomite company was established in the year 1910 It has the share capital of Rs 50 crore It is doing business in mining and marketing of Dolomite and Limestone of various varitites The organisation has its mining leases in the District of Sundargarh called as Birmitrapur located in Orissa Due to alteration in steel making technology the demand for BSLCrsquos products has reduced in recent years considerably resulting in poor financial imbalance arising out of sharp fall in the organisation turn over
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
After this company came under the strong administrative control of the Ministry of Steel which comes under Government of India the Government extended its full support to the Bisra in the form of different Plan Loan Non Plan Loan as well as Grant in aid for validation of manpower The companyrsquos product mix was also altered and some measures were taken to improve for good quality of products Following upon taking such decisions the organisation have earned positive gross margin in its business That is called margin before charging its depreciation and its interest on Government Loan in the year 1996-97 The position however deteriorated once again from 1997-98 At the beginning due to some labour problem and there after due to demand constraints since 1998-99 arised out of recession in Steel Industry
With the Indian Governmentrsquos support the Bisra has taken vital major steps for rationalization of manpower through execution of Voluntary Retirement Scheme (VRS) The BISRA has been able to separate 3095 number of their employees through VRS from the period span of 141992 till 31032007 it had previously manpower strength of 5200 approximately as on 141992 the strength now as on 310307 stood at only 1234 This has enabled company to control the wage related and other types of cost to some significant extent
But now Recessionary trend in the steel sector are over and demand position has little bit improved the Bisra has been making effort to step up production and dispatch of its products The company has taken appropriate best steps for development of the new business areas
in the leasehold areas Bisra is making of new technology Crushing Plant with additional crushing capacity and also modification and up gradation of the present Crushing Plants and Railway siding It has signed MOU with Steel authority of India for delivery of its products to SAIL Steel Plants in the Eastern areas With all these important steps the organisation position has improved and it has been getting positive gross margin in the business before charging the interest on Government provided loan and its depreciation
Information Parameters BISRA
Incorporated in 1910Founder bird groups
Location
The Bisra Stone Lime Company LimitedFD-350 Sector ndash IIISalt Lake CityKolkata ndash 700 106
Key PersonsShri K L Mehrotra Shri M S Barpanda Shri Tapan Biswas
PRODUCTION amp DESPATCH Limestone (MT) Output 282690
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Dispatch 242340Dolomite(MT) Output 830638Dispatch 827017Land (Free hold) (RS) 864068Land (lease hold) (RS) 1597111Buildings (RS) 10862507Machinery amp Plant (RS) 142334156Earth Moving Equipment (RS) 44847219
Electric Machinery amp Plant (RS)amp General Electrification 9768039Siding (RS) 5229900Pipe Line (RS) 785190Furniture (RS) 1021723Motor Car Lorries amp Bus (RS) 2106299Tractors (RS) 1036661Bridge (RS) 73690Water Supply (RS) 2255157Mines Office
Birmitrapur Dist - Sundargarh (Orissa)Tel (0661) 26102702610236 Fax (0661) 2610270
MINING LEASES
The Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Finally it has to be approved by the Steel Minister Government of Orissa for grant of lease renewal
Mines area 75 km in length Total reserves available for mining (in Tonnage) 30000MTManpower 1234Products limestone and dolomitesales turn-over Rs 4632 lacsConservation of Energy The Company consumes
purchased electricity
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Technology Absorption The Company has not absorbed any specific technology for its operational activities
Financial details Share Capital (RS) 50000000Reserves amp Surplus (RS) 292110Loan Funds (RS) 6144790653Fixed Assets (RS) 36269964Inventories (RS) 37602504Sales turn-over (RS) 463159455Interest Earned (RS) 308552Other Income (RS) 799899Employees remuneration and benefits (RS) 107375629Consumption of Stores amp Spare Parts (RS) 5129253Power amp Fuel (RS) 34097701Royalty (RS) 67348479Loss for the Year (RS) -816132721CURRENT LIABILITIES Sundry Creditors (RS) 73175954Advance from Customers (RS) 10501611Sundry Deposits (RS) 17090352Interest accrued but not due on unsecured loans (RS) 2758997SALES Limestone (RS) 93966580Dolomite (RS) 317457255Reject Boulder (RS) 51735620Purchased power (RS) 18382554
Turnover (RS) 4632 lacs
Earnings Per Share in Rs (RS) NIL
sizes of dolomite
3mm +3mm to 6 mm and +6 mm to 15 mm and 15mm to 50 mm
Chemical Specification SiO2 450Mgo 1950Parameters
CaO 28-30
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
MgO 19-20
SiO2 6-7
Al2O3 140Fe2O3 090Total alkali 040Market
Exported todomestic organizations nilanchaladhunik steel etc
Power Generation Related Details Manpower details ndash Equipment wise NA
Operations which are outsourced and the contract employees usedscreening and crushing of ores
Power cost ndash breakup at various stages (including interest and depreciation) purchased from outsideTechnology supplier BHELABBjaypeeEfficiency of the unit NA
Capacity and various equipment used heavy mining equipmentsCost of various input used NA
Method of waste disposal(qty of waste generationday)
filteringcleaning and then disposing to nearby scrap area through pipelines
Capital cost of the project 05 CrPlant availability NAOther Details
Accreditation Ministry of Steel Government of India
Accident amp Incident Statistics for their Mines Ferro Alloy Plant and Power Plant
- Fatal - Serious 2 - Reportable 5
No of accidents per million hours worked Frequency (per thousand employed)
- Fatal - Serious
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
- Reportable CIFR (no per million hour worked) Sick leave days (per million hours worked) No of cases of occupational illness 42Training cost as of total remuneration Training daysperson Quality of water emitted from ferro alloy plant 2 Nitric acidQuality of air emitted from ferro alloy plant under pollution controlNoise level Illumination level at mines and alloy plant undercontrol
Instrumentsprocess used for different quality tests
Dust extraction system of latest technology has been installed in the Crusher plants
Shareholding Patterns Cycle time for carrying out different quality tests At fixed intervals
CSR
The company keeps close relations with Birmitrapur Municipality for providing good drinking water it has constructed of dug-well renovation of ponds in its area maintenance of the village roads and good education facilities and free hospitals facilities to the family members of the employee as well as local villagers of that area
Future Plan
Expansion Plandue to loss till date no expantion plan
Capital Outlay Required NA
ANALYSIS OF BISRA LIME AND STONE
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
GENERAL WORKING OF THE COMPANY
The Bisra limestone and dolomite company has achieved total sales turn-over of Rs 4632 lakhs during the year under assessment registering an increase by 2287 from that of the last year (Rs3770 lakhs) This rise in its sale value has been possible because of over-all improvement in the condition Both production and dispatch of dolomite and limestone have been augmented There has been also various rise too in selling prices of its products and which has also contributed to the increase in sales value in present year
The Bisra achieved during this year positive gross margin before charging its depreciation and interest on government loan to the amount of Rs12031 lacs However their net loss has greater than before to Rs 826133 lakhs for the year against Rs676474 lacs for the last year due to some compounding effect of interest and penal interest on the government provided loan The cumulative loss amounted to Rs6208942 lakhs from Rs 5392809 lakhs for the previous year
FUTURE OUTLOOK
With the fast growing trend in the Steel Industry demand of dolomite and limestone has remained stable in recent years The demand for dolomite and limestone is expected to be encouraging the position in coming years also unless there is any big change in the steel making technology In the current situation of booming Steel Industry organisation performance is expected to be remaining at moderate and satisfactory level The company is making all practices to gear it up to meet the challenges of favorable market for running business With abundant reserves of good cement grade limestone in the leaseholds the company has kept its hard work on for diversification either by entering into a different contract of sale of cement making limestone and setting up a cement plant on its own Bisra future steps will depend on the planned re-structuring and re-organization method of the organisation as well as the whole groups
MINING LEASES
The Bisra limestone and dolomite Mining Lease is under consideration of the Secretary of Department of Steel and Mines which is under Government of Orissa Now it will be permitted by the Steel Minister of Government of Orissa for grant of lease renewal
VOLUNTARY RETIREMENT SCHEME
Through execution of Voluntary Retirement Scheme (VRS) for a past many years 3194 numbers of employees could be removed till 30-06-2007 with an outgo of Rs 3193 crores It has Rs
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
2042 crores towards funding in aid and Rs152 crore towards non-plan loan received from the government of India The Bisra has next programme for rationalization of their skilled and unskilled manpower with a view to decreasing the manpower cost
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
a) Conservation of EnergyThe Bisra Company consumes purchased electricity for production Vital steps are taken by the Bisra Company to decrease the power consumption
b) Technology AbsorptionThe Bisra Company has not absorbed any new specific technology for its operational activities for making its products
c) Foreign Exchange Earnings and OutgoThere were no transactions in foreign exchange during this year
8 PARTICULARS OF EMPLOYEES
With Provision of Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is not concerned in respect of remuneration of any employee of the organisation
WELFARE ACTIVITIES
Notwithstanding the financial constraints the Bisra Company attributes more importance to the different welfare activities for its employees and their families for employee satisfaction and also for local villagers who live nearby the mines areas in reflection of the socio-economic needs of the region
i) Bisra organisation keeps close relations with Birmitrapur Municipality for providing good quality drinking water it has constructed many dug-well renovation of different ponds and maintenance of the roads of nearby area and free education facilities and free hospital facilities for the family members of the employee as well as local villagers of that particular area
ii) Bisra company participates in various Health related Care Camps throughout the year which is organized in that area such as eye testing camp family related planning camp children pulse polio drive etc
iii) Bisra company extends its full hearted support to the Birmitrapur Municipality for development of new roads construction of ponds and cleanliness in the local area
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
STEPS TAKEN FOR POLLUTION CONTROL
To keep the environment clean and safe nearby the mining zones for pollution free atmosphere the following different steps have been taken by the company
i) It has installed Dust extraction system in the Crusher plants
ii) Dust suppression at heave road and crusher point is made by deploying one hired truck mounted with water sprinkler
iii) Time to time Environmental monitoring have been done to study the pollution towards different areas such as water air and noise to take appropriate protection and steps through approved agency and their reports are sent to MOEF and State Pollution Control Board of India
iv) During the year 2007-08 6500 numbers of saplings have been planted at the road-side of Office to Lime furnace Siding to capture the flow of harmful dust towards National Highway
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
competitor-2
XSTRATA ALLOYS
Information Parameters XSTRATA
Incorporated in 1926Founder Willy Strothotte Chairman
Location
Bahnhofstrasse 2 PO Box 102 Xstrata Alloys headquarters are located at Portion 27 Waterval 306 JQ Rustenburg South Africa
Key Persons
CEO Micheal L DavisCFO Trevor L Reid
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Products
Xstrata Alloys company is a producer of Ferro chrome as well as primary vanadium Xstrata Coal is an exporter of thermal coal and a producer of hard coking coal and semi-soft coal Xstrata Copper is a copper producer with mining and processing facilities located in Australia Chile Peru Argentina and Canada Xstrata Nickel is a nickel and cobalt producer Xstrata Zinc is a miner and producer of zinc
Website httpwwwxstratacomNo of Employees 40049
Capacity (MTPA)The run-of-mine capacity is 60000 tpm
Production trends (tpa) Xstrata-Merafe PampS venture has a combined production capacity in excess of 2 million tone of Ferro chrome per annum
Manpower used 43000 - CrFe ratio Ferro chrome is a corrosion-resistant alloy of
chrome and iron containing between 35-37 iron and 49-52 chrome
Transportation and despatch related details Because of distance between the mines and smelters Xstrata Alloys uses haul trucks to transport products
Financial details Revenue 2007 28542Revenue 2008 27952EBITDA 2007 10888EBITDA 2008 9657EBIT 2007 8792EBIT 2008 7261Attributable profit 2007 5424Attributable profit 2008 4698Earnings per share 2007 560Earnings per share 2008 490Cash generated from operations 2007 11046Cash generated from operations 2008 8888Net assets per share 2007 2629Net assets per share 2008 2551Dividends per share 2007 50Dividends per share 2008 18Total recordable injury frequency rate 2007 123
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Total recordable injury frequency rate 2008 101Key locations South Africa
Boshoek plant BoshoekLion plant SteelpoortLydenburg plant LydenburgRustenburg plant RustenburgWonderkop plant MarikanaBoshoek opencast mine BoshoekHorizon mine PilansbergKroondal mine RustenburgThorncliffe mine SteelpoortHelena mine SteelpoortWaterval mine RustenburgRhovan V2O5 and FeV BritsMaloma mine Maloma SwazilandChar Technologies WitbankAfrican Carbon Manufacturers WitbankAfrican Carbon Producers WitbankAfrican Fine Carbon MiddelburgAfrican Carbon Union WitbankMototolo SteelpoortEland Brits
Contribution to Group Revenue $2002mContribution to Group EBIT $1007mAverage number of employees in 2008 9476Employees Turnover 2007 740Employees Turnover 2008 1240ofwomen in theworkforce 2007 940
ofwomen in theworkforce 2008 11 of female managers 2007 13 of female managers 2008 15
Average training hours per employee 2007 32
Average training spend per employee 2008 38New occupational illnesses 60New occupational illnesses by type Dermal conditions 8Respiratory conditions 1000Musculoskeletal 27Noise-induced hearing loss 55Total recordable injury frequency rate 101Lost-time injury frequency rate 270Corporate Social Involvement ($m) 841
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
environmental incidents 8incidents by type Storm water discharges off-site 1Breach of air emissions limits 1Ground contamination 3
Water contamination 3Greenhouse gas emissions (CO2-e mt) 269CO2-e by CBU ( of Group total) Nickel 900Copper 12Zinc 16
Coal 33Alloys 30
Energy usage (PJ) 12710
DETAILS () Natural Gas
6 Naphtha
7 Other fuels
14 Diesel
21 Coalcoke
3 Electricity
49
Fresh water use (ML) 170000Recycled water use (ML) 520400Production Ferrochrome (kt) 1126Ferrovanadium (k kg) 3622V2O5 (k lbs) 16604Platinum Group Metals 222516
Average prices Chrome (UScentlb) (European benchmark) 1758Ferrovanadium (US$kg) (Metal Bulletin) 612Vanadium pentoxide (US$lb) (Metal Bulletin) 135Platinum ($oz) 1578
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Palladium ($oz) 353Rhodium ($oz) (Metals Week) 6483Alloys Financial data Revenue ($m) 2002EBITDA ($m) 1094EBIT ($m) 1007Share of Group EBIT () 139Capital expenditure ($m) 222Xstrata Alloys operation (KT) Boshoek plant 190Lion plant 242Lydenburg plant 283Rustenburg plant 302Wonderkop plant 400Boshoek opencast mine 1331Horizon mine 38Kroondal mine 1134Thorncliffe mine 1150Helena mine 434Waterval mine 66Rhovan V2O5 16604Maloma mine 280Char Technologies 92African Carbon Manufacturers 125African Carbon Producers 124African Fine Carbon 101African Carbon Union 102Mototolo 158Eland 145Market Exported to
Key Status amp Ratio
The Company focuses on seven international commodity markets copper coking coal thermal coal ferrochrome nickel vanadium and zinc with additional exposures to gold cobalt lead and silver Xstrata plcrsquos operations and projects span 19 countries Its activities are organized into five global commodity businesses alloys coal copper nickel and zinc and a technology business
Net Profit Margin
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Operating Margin 1382EBITD Margin 2085Return on Average Asset 2938Return on Average Equity 719EPS 1543PE 131
596
ANALYSIS
Xstrata Company is a global world diversified mining group it has been listed on the London as well as Swiss Stock Exchanges Xstrata has headquarters in Zug located in Switzerland
Xstratarsquos businesses has made a top position in seven major international commodity markets throughout the globe like copper Ferro chrome coking coal thermal coal nickel vanadium and zinc with their latest recycling facilities additional exposures to gold cobalt lead as well as silver and a suite of top class global technology products many of which have made them industry leaders
The Xstrata Groups business operations and their projects are spanning in different 18 countries of the world they are Canada Argentina Australia Papua New Guinea Brazil Chile Colombia Philippines the Dominican Republic Spain Germany New Caledonia Norway Peru the South Africa Tanzania the USA and also UK Xstrata employs near about 43000 people both skilled and unskilled including contractors
The Xstrata company exports coal from and makes Ferro chrome amp vanadium at South Africa and Australia mines and smelts zinc in Spain through subsidiary Austrians de Zinc and in Germany and it has mines anthracite also in Swaziland
Xstrata plc was established in year 2002 when Xstrata bought Glencore Internationals coal assets for entering into business In this year the company acquired MIM Holdings a deal that increased approximately doubled Xstratas coal and zinc holdings in market
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Coal accounts for not fairly half of its sales and Xstrata is among the worldrsquos largest and top coal exporters Credit Suisse Group and Glencore has share of 24 and 16 respectively of Xstrata coal business
3 major and top level companies which are named as Cerrejon Coal Tintaya Copper and Falconbridge Ltd acquired in year 2006 which created an exceptional wide range of organic growth option in business Cash acquisition of total $196 billion was completed and also maintaining grade credit rating of products It has a ratio of 42 at year ending and Performa operating cash flow of approximately $95 billion
Total Annual synergies of Xstrata are $546 million confirmed with Falconbridge acquisition by the company Cost of mining inputs like labour mining consumables and equipments continued to increase in the year 2008 $57 million of real cost saving was achieved during the last financial year
Due to Confirmed increased resources at different parts like Wandon for thermal coal Antapaccay Mount Isa Alumbrera Las Bambas ampTampakan for copper Raglan Kabanga Araguaia for nickel productions New Projects are also commissioned such as on time amp on budget at Rolleston Thermal Coal Wollombi coking coal Lion Ferrochrome Mototolo PGM and Lennard Shelf zinc-lead
The origins of Chrome Resources lie in the acquisition of the Chroombronne mine in the Western Belt in year 1987
Sales by Percentage ( ferrochrome )
5 13
34
48
Africa North America Asia Europe
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Mine Details
Kroondal Mines
The run-of-mine capacity of Xstrata at Kroondal has increased to 110000 tpm from 80000 tpm a from few years ago Their Operations at the mine have been 100 mechanized with the help of latest technologies thereby it has reduced the labour content of their total costs Since year 2001 the mines has been accessing reserves which is held by global Ferro chrome player Samancor this ore being fed to the two new latest made furnaces at Wonderkop (5 and 6) which run as run as a joint venture Kroondal has a further estimation of 20 years life and this could be extended to 40 years if new reserves will be developed Now it is extended up to year 2016 Kroondal and Marikana have combined chrome reserves of 20-million tones and the Wonderkop have joint venture consists of two semi closed furnaces and a recovery plant with a production capacity of 191 000 tons per annum
Waterval mines
The Waterval section of mines was developed from the dormant Cashan mine acquired in the year 1992its Production was again restarted in year 1994 and a surface treatment plant was made in March of year 1995The Waterval capacity was quoted as 61000 tpm run-of-mine (500000 tons per annum) in year1997 but it was subsequently downgraded to 30-40000 tpm in year 1998 and year 1999From year 2000 its operations were merged into those of the Purity mine to create an operation which is called as Waterval East having a theoretical capacity of 61000 tpm run-of-mine basis though the production at the start of year 2002 was just near about one-third of this level A latest mining operation known as Waterval West began production in year 2001 and is likely to reach full capacity of 100000 tpm from by the end of year 2003
Wonderkop mines
Wonderkop mines were started in year 1996 in tandem with the newly commissioned fifth and sixth Fe Cr furnaces The run of mine capacity is around 60000 tpm Ore from the plant is carried and transported to the short distance to the smelter by means of a conveyor belts Productions and Operations at Wonderkop have been scaled back since year 1998 in preference to using ore from other mines it has been sourced from platinum mining In year 2001 there was no production at Wonderkop mines and the mine remained closed at the starting of year 2002
Thorncliffe mines
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Thorncliffe mines were developed at the period of 1996-98 first and foremost to meet the ore requirements of the Lydenburg plant which is 60 km away The mine production was displaced a longstanding contract that CMI Lydenburg held with Samancorrsquos Winterveld mine for the supply of ore fines in the international market Open cast operations started at Thorncliffe mines in year 1996 at a fast rate 40000 tpm run-of-mine to a depth of 30 meters Underground mining started in month of May 1997 and in year 1998 the ratio of open pit to underground ore extracted was 12 Open-cast mining at Thorncliffe stopped completely from month of April 1999Three incline shafts provide access to the ore body up to 300 meters below the surface These Reserves are sufficient for at least next 40 years at the recent level of mining The total capacity at Thorncliffe is near about 120000 tpm run-of-mine Yields at Thorncliffe are up to 86 as opposed to 70 at the Rustenburg mines because of the thicker seams of 18-2 meters it has higher ratio of the lumpy ore and low angle of the seam of 11deg
Townlands mines
In month of July 1997 the Xstrata company purchased the Townlands chrome ore deposit near Rustenburg but its development was subsequently delayed by third party claimsThis deposit has been estimated to contain up to near about 100m tones of ore and it is likely to be developed in conjunction with good infrastructure at the Purity mine The production capacity has been estimated approximately to 100000 tpm run of mine Three incline shafts were providing access to the ore body up to 300 meters below the surface It has Reserves which are sufficient for at least next 45 years at the current level of mining The total capacity at Thorncliffe mines is near about 120000 tpm run of mines It has Thorncliffe mines are up to 85 as opposed to 70 at the Rustenburg mines due to the thicker seams of 18-2 meters higher ratio of the lumpy ore and low angle of the seam 11deg
Xstrata was started development in year 2007 with outstanding organic growth prospects a strong and fair balance sheet and a diversified portfolio of cash generation and and efficient operations for production Xstrata has a very highly motivated and well efficient entrepreneurial team for managing business efficiently throughout globe year 2007 was a seminal year for Xstrata With its strong commodity prices and increase in base metal prices Xstrata had a very good sustainability
1 Company transforming
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
2 incremental acquisitions were integrated at the end of year 2007The group spend about $202 billion for this work Xstratarsquos transformation and growth has taken place during an exceptional time when in commodity market their commodity prices near their all time low
Xstrata Alloys continues to make market leadership in the Ferro chrome market as an international player In February of year 2007 the group concluded ZAR 575 million contracts with the Bakwena Ba Mogopa community This added value to Xstrata Alloys for doing smooth business The Lion project and Falconbridge acquisition has boosted the market position greatly up to higher levels
Xstratarsquos commodity business continued to grow towards their goals of zero harm in the world market Xstratarsquos Kroondal Mines Waterval Mines East amp West together Thorncliffe Mine and Wonderkop Mine together have total reserves up to of 300 MT So this huge potential lies within to expand further by Xstrata With their ongoing operations and mine capacities has increased due to recent acquisitions Xstrata continues an excellent market positioned is expected to grow further in coming years
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
competitor- 3
OUTOKUMPU
Information Parameters OUTOKUMPU
Incorporated inFounder Location Corporate Management
Riihitontuntie 7 BPO Box 14002201 ESPOOFINLAND
Key Persons VICTOIRE DE MARGERIEANNA NILSSON-EHLELEO OKSANENLEENA SAARINEN
Sales (2008) Stainless steel deliveries (2008) 1 423 thousand tonsMain products Cold and hot rolled stainless steel coil
sheet and plate quarto plate thinstrip tubular and long products
Grades Full range of standard and high alloyed austenitic grades as well as ferriticduplex and manganese grades
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Dimensions Cold rolled flat products in thickness range from 012 mm to 65 mm Whitehot strip and hot rolled plate in varying widths and thicknesses Full range of tubular products from hygienic tubes to heavy walled pipes
Customers Distributors re-rollers and further processors tube makers as well as enduser and project customers in different industrial segments
Typical customer industries using stainless steel Architecture Building and Construction Chemical Petrochemical and Energy Architecture Building and Construction Chemical Petrochemical and EnergyTransportation Catering and Appliances Process Industries and Resourcesand various other industries and applications
Main production facilities Finland Sweden the UK the US the Netherlands
Sales companies and service centers A comprehensive network of sales companies and service centers in some 30 countries
Financial data Sales euro million 5 474 Operating profit -63Non-recurring items in operating profit euro million -83Profit before taxes euro million -134Non-recurring items in financial income euro million -21Net profit for the period from continuing operations euro million
-110
Net profit for the period from discontinued operations euro million
-79
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Net profit for the period euro million -18900Capital employed on Dec 31 euro million 386700Return on capital employed -2Net cash generated from operating activities euro million 656
Capital expenditure euro million 544 190Net interest-bearing debt on Dec 31 euro million 1072Equity-to-assets ratio 524Debt-to-equity ratio 384Earnings per share euro -105Earnings per share from continuing operations euro -061Earnings per share from discontinued operations euro -044Equity per share euro 155Dividend per share euro 1Share price on Dec 31 euro 8Market capitalization on Dec 31 euro million 150200Stainless steel deliveries 1 000 tons 142300Stainless steel base price 2) euro ton 118500Personnel on Dec 31 continuing operations 8471Electrical energy 43of total production costs
OUTOKUMPU STAINLESS STEEL DELIVERIES
15
32cold rolled 739White hot strip 330Quatro plate 120Tubular products 70Long products 5500Semi-finished products 109Total deliveries 1423Salesperson euro million 06Incentives of total remuneration costs 490Training costs of total remuneration costs 14Training daysperson 3EMISSIONS INTO THE AIR Although dust emissions have
traditionally been the most significant class of emission from the steel industryemissions of dust by Outokumpu have decreased in the past years despite an increase in production
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
levelsThe majority of particulate emissions by Outokumpu originate from the steel mills in Tornio and Avesta and the hot-rolling mill in New Castle in the usIn 2008 Outokumpursquos carbon dioxide emissions totaled 871 000 tons(2007 932 000 tons)
WASTE The major waste streams from Outokumpursquos stainless steel operations are slags sludges dusts and scales Whereverpracticable wastes are collectedand recycled to recover valuable alloying elements such as nickel chromium and molybdenum
INJURIES(EMPLOYEES AND CONTRACTORS)
9
ENVIRONMENTAL INVESTMENTS At the beginning of 2008 Outokumpu announced that it would invest eur 5 million in an environmental target to be decided through a Group-wide competition to combat climate changeProposals were supposed to present innovative solutions for either lowering Outokumpursquos carbon dioxide emissions or reducing the amount of wastegenerated
SHARE-RELATED KEY FIGURESEarnings per share euro -105Equity per share euro 155Dividend per share euro 05Dividend payout ratio NegDividend yield 6Priceearnings ratio neg NegDevelopment of share priceAverage trading price euro 633Lowest trading price euro 3399Highest trading price euro 828
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Trading price at the end of the period euro -61Change during the period -534Change in the OMXH index during the period 1492environmental responsibility
Customers from the process industry and industrial machinery to building construction and electrical industry transportation electronics and information technology as well as catering and households
expansion plan
ANALYSIS
OUTOKUMPU is an also international global leader in the market of stainless steel Its long term vision is to be the undisputed number one in stainless steel producers with success based on operational excellence at different levels It has Customers in a wide range of industries with worldwide use of their stainless steel products and services It is Being fully Recyclable and maintenance of free as well as very well-built and durable material stainless steel are one of the key building blocks for ustainable expectations Outokumpursquos does business in mostly 30 countries and employs near about 8 000 people The Outokumpursquos head office is located at different places like Espoo and Finland Outokumpursquos has also been listed on the NASDAQ and OMX Helsinki since year 1988
Outokumpursquos market position
The global stainless steel market totals 27 million tons or some euro 80 billion During its past twenty years Outokumpursquos consumption has grown at near about rate of 5ndash6 per year In Europe the Outokumpursquos Grouprsquos main business market places the market size are total of 423 million tons and its consumption has grown up by 25 yearly In recent years the prime growth globally has occurred in country China with a growth rate of about 15 yearly
Outokumpursquos is one of the worldrsquos best quality steel makers of world Top manufacturer of stainless steel with main manufacturing as well as production facilities are located in different parts of the world like Sweden Finland UK US and Netherlands Outokumpursquos melting capacity is near about of total 256 million tons per annum and its finished products capability for cold rolled material as well as white hot strip rolled material is 16 million tons per year Outokumpursquos have also yearly production capacity of 03 million tons of long products and plate of different sizes and varieties In global method Outokumpursquos biggest workplace is Tornio
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
Works which is located at Finland it is one of the top worldrsquos most economic cost levels and the best integrated single-site of Stainless steel production facilities
At work place of Tornio Works at Finland Outokumpu mainly produces high volume standard quality and grades of stainless steel as well as Avesta integration which is located in country Sweden is focusing greater on customer required special grades and products Outokumpursquos has an 18 of total share of the stainless steel coil market in continent of Europe and just a 6 share on the other parts of world Outokumpursquos main markets are basically located European markets it has achieved 78 of sales in year 2008 in Asia it has achieved 8 as well as in North and South America is 11 of sales
RAW MATERIALS
Carbon steel and Recycled stainless as well as ferro chrome and nickel are the important necessary raw materials which are used in production of stainless steel Ferro chrome and mainly nickel are the most vital raw materials for manufacturing steel Outokumpu has its own chromite mine at place called Kemi and a ferro chrome smelter at Tornio both are located in Finland Carbon steel and Recycled stainless as well as nickel and some of the ferro chrome are brought from open market
ENERGY
Electrical energy consumption accounts for approximately 4 of its total production and manufacturing costs The more electric energy are mainly consumed by its Tornio ferro chrome smelter and the stainless steel melt shops in Tornio which is located in Finland Avesta at Sweden amp Sheffield at Britain
SHORT-TERM ACTIONS
Outokumpu is facing this situation from a strong financial condition It has a healthy Balance sheet its debt maturity profile is properly balanced and their cash flow is sounds good for current business scenario As a top organization however they have to be ready for a situation in which business in the markets will remain poor for some time ahead So we can say that outokumpu has made some decisions on key actions in the month of December and January that plan at maximizing in their short-term cash flow and ensuring financial flexibility
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
The important key actions of outokumpu are
It has focused in Cost reductions in both variable and fixed costs they have reduced The main target for fixed cost savings is in the range of approximately euro 100 million for 2009
Well-organized management of inventories and procurement to make sure to do working capital reduction for the company
It has done Postponement of investments in huge amount in year 2009 This investment program was limited up to approximately euro 300 million in the year of 2009 and it has shown reduction of more than euro 500 million compared to the previous original plan
STRATEGY
Outokumpursquos strategy mainly aims at making a more balanced and predictable business form Some of the important key components in its strategy are increasing it sales to end-users of products and also to project customers by making greater stable deliveries to distributors and increasing Sales of the special products and ferritic (non-nickel containing) grades To maintain the realization of these types of vital strategic goals a new well maintained commercial organization structure was made recently The key concept in this new structure is the making of a customer segment groups whose main work is to understand the needs and wants of different types of target customers
The segment teams unite the expertise of the customer and product awareness RampD hold and supply chain ability The acquisition of the Italian distributor So GePar during the summer of year 2008 was a very important and vital step forward in end-user customers of the market The acquisition brought United States big customer base and good quality service center operations in Italy amp UK both of which are strategically important markets for Outokumpu for doing the business Their strategy is to develop a more balanced and stable business model which is
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
remains valid even though some of the related earlier Decided investments which are now postponed for some times
Now at present Outokumpursquos have sufficient available capacity to sell more special products and ferritic quality grades and to increase both project business and end-user their new organization is well suited for handling this type of challenge
OUTOKUMPUrsquoS KEY STRENGHT
It has Fully-integrated and globally cost-competitive production plant located in Tornio It has the leading position in specialty products of different qualitiesThey have Strong customer orientation for doing the business effectivelyThey make Highly-recognized product of different varieties and of process development It manly Focus on continuous improvement and excellence for its business
FOUR MAIN TYPES OF STAINLESS STEEL
They have Different types and compositions of stainless steel which are developed for different end-user working The four main grades are mainly austenitic ferritic ferritic-austenitic and martensitic steel All grades of stainless steel mainly contain of an approximately of 105 of chromium Outokumpursquos main product is austenitic stainless steel which mainly has near about 8 nickel in totaling to 18 chromium Ferritic stainless steel does not have nickel in the production of steel but chromium is mixed up to 24 Martensitic stainless steel contains mainly around 11ndash13 chromium in its product Ferritic-austenitic types of steel mainly contain 15ndash5 amount of nickel and they are very strong and hard and corrosion Resistant In the product of steel Outokumpursquos duplex steel grades are mainly of ferritic-austenitic which is containing only small proportion of nickel in its product
SERVICE CENTERS AND RETAIL SALES CUSTOMERS
As of January 1 2009 Outokumpursquos have made service centers and retail sales have been organized as a third sector in Group Sales and Marketing for doing the business properly in the market
Stock amp Processing Operations Retail Sales
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
There is a key channel is made for serving in better way both for end-user and project customers is the Grouprsquos arrangement of stainless steel as well as service centers Outokumpu is recently expanding its capacity at the Grouprsquos service center at Willich which is located in Germany with the expanded capacity coming on full growth in year of 2009 A Greenfield service center being built in Shanghai China its main objective is to process mainly special grades operational in year 2010 Other service center projects are also planned for different locations of the world such as Poland Southern Germany France and India have been temporarily postponed due to of the global financial crisis and the weaker stainless steel market In year 2008 Outokumpu completed the acquisition of So GePar it is distributor based of Italy Which increased the Grouprsquos service center capacity by near about of 16 million tons yearly The So GePar units were included into the Grouprsquos commercial organization on January 1 of year 2009 Outokumpursquos Retail Sales serves a huge number of smaller local customers of service centers which are not allocated to End-user and Project clusters
TRAINING AND DEVELOPMENT
Continuous Outokumpursquos training and development programme is one of the important priority areas of Outokumpursquos human resources plan The Group offers much number of different types of development programs and creates opportunities which will mainly focus on developing employeesrsquo skills and competence in the work Outokumpu wants to maintain its position as the cost leader in the stainless steel market Outokumpu has been running so called Operational Excellence programs since 2005 These types of programs mainly consist of new methodology of theoretical training real project work amp leadership training
A new type of ldquoStainless Prordquo an international program for graduates with a university level degree was started in year 2007 Few new trainees started the program in September of year 2008 During the period of this two-year program trainees are given the chance to work in different parts Outokumpu business units The total Training costs in year 2008 was 14 of total salaries The Group almost provided 28 training days per employee in the year 2007
THE NUMBER OF EMPLOYEES
In December of year 2008 the company employed near about 8471 people in different parts of the world covering almost 30 countries round the globe The average period of service was 15 years Its Personnel turnover in the year 2008 amounted to 7 and the average age of the companyrsquos permanent employees was near about 433
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
RISK MANAGEMENT
OUTOKUMPU generally works in accordance with the help of risk management policy which are approved by the Board of Directors The risk management policy mainly defines the objectives of organization its approaches and also its areas of responsibility of risk management Risk management supports the company strategy and it also helps to maintain a balanced risk profile from the point of view of shareholders as well as other stakeholders such as customers suppliers personnel and lenders which are related with the company in its business
Company has defined risk to be anything that may have an adverse effect on activities that the organization has undertaken to achieve its goals Risks can thus be called as threats or uncertainties or lost opportunities relating to present or future operations in the business
SHARES AND SHARE CAPITAL
On December 31 year 2008 Outokumpu has fully paid and registered its total share capital amounted near about euro 30846820110 and it consisted of near about 181451 883 shares in the market Each share of the company entitles its share holder to one vote at General Meetings of Shareholders
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
CONCLUSION
The three competitors of Tata steel of Ferro alloys Xstrata and Outokumpu are international level competitors while bisra lime and stone is domestic competitors
Xstrata have more number of mines at South Africa where they can produce Ferro alloys at cheaper cost They have the corporate office at different parts of world Xstrata is currently the worlds largest and amongst the lowest cost integrated ferrochrome producers in the world
The Groups operations and projects span 18 countries They have well trained manpower and management which is doing the business effectively across the globe Xstrata have made good infrastructure which are helpful in doing business effectively Operations at the different mine have been 100 mechanized there for it has reduced the labour content of its total costs A huge prospective lies within to expand further for doing its business across the world with their recently ongoing operations and mine capacities and by the recent acquisitions Xstrata continues an excellent market positioned is expected to grow further
Outokumpu is also a global Ferro chrome producer It has maintained a global leadership in cost efficiency in high volume of its standard grades due to its integrated economic and with the help of recent technology production from chrome to stainless steel melting cold rolling as well as hot rolling A majority part of Outokumpursquos sales is reaching to the end-user of stainless steel through its strong marketing channels and distributors and further processors The company recent product portfolio mainly consists to a large extent of nickel containing stainless steel of different grades As nickel price is very volatile demand for these grades and products also tends to vary a lot
The majority of Outokumpursquos sales and almost all production sites are located in different parts of Europe In order to create a more balanced and stable business environment in the market outokumpu intend to increase the market share of sales to different types of end-user customers amp projects and to key distributors with more predictable order volumes Their mainly strong and well trained sales organization has been aligned and their service center network has been strengthened with the aim to better serve the different industries using stainless steel
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
BISRA lime and stone is a very small domestic level organization which produces limestone and dolomite It has a small capital comparing to other Ferro alloys market player Due to change in steel making technology the demand for BSLCrsquos products declined sharply at greater level resulting which financial imbalance arised out of sharp fall in the BISRA turn over It has signed into MOU with SAIL for dispatch of its products to SAIL Steel Plants which are located in Eastern Sector of India With all these steps the BISRA position has little bit improved and it has been achieving positive gross margin of profit before charging the interest on its Government loan and its depreciation
Recommendations
Tata steel has limited in-house smelting capacity so they should expand it
Tata steel should Attract amp retain talent
Tata steel should acquire additional mineral resource in India
Tata steel should do Utilization of waste
Limited availability of High grade Cr ore for COB so they should take new mines on lease for production of high grade cr
Tata steel has Space constraint for OB amp tailing storage so they should try to overcome this problem for doing business smoothly
Tata steel is Increasing depth of mines which is increasing in cost
Acquisition of new mineral resources in India amp Overseas
Tata Steel should Refine Manganese alloys to meet in-house requirement for LC FeMn LC SiMn Mc FeMn etc
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
IPI
Tata steel FA amp MD division should have own video conferencing room where they can interact with their customer directly at any time and provide support to them
Tata Steel FA amp MD division should work in two shifts (6 am ndash 2 pm) amp (2 pm ndash 10 pm) so that they can able to do their business round the globe according to the different country timings
Tata steel should do scanning of all types of bills and other documents which they keep in their file so that they can be stored in computer for easy access and long term preservation of data The backups of data should be kept at different locations of globe
Tata steel should outsource its work of mining to third party in South Africa so that it will reduce the cost of production
Tata steel should lease the maximum number of mines in Orissa so that they can able to meet demand
Tata steel (Tata centre Kolkata) can use high class technological security based on Biometrics principles so that 100 security can be provided from any type of threats like terrorist attack hackings etc
Tata steel FA amp MD division should make a ldquosmoking roomrdquo so that employee can smoke inside freely without any type of hesitations
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-
FIBRES 2009 (FA amp MD) 2009
REFRENCES
wwwtatasteelcom
wwwmjunctioncom
wwwcoolavenuecom
wwwxstratacom
www Outokumpucom
wwwbirdgroupscom
wwwyoutubecom
wwwmbajunctioncom
wwwscribdcom
wwwsciporg
wwwfuldcom
wwwcompetitive-intelligencecouk
Proven Strategies in Competitive Intelligence Lessons from the Trenches - John E Prescott and Stephen H Miller
Competitor Targeting Winning the Battle for Market and Customer Share - Ian Gordon
Steel journals and magazines
Tata steelrsquos databases
- ACKNOWLEDGEMENT
-