Global Marketing Strategies For Indian Firms

EXECUTIVE SUMMARY
Global marketing offers a way for companies of all sizes to grow by expanding
their customer base beyond the domestic market. However, the complexities of
global marketing demand careful planning and proper implementation.
This study has been conducted to gain knowledge about the potential strength of
Stainless Steel exports of China. The supply demand scenario, domestic steel
industry and the present and possible role of India was analyzed in case of
China.
To start with the Indian and the world Iron and steel Industry is studied and
comparative study of the performance of Exporting Countries and Indian industry
is analyzed.
India’s positioning in the global perspective will depend upon cost

competitiveness of the Indian. Besides the continuous emphasis is to given on
new technology/process/products developed, productivity improvement,
quality improvement. The Chinese steel market is one of the most active
markets in the world. China is a country with a dynamic economy whose annual
growth rate has stayed at 7-8 percent in the last five years.
After this China Customer are segmented, and the most attractive segments for
Indian Exporters are selected as target markets. The company studied is Jindal
Steel Ltd. Jindal Stainless is among the top twelve stainless steel producers in
the world along with Arcelor, KTS, Acerinox, Avesta Polarit, and POSCO etc. The
company itself has two offices in China and is a well-known brand in the Chinese
Stainless Steel Industry. It is a pioneer in the production of Chrome Manganese
Stainless Steel and last year 90% of Jindal Stainless' exports were to China.
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OBJECTIVES OF THE STUDY
Indian business firms are facing problems on the international

marketing front and the possible strategies the can employ for going
global and maintain their stride with global scenario
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Marketing Mix of Global Marketing
Marketing planning helps you decide what products or services are

required in your market, then how to sell them and what price to put on
them. So focus on the “seven P’s of marketing” — people, planning,
product, positioning, pricing, place and promotion.
People
The personal, cultural, social and psychological attitudes of your

customers are important. If you are going to meet their needs; do some
basic market research.
Planning
your market research needs to be analyzed and evaluated. You can then
start to predict the requirements of your customers.
Product (or service)
What makes your product different from that of your competitor? Can you
develop any brand values for your product? Decide what your unique
selling point is and work out how the customer will benefit from your
product or service.
Positioning
Differentiate your product from that of your competitors. Look for the gap
in the market for your product; work out why this gap exists. How big is
this market? Does it have short and/or long term growth potential? Decide
who your competitors are and how they will react to your plans. What
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makes your product special? How will you develop and exploit competitive
advantage; work out the best time to launch your product.
Pricing
What people feel about a product is reflected in what they are prepared to
pay for it. Identify what value your customers place on your product. Then
decide which market segment you will attack e.g. premium or budget.
What discount structure (if any) will you offer for volume. What will be your
pricing policy for agents, wholesalers and retailers?
Place
You may need to work out how your goods will move from where they are
produced to where they are sold. You may want to use wholesalers,
retailers or your own premises. Or will you use direct marketing,
telemarketing, or e-commerce via the Internet?
Promotion
This is the most visible aspect of marketing. It pulls together various

communication elements- Corporate identity; Branding; Advertising strategy;
Public relations, internal and external; Direct marketing; Sales promotion and
merchandising; Sales and sales management; Exhibitions.
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Developing Marketing Strategies
• Positioning and differentiating the market offerings through the product

lifecycle
• Developing new market offerings
• Designing global market offerings
This study will also be conducted to gain knowledge about the potential strength
of Stainless Steel exports of China. The supply demand scenario, domestic
steel industry and the present and possible role of India was analyzed in case
of China.
To start with the Indian and the world Iron and steel Industry is studied and
comparative study of the performance of Exporting Countries and Indian industry
is analyzed.
In the next step, the environmental analysis of China is done. The environments
selected included macro-micro economic environment, legal environment, social
environment, and business environment, of China.
India’s positioning in the global perspective will depend upon cost

quality improvement. The Chinese steel market is one of the most active
markets in the world. China is a country with a dynamic economy whose annual
growth rate has stayed at 7-8 percent in the last five years.
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The Iron and Steel Industry is one of the major foreign exchange earners, despite
of important role it plays in balancing India’s international trade. Steel has
pervaded our daily lives from the kitchen to hospital and industry. Because of
its ability to withstand corrosion, steel has found an indispensable slot even in
the medical world. Extensively used, steel is sudden in a wide assortment of
container industry, galvanizing units, engineering industry electrical industry,
re-rolling industry and heavy industry. Hence we can say that:
There is a little bit of steel in everyone’s life
Iron containing less than 2% carbon and less than 1-% silicon and not more
than a trace of phosphorus is what is usually termed steel. Carbon is the
principal hardening element in steel. The increment of carbon % within steel
increases the hardness of steel. The hardness becomes correspondingly less
in steel containing more than 85% carbon than low carbon ranges.
PRODUCTION PROCESS
There are two primary methods of making steel, differing in terms of the
process and raw materials used : the blast furnace route (BF) and the electric
arc furnace (EAF) route. In the BF process, the iron is first reduced with coke
in a blast furnace and then refined to produce molten steel, while in the EAF
process a mix of scrap and sponge iron is melted using electricity in an
electric are furnace to produce long and flat products.
Stainless steel is gaining recognition and it is considered as the friendly and

sustainable material because of its corrosive resistance and for its easy to clean /
hygienic surfaces. Its versatility, durability and its supraliminal quality makes
stainless steel the exceptional material of a choice for the new millennium.
Initially stainless steel found its applicability in cutlery and gradually into textile,
chemical and other engineering industries. Today its application has created
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wonders in the Architecture, Building and Construction (ABC) and Automobile,
Railways and Transportation (ART).
Stainless steel usage in the building and construction sector would increase in
the coming years. If the potential of the market is fully realized in terms of the
prospective end use sectors mentioned above along with the continuing growth
of the utensil market, the future growth rate of stainless steel can even be higher
than witnessed in the last decade.
INDIAN STEEL INDUSTRY
Indian Steel Industry is now going through a speedy growth path. In the global
scenario, China remains the world’s largest crude steel producer in 2008. China’s
steel sector has been following an upward trend, with sale of steel product
reaching their highest levels in recent years. Increased imports and decreased
export have combined to bring great pressure to bear upon china’s steel market.
The Antidumping Measure taken by the United States against China HR Plates
has seriously helped up China’s export.
In china the volatile Nickel price create uncertainty in the stainless steel market.
China’s Metal Sector has been enjoying a period of astonishing growth. Trend of
production and consumption are further elaborated with respect to category of
products like cold rolled flat, bars, wire rods and pipes. Stainless steel world has
a department specialized in research and intelligence to help meet the market’s
increasing need for the resolution of complex technological and informational
problem.
Stainless steel production in India is speedily increasing since the last three
decades. Initially India had to depend on foreign markets to meet its requirement
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of stainless steel. Today India is self sufficient enough to make stainless steel of
all grades, shapes & sizes and is also a major exporter of stainless steel of
utensil grade. In the Public Sector, the special steel plants of Steel Authority of
India Limited (SAIL) at Durgapur and Salem have made significant contribution
for the growth of this industry. Mukand Limited, Panchmahal Steel Limited, Shah
Alloys Industries Ltd., Jindal Strips Limited have also contributed significantly in
making India self-sufficient in stainless steel production. (William A. Johnson,
2001)
Most (around 75%) of the Indian stainless steel market is still in the kitchen
segment. Indian Railways is switching over to manufacture their passenger
coaches which will require 15 mt stainless steel per coach in coming 5 years.
The Indian government is using Ferric cold rolled stainless steel strips for
making coins. The main focus of Indian stainless steel industry is China which
still imports 90% of stainless steel. (William A. Johnson 2001)
EXPORTS FROM INDIA
Iron and steel exports from India started after 1964, the first time India’s supply
dominated her domestic needs. Though the Indian exports are quite vulnerable
to domestic demand conditions, the export market has been doing reasonably
well in the past few years, with FY03 seeing an increase of more than 100% over
the previous year. The increase in exports to Asia (approx. 227%) and America
(105%) has contributed to this massive growth. The abundant availability of raw
materials like iron ore and cheap manpower in India provide tremendous
potential for the iron and steel sector to grow. (Peter M Fish, 2003)
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The recovery of the steel sector witnessed in 2006-07 was carried forward in Q1
2007-08. Production and apparent consumption were higher by 8.4 per cent and
1.6 per cent, respectively. Production growth was 9.4 per cent in the flats
segment as against 5.7 per cent in the non-flat segment. Apparent consumption
growth in the flat and non-flat segments was —1.5 per cent and 5.1 per cent,
respectively.
The apparent consumption growth in the flat segment was negative despite a
positive production growth, due to sharp rise in exports coupled with a poor
domestic off-take largely due to the transporters strike in April 2003. Export
performance was remarkable with a growth of 38.6 per cent during the period.
Imports were higher by 26.8 per cent.
Export growth was higher for flat products (41.8 per cent) as against non-flat
products (21.8 per cent). Import growth was higher for non-flat products (42.9 per
cent) as against flat products (25.7 per cent). The capacity utilization (primary
and secondary producers) of crude steel production improved from 86.3 per cent
in Q1 2002-2003 to 92.0 per cent in Q1 2003-2004.
India exported about 3.85 million tonnes of stainless steel production in 2007-08.
Of these, low nickel high manganese grade hot rolled and cold rolled products
were 30,000 tones. In the 300 series, hot rolled and cold rolled products were
about 30,000 tones, Corex Furnace Bars 43,600 tones, wire and cables about
22,000 tones. The export of 400 series was 13,800 tones of which CF Bars were
9,200 tones and wire and coils about 3,400 tones. The export of utensils and
kitchenware during 2007-08 was about 80,000 tones. The value of utensil export
by India in 2007-08 was about US $ 47 million to Middle-East.
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STATEMENT OF THE PROBLEM
The study is intended to find the export potential of Stainless steel to Chinese
market, to reveal present pattern and possible future developments of supply,
demand and consumption in relevant product specific markets.
Jindal Strips Limited is the largest integrated producer of stainless steel in India.
It is Flagship Company of Jindal Group set up in 1970 under the visionary of Mr.
O.P.Jindal. Jindal Organization is ranked fourth amongst the top Indian Business
houses.
The company initiates developing new market for its stainless steel products
around four to five years back and has been able to achieve compounded
average growth. Jindal is the leader in domestic market of stainless steel and it is
trying to become a major player in international market. With a market share of
50% in India, it also exports to various countries across the globe. Jindal
stainless is the only company in India which has the composite stainless steel
plant for the manufacture of Slabs, Blooms, Hot rolled and Cold Rolled Coils.
This study is carried out keeping in the interests of Jindal Strips Limited and
hence it becomes important to have an insight of the domestic market and export
potential in the Chinese market.
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OBJECTIVES OF THE STUDY
1. To study various global marketing strategies
2. This study highlights the export potential of Jindal Strips Limited in China.
3. This study may help Jindal Strips Limited in identifying new markets.
4. This study would present the strategic alliances that Jindal Strips limited
can form to reduce the risk in the market.
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A global industry is an industry in which the strategic positions of competitors in
major geographic or national markets are fundamentally affected by their overall
global positions. A global firm is a firm that operates in more than one country
and captures R&D, production, logistical, marketing, a financial advantages in its
costs and reputation that are not available to purely domestic competitors. Global
firms plan, operate, and coordinate their activities on a worldwide basis. Ford’s
“world truck” has a European-made cab and a North American- built chassis, is
assembled n Brazil, and is imported into the United States for sale. Otis Elevator
gets its door systems from France, small geared parts from Spain, electronics
from Germany, and special motor drivers from Japan; it uses the United States
for systems integration. A company need not be large to sell globally.
Developing an International Marketing Strategy
An international marketing strategy involves developing and maintaining a strate-
gic fit between the international company's objectives, competencies, and
resources and the challenges presented by its international market or markets.
(Terpstra, V. and Sarathy, R., 1997) As such, the international strategic plan
forges a link between the company's resources and its international goals and
objectives in a complex, continuously changing international environment. Given
the changing nature of the environment, the international company's strategic
plan cannot afford a typical long-term focus (a five- or ten-year plan); rather, the
planning process must be systematic and continuous, and it must re-evaluate
objectives in light of new opportunities and potential threats. (Carol Graham,
2001)
Another dimension of international marketing strategy is linked to the company's
commitment to its international markets. Some companies use international
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marketing only to test the waters or to unload overproduction. (Carol Graham,
2001) This approach to international marketing, although it might open long-
term opportunities to the company, does not indicate a substantial commitment
to internationalization and is not a premise for success in the long term in
international markets. A long-term international commitment that entails
substantial investment in terms of resources and personnel is likely to bring the
company the greatest rewards in the long run. Such a strategy will make the
company a stronger competitor in the world market, as well as at home.
International strategic planning takes place at different levels(Isobel Doole and
Robin Lowe, 2003):
• At the corporate level, the strategic plan allocates resources and establishes
objectives for the whole enterprise, worldwide. The corporate plan has a
long-term focus and involves the highest levels of management. PepsiCo
Beverages headquarters (including its international headquarters) are
located in Purchase, New York, USA. The company's corporate plan is
developed here.
Frank Bradley and Michael Gannon (2000) proposes that planning at this level
involves international target market selection decisions:
• At the division level the strategic plan allocates funds to each business unit
based on division goals and objectives. In the PepsiCo example, its division
for Eastern Europe is located in Vienna, Austria. From there, the company
coordinates all local (country-level) operations. At this point, Pepsi may
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use various portfolio analysis tools to decide which brands to harvest, to
invest in, or to divest, and plan its resources accordingly.
• At the business unit level, within each country, decisions are made regarding
which consumer segments to target. At this level, Pepsi develops a strategic
plan.
• At the product level (line, brand), a marketing plan is developed for achieving
objectives. PepsiCo's marketing plan for Poland, for example, might
include increasing the consumption of Pepsi and Pepsi Light and launching
Pepsi Max beyond the cities of Warsaw, Krakow, Wroclaw, and Poznan.
DEVELOPING AN INTERNATIONAL MARKETING PLAN
At this stage of the planning process, the international company develops a mar-
keting plan. Assuming that the company has already analyzed its marketing
opportunities and researched and selected the target market, it must now (Terry
Hennessy, 1999)
• Develop marketing strategies for the target market, deciding on the prod
uct mix for the local target market, as well as on the other components of
the marketing mix—distribution, promotion, and pricing.
• Plan the international marketing programs.
• Manage (organize, implement, and control) the marketing effort.
The decision on which elements of the marketing mix to use in a particular target
market is closely linked to the product's life cycle and to the market entry strategy
selected: A product in the early stages of its life cycle, such as the Palm Pilot, will
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most likely be sold to consumers in highly industrialized countries for a high price,
accompanied by heavy promotion. (Isobel Doole and Robin Lowe, 2003) A
product will most likely be manufactured in a developed country and exported to
the rest of the world. Alternatively, a product in the later stages of its life cycle,
such as a videocassette recorder, will be sold to consumers worldwide, regardless
of country development level. The company selling the product will heavily
compete on price and, thus, most likely manufacture the product in a developing
country where labor is inexpensive, to sell all over the world. Most likely, the
company will have at least one subsidiary located in the country of product
manufacture. (Carol Graham, 2001)
Insights into the marketing strategies that companies use to target international
markets reveal that marketing mix decisions are complex and based on
extensive research. Kraft Foods (www.kraftfoods.com), for example, has made
interesting product mix decisions: It sells coffee products and confectionery
products that cover the spectrum of target consumers—and the brands often
cannibalize.
Among the many brands of coffee Kraft Foods offers are:
• Jacobs coffee: This product sells mainly in Central and Eastern Europe.
Jacobs coffee is popularly known as a quality German brand. Because con
sumers in Central and Eastern Europe have traditionally had frequent
interaction with German consumers and have acquired a taste and prefer
ence for German brands, marketing the Jacobs brand in this region was
appropriate. Had Kraft brought the product to the United States, it would
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have had to challenge quality perceptions of bulk coffee associated with
developing countries in Latin America (Colombia and Guatemala, in par
ticular) and Africa (Kenya, especially) and value perceptions held by store
brands and other low-priced national brands such as Folgers and Kraft's
own Maxwell House. (Dana-Nicoleta Lascu 2003)
• Gevalia coffee: This brand is aimed at the Scandinavian market and
imported into the United States as a gourmet product sold exclusively by
mail order.
Among the numerous confectionery products Kraft offers are the following:
• Milka: Kraft Foods is now importing its European Milka brand of choco
late into the United States, selling it primarily through chain stores such as
Target. Mass-market consumers in the United States are increasingly
replacing favorite local candy bars with products that are perceived as
more sophisticated and that are available at competitive prices. (Dana-
Nicoleta Lascu 2003) Competitors such as Ferrero Rocher and Dove have had
great success with the pre mium chocolates they sell in the U.S. market, and
they are increasingly placing their products in the impulse-purchase section,
by the cash register. Kraft's Milka is using a similar strategy, selling its basic-
milk chocolate
with the picture of a Swiss cow in the Alps on the packaging at Target
stores. Milka also is available in a wider selection at shops that specialize in
foreign gourmet foods. (Frank Bradley and Michael Gannon, 2000)
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• Suchard: Kraft Foods is restricting the distribution of its premium
chocolate Suchard to Western Europe. Suchard has been for decades the
traditional competitor to Lindt in the premium chocolate market in
Europe. The Suchard name has long been associated with French-speaking
Switzerland, and most European consumers do not know that it is owned
by an American company.
• Toblerone: Kraft is distributing its Toblerone chocolate brand extensively,
all over the world.
Kraft also has numerous brands that are restricted to a few markets. Among
them are Daim, aimed at Scandinavian consumers, and Bis, aimed at Argentina
and Brazil.
Kraft Foods, a company based in the United States, has different mix strategies for
each market. And it sells to the U.S. consumer only a fraction of its international
offerings, some of which are positioned as premium European imports. It should
be mentioned that companies with more limited resources will very likely be
more restricted in their worldwide market coverage.
Companies entering more and more countries in search of new markets are
likely to face increasing difficulty in continuously monitoring and controlling
their international operations. These firms must monitor not only the constantly
changing marketing environment, but also changes in competitive intensity, in
competitor product/service quality strategies, in supply chains, and in consumer
expectations. (Dana-Nicoleta Lascu 2003)
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Major Decision in international marketing :
Deciding Deciding Deciding how
whether to go which markets to enter the
abroad to enter market
Deciding the Deciding on
marketing the marketing
program organization
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DECIDING ON THE INTERNATIONAL ENTRY MODE
The company control over operations and overall risk increase from the export
mode to the wholly owned subsidiary entry mode. (Terpstra, V. and Sarathy, R.,
1997) In general, companies tend to use the export mode in their first attempt to
expand internationally and in environments that present substantial risk, and
companies tend to approach markets that offer promise and lower risk by
engaging in some form of foreign direct investment. (Terpstra, V. and Sarathy,
R., 1997) There are, however, many exceptions to these statements:
Companies that have been present for decades in attractive international
markets, such as Airbus Industries and Caterpillar, continue to export to those
markets, rather than manufacture abroad. Similarly, many new small businesses
find that they can manufacture products cheaply abroad and distribute them in
those markets without making a penny in their home country; this is increasingly
becoming a possibility for companies selling on the World Wide Web. (John D.
Daniels, 2005)
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Amount of commitment, risks, control, and profit
potential
Direct
investment
Joint
ventures
Indirect Exporting
Indirect exporting means that the company sells its products to intermediaries in
the company's home country who, in turn,Licensing

sell the product overseas. A company
engaging in indirect exporting can use middlemen such as export management
companies, trading companies, or agents/brokers

Direct to distribute its products
exporting
overseas. (Carol Graham, 2001) Alternatively, the company can use cooperative
exporting, also referred to as "piggybacking" or "mother henning." With cooperative

Indirect
exporting, companies use the distribution system of exporters with established
exporting
systems of selling abroad who agree to handle the export function of a no
competing (but not necessarily unrelated) company on a contractual basis.
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(Isobel Dole and Robin Lowe, 2003) Such companies are paid on commission or
are charged a discount price for the product; they are larger companies with
extensive experience in and knowledge of the target international market.
(Gilligan, C. and Hird M., 1986)
Using indirect exporting does not require market expertise, nor a long-term
commitment to the international market. The company's risk also is minimal; at
most, it can lose a product shipment. Among disadvantages are lack of control
over the marketing of its products - which could ultimately lead to lost sales and
a loss of-good will that might ultimately affect the perception of the company and
its brands in other markets where it has a greater commitment.
Some companies use indirect exporting as a first step toward a greater degree of
involvement. After a sufficient consumer franchise is secured and the market is
tested with the initial shipment, a company might commit resources for additional
investment in the market. It should be mentioned, however, that indirect export-
ing in the long term does not necessarily mean that the company is not commit-
ted to the market; it simply means either that the company does not have the
resources for greater involvement or that other markets are performing better and
need more company resources. (Carol Graham, 2001) One of Europe's leading
car makers, Germany's Volkswagen, operates through independent importers
and distributors in Belgium, the Netherlands, Switzerland, and Austria, while in
France, Germany, Italy, and Spain, which together account for 83 percent of
European sales, it controls its wholesale operations directly. (Frank Bradley &
Michael Gannon, 2000)
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Direct Exporting
Companies engaging in direct exporting have their own in-house exporting
expertise, usually in the form of an exporting department. Such companies have
more control over the marketing mix in the target market: They can make sure
that wholesalers and retailers observe the company's marketing policies, charging
the suggested sale price, offering the appropriate promotions, and handling cus-
tomer requests promptly and satisfactorily. (Terpstra, V. and Sarathy, R., 1997)
More control, however, is expensive. Companies carry the cost of their export
department staff, and the costs involved in selecting and monitoring the different
middlemen involved in the distribution process—freight forwarders, shipping
lines, insurers, merchant middlemen, and retailers—as well as other marketing
service providers, such as consultants, marketing researchers, and advertising
companies. (Dave Savona, 1992)
One venue that opens new opportunities for direct exporting is the Internet. With
a well-developed web site, companies now can reach directly to customers
overseas and process sales online. And many companies do: Catalog retailers
and dot-corn companies, such as Lands' End and Amazon, respectively, long ago
made their first international incursions by exporting their products to
consumers abroad and are rapidly expanding their international operations.
(Frank Bradley and Michael Gannon, 2000)
The challenges for companies using the Internet to export their products
involve securing the appropriate credit in environments where credit cards and
personal checks are uncommon and, finally, having sufficient sales to warrant staff
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expenditures needed to process and handle the international sales. (John D.
Daniels, 2005)
Licensing
A popular international entry mode, licensing presents more risks to the company
but also offers it more control than exporting. Licensing involves a licensor and a
licensee. The licensor offers know-how, shares technology, and often shares a
brand name with the licensee. The licensee, in turn, pays royalties. (Dave
Savona, 1992) The two approaches to licensing are licensing without the name
and licensing with the name.
Licensing without the Name
A licensor is very selective when choosing a licensee, ensuring that products
manufactured under license are of the highest quality. When quality cannot be
guaranteed, either because the licensee does not allow the licensor sufficient
control and scrutiny, or because the licensee cannot guarantee quality, it is
preferable for the products produced under license not to carry the licensor's
brand name. (Frank Bradley and Michael Gannon, 2000) In the early 1970s,
Italy's Fiat granted a license to Avto VAZ, Russia's largest automobile
manufacturer, to manufacture Lada, Russia's most popular automobile, and an
important export to neighboring and other developing countries. Under a similar
arrangement, France's Renault granted a license to build Dacia brand
automobiles in Romania in the 1960s. Today, the automobile, which continues to
sell under the Dacia name, is as popular as ever, and, in 1999, Renault acquired a
51 percent stake in the company. (Isobel Doole and Robin Lowe, 2003)
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Licensing with the Name
Licensors can decide to adapt the names of their products when they have a
greater confidence in the capability of the licensee's workforce. One example is
Poland's Polski Fiat. Fiat was confident of the reliability of Polish manufacturing
and did not require the use of a different name for the product. Today, Fiat no
longer licenses the Fiat name to Polish manufacturers; it has set up a subsidiary
with multiple operations, Fiat SpA, which manufactures many of the Fiats sold in
Eastern Europe under the Fiat brand name (primarily lower-priced models, such
as Fiat Punto and Seicento J. (John D. Daniels, 2005)
Licensing is a lower-risk entry mode that allows a company to manufacture a
product all over the world for global distribution. Beverly Hills Polo Club, for
example, conducts business in approximately 85 countries around the globe, pro-
ducing apparel licensed under its own name, all licensed apparel for Harvard Uni-
versity, as well as Hype, Karl Kani, and Blanc Bleu—a line that sells in upscale
European retailers. (John D. Daniels, 2005)
Licensing permits the company access to markets that may be closed or that
may have high entry barriers. In the examples in the "Licensing without the
Name" section, Lada, Dacia, and Polski Fiat were sold in the countries of manu-
facture at low prices, with few taxes, while automobile imports were charged tar-
iffs at rates ranging from 50 to 100 percent.
Companies that engage in licensing agreements also limit their exposure to
economic, financial, and political instability. In the event of a national disaster or
a government takeover, the licensor licensing without the name incurs only the
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loss of royalties. The licensor that permits the use of the name may suffer a loss of
reputation in the short term if the products are manufactured without licensor
supervision and/or if they do not uphold the licensor's standard. In the latter case,
the licensor has some control, at least in international markets. (Gilligan, C. and
Hird M., 1986) For example, it can bring to the attention of international trade
bodies the sale of products that are illegally using its brand name, assuming the
company has international trademark protection; in most markets, it also can sue
the former licensee.
A downside of licensing is that it can produce a viable competitor in the
licensee, who is well equipped to competently compete with the licenser. Simply
training locals in company operations, particularly technology, can lead to the
development of skills for future competitors.
Franchising
According to Isobel Doole and Robin Lowe (2002) Franchising is a means of
marketing goods and services in which the franchiser grants the legal right to use
branding, trade marks and products, and the method of operation is transferred
to a third party – the franchisee – in return for a franchise fee. The franchiser
provides assistance, training and help with sourcing components, and exercises
significant control over the franchisee’s method of operation. It is considered to
be a relatively less risky business start up for the franchisee but still harnesses
the motivation, time and energy of the people who are investing their own capital
in the business. For a franchiser it has a large number of advantages including
the opportunity to build greater market coverage and obtain a steady, predictable
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stream of income without requiring excessive investment. (Isobel Doole and
Robin Lowe, 2002)
Franchising (or business format franchising, to be accurate) is ‘the permission
given by one person, the franchisor, to another person, the franchisee, to use the
franchisor’s trade name, trade marks and business system, in return for an initial
payment and further regular payments’ (Sandhya, Krishnamurthy 2002)
Having satisfied himself that franchisee would be suited to running his own
business and that he will accept the restrictions laid down by the franchiser,
franchisee will choose the type of business in which he would like to work and be
happy that it is in a market with good potential. (Harry G. Barkema, 1997)
Franchisee now need to choose the franchiser. If he has picked a category in
which there are only one or two franchisers, it would be wise to select a second
category to avoid having too small a choice. This will also give him a wider
selection of territories. (Sinha, Piyush Kumar 1999)
Obtain a list of the franchises, which are available in the business category
franchisee has chosen. Which is best for him? Although this is the last stage of
your assessment process, it is, of course, the most important. He may be right for
franchising and the market he has chosen may be full of promise, but this will not
make up for an ineffective franchiser.
There are many questions (Windsperger J. 2002) that can be asked to assess
the quality of a franchiser, but most falls into the following fields.
Has the franchise been sufficiently tested and are its franchisees successful? Do
the initial fee and continuing fees (or product mark up) represent good value for
30
money? Do the on-going fees (or product mark up) still leave the product or
service competitive in the market place and provide sufficient profit for the
franchiser and franchisee to make the business worthwhile?
Have the franchiser sufficient financial and management resources to do what
they say they will do to make your business succeed? Are they fair and ethical in
their business conduct? Are they a member of the British Franchise Association,
whose members are required to abide by a code of business practice? In the
event of the franchiser’s failure are there alternative suppliers?
Joint Ventures
Joint ventures involve a foreign company joining with a local company, sharing
capital, equity, and labor, among others, to set up a new corporate entity. Joint
ventures are a preferred international entry mode for emerging markets. In devel-
oping countries, joint ventures typically take place between an international firm
and a state-owned enterprise; in this case, the company's partner is the local
government. As such, the company is assured instant local access and
preferential treatment.
Many developing countries welcome this type of investment as a way to
encourage the development of local expertise, of the local market, and of the
country's balance of trade—assuming the resultant production will be exported
abroad. (Gilligan, C. and Hird M., 1986) In most developing countries, the
international firm will typically provide expertise, know-how, most of the capital,
the brand name reputation, and a trademark that is internationally protected,
among others. The local partner will provide the labor, the physical infrastructure
31
(such as the factory and access to the factory), local market expertise and
relationships, as well as connections to government decision-making bodies.
(Carol Graham, 2001)
It is typical for the local government of the developing country to limit the joint-
venture ownership of international firms to less than 50 percent. It is also typical
for the local government to encourage the reinvestment of profits into the firm,
rather than the repatriation of profits by the international firm. As such, the
government, in effect, leads the international firm to engage in transfer pricing, a
method whereby the parent company of the international joint-venture partner
charges the joint venture for equipment and expertise, for instance, above cost.
(Harry G. Barkema, 1997)
Joint ventures could constitute a successful approach to a greater involvement in
the market, which is likely to result in higher control, better performance, and
higher profits for the company. Successful joint ventures abound. (Frank Bradley
and Michael Gannon, 2000) In one example, British Petroleum PLC established a
joint venture in Russia, under the name Petrol Complex, with ST, a powerful local
partner with close ties to the Moscow city government. The company owns 30 BP
gas stations, each of which sells an average of 3.5 million gallons of gasoline a
year, four times the average of a gas station in Europe. (John D. Daniels, 2005)
BP offers Russian drivers good service (a rare commodity in this market), as well
as minimarkets with espresso bars and a wide selection of wines; this is in stark
contrast to the Russian gasoline stations where customers pay for gasoline by
stuffing cash through a tinted window and where they communicate with the
salesperson through a microphone. (Sabrina Tavernise, 2001)

32
The joint-venture entry mode is not limited to developing countries. Numerous
joint ventures are operating throughout Europe, and they are increasingly
coming under the scrutiny of the European Commission, which assesses their
impact on competition. (Harry G. Barkema, 1997) Typically, the Commission
appoints a taskforce to investigate the impact of the joint venture on competition
and then issues a statement of objections within six to eight weeks, giving the
companies involved a chance to respond and request a hearing before the
Commission makes its final decision with regard to the joint venture; whenever
no such statement is issued, the deal is assumed to be on its way for approval,
(Brandon Mitchener and Deborah Ball, 2001) One joint venture that the European
Commission has examined involves the diamond giant De Beers Centenary AG
(the world's largest diamond-mining company) and the French luxury goods
company LVMH Moet Hennessy Louis Vuitton SA (which owns, among others,
Christian Dior, Moe't & Chandon, Louis Vuitton, and Donna Karan); the company
wants to produce De Beers-branded jewelry and open a network of exclusive
shops all over the world. (Brandon Mitchener and Deborah Ball, 2001)
Overall, 70 percent of all joint ventures break up within 3.5 years, and inter-
national joint ventures have an even slimmer chance for success (Dave Savona,
1992). Companies can, to a certain extent, control their chances for success by
carefully selecting the joint-venture partner; a poor choice can be very costly to
the company. Other factors that will increase the success of the international
joint venture are the firm's previous experience with international investment and
the proximity between the culture of the international firm and that of the host
33
country; a greater distance erodes the applicability of the parent's
competencies. (Harry G. Barkema, 1997)
Reasons for the failure of joint ventures are numerous. The failure of a partner
can lead to the failure of the joint venture—for example, the joint venture
between a mid-size company, Bird Corp. of Dedham, Massachusetts, and con-
glomerate Sulzer Escher Wyss Inc., a subsidiary of Sulzer Brothers Ltd. of Switzer-
land. Although the joint venture performed well, Bird Corp. experienced serious
problems, with unsteady revenues and slim profits, leading to the failure of the
joint venture. (Savona, 2004) Even a natural disaster or the weather could lead to
failure: Zap-ata, a $93 million Houston, Texas, company involved in natural gas
exploration, took a 49 percent share in a joint venture with Mexican investors with
the goal of fishing on Mexico's Pacific coast for anchovies, processing them, and
selling them as cattle and poultry feed The weather system El Nino caused the
anchovies to vanish, leading to the failure of the joint venture. (Savona, 2004)
Like licensing and franchising, joint-venture partners can turn into viable
competitors that know the firm's operations and competitive strategies. In this
case, the local partner will undoubtedly become a formidable competitor locally,
where the firm will be protected by the government. (Harry G. Barkema, 1997)
Internationally, however, the international firm has some capability to combat
the new competitors through controls and agreements with the supply chain
and distributors that will prevent access to equipment or to markets, for
example.
34
Wholly Owned Subsidiaries
Companies can avoid some of the disadvantages posed by partnering with other
firms by setting up wholly owned subsidiaries in the target markets. The assump-
tions behind a wholly owned subsidiary are that (John D. Daniels, 2005)
• The company can afford the costs involved in setting up a wholly owned
subsidiary.
• The company is willing to commit to the market in the long term.
• The local government allows foreign companies to set up wholly owned
subsidiaries on its territory.
Frank Bradley and Michael Gannon, (2000) suggests that the company can
develop its own subsidiary, referred to as greenfielding, which represents a
costly proposition, or it can purchase an existing company through acquisitions
or mergers. Many opportunities for acquisitions have recently emerged in
developing and developed markets alike: Governments have been de-socializing
services and industries, rapidly privatizing industries that were formerly
government owned or operated. Opportunities have emerged in the area of
telecommunications, health care, energy, and even the national mail service.
The most important advantage that a wholly owned subsidiary can provide is a
relative control of all company operations in the target market. In particular, a
subsidiary offers the company control over how to handle revenue and profits.
Wholly owned subsidiaries also carry the greatest level of risk. A nationalization
attempt on the part of the local government could leave the company with just a
tax write-off.
35
Additional difficulties could arise when a company decides to acquire or merge
with another. In the case of DaimlerChrysler, Daimler quickly found out that the
former Chrysler was not performing up to par and quickly proceeded to
restructure, weeding out former Chrysler employees. (Dana-Nicoleta Lascu 2003)
In general, the company acquiring another or building its wholly owned subsidiary
will not be able to share risks with a local partner, nor will it benefit from a
partner's connections; it must build its own.
Even selling the subsidiary can eventually haunt the company years later. Har-
rods Buenos Aires was originally set up as a subsidiary of Harrods London, but
became an independent company in 1913 and changed hands several times.
Today, Harrods Buenos Aires operates in Argentina and has no relationship
whatsoever with Harrods London—which cannot address this issue successfully
in the local courts in Argentina.
Strategic alliances
In analyzing the results of joint ventures in China, Vankonacker (1997) observes
that joint ventures are hard to sustain in stable environments and concludes that
more direct investment will be wholly owned offering Johnson and Johnson’s
oral-care, baby and feminie hygiene products business as a success story.
Whilst all market entry methods essentially involve alliances of some kind, during
the1980s the term strategic alliance started to be used without being precisely
defined to cover a variety of contra contractual arrangements which are intended
to be strategically beneficial to both parties and which cannot be defined as
clearly as licensing or joint ventures. Bronder and Pritzl (1992) have defined
36
strategic alliances in terms of at least two companies combining value chain
activities for the purpose of competitive advantage. Perhaps one of the most
significant aspects of strategic alliances has been that it has frequently involved
cooperation between partners who might in other circumstances be competitors.
Some examples of the bases of alliances are(Frank Bradley and Michael
Gannon, 2000):
• Technology swaps
• R&D exchanges
• Distribution relationships
• Marketing relationships
• Manufacturer supplier relationships
• Cross-licensing
There are a number of driving forces for the formation and operation of strategic
alliances.
Insufficient resources: the central argument is that no organization alone has
sufficient resources to realize the full global potential of its existing and
particularly its new products, competitors will exploit the opportunities which arise
and become stronger. In order to remain competitive, powerful and independent
companies need to cooperate.
Pace of innovation and market diffusion: the rate of change of technology and
consequent shorter product life cycles mean that new products must be exploited
quickly by effective diffusion out into the market. This requires not only effective
promotion and efficient physical distribution but also needs good channel
manager, especially when other members of the channel are powerful, and so,
for example the strength of alliances within the recorded music industry including
37
artists, recording labels and retailers has a powerful effect on the success of
individual new hardwire products such as the Sony compact disc and Philips
digital compact cassette. (Dana-Nicoleta Lascu 2003)
High research and development costs: as technology becomes more complex
and genuinely new products become rarer, so the costs of R&D become higher.
For example, Olivetti and Canon set up an alliance to develop copiers and image
processors. In order to recover these costs and still remain competitive,
companies need to achieve higher sales levels of the product.
The pharmaceutical company Glaxo’s success in marketing Zantac, its nulcer
drug, was achieved by using a network of alliances the most effective of which
was including Roche in the US.
Concentration of firms in mature industries: many industries have used alliances
to manage the problem of excess production capacity in mature markets. There
have been a number of alliances in the car and airline business, some of which
have lead ultimately to full joint ventures or take\overs.
Government cooperation: as the trend towards rationalization continues, so
governments are more prepared to cooperate on high cost projects rather than
try to go it alone. There have been a number of alliances in Europe- for example,
the European airbus has been developed to challenge Boeing, and the Euro
fighter aircraft project has been developed by Britain, Germany, Italy and Spain.
Self-protection: a number of alliances have been formed in the belief that they
might afford protection against competition in the form of individual companies or
newly formed alliances. This is particularly the case in the emerging global high
38
technology sectors such as information technology, telecommunications, media
and entertainment. (Dana-Nicoleta Lascu 2003)
Market access: strategic alliances have been used by companies to gain access
to difficult markets, for instance, Caterpillar used an alliance with Mitsubishi to
enter the Japanese market.
In light of the fact that two thirds of alliances experience severe leadership and
financing problems during the first two years, Bronder and Pritzl (1992)
emphasise the need to consider carefully the approach adopted for the
development of alliances. They have stressed the need to analyse the situation,
identify the opportunities for cooperation and evaluate shareholder contributions
Devlin and Blackley (1988) have identified some guidelines for success in
forming alliances. There needs to be a clear understanding of whether the
alliance has been formed as a short-term stop gap or as a long term strategy. It
is, therefore, important that each understands the other partner’s motivations and
objectives, as the alliance might expose a weakness in one partner which the
other might later exploit. It is apparent that many strategic alliances are a step
towards a more permanent relationship, but the consequences of a potential
breakup must always be borne in mind when setting up the alliance.
Glaxo appears to have changed its strategy resulting in the take-over of
Welcome. More recently it announced a proposed, merger with Smith Kline
Beecham but at the first attempt it failed, apparently because of a clash of
personalities of the top executives. (John D. Daniels, 2005)
39
As with all entry strategies, success with strategic alliances depends on: effective
management, good planning, adequate research, accountability and
monitoring. It is also important to recognize the limitations of this as an
entry method. Companies need to be aware of the dangers of becoming
drawn into activities for which it is not designed.
Each of these have advantages and disadvantages.
Entry Mode Advantages Disadvantages

Exporting Ability to realize location High transport costs
and experience curve Trade barriers
economies
Problems with local
marketing agents
Turnkey contracts Ability to earn returns Creating efficient
from process technology competitors
skills in countries where Lack of long term market
FDI is restricted presence
Licensing Low development costs Lack of control over
and risks technology inability to
realize location and
experience curve
economies
Inability to engage in
global strategic
coordination
Franchising Low development costs Lack of control over
and risks quality
Inability to engage in
global strategic
coordination
40
Joint ventures Access to local partners Lack of control over
knowledge technology
Sharing development Inability to engage in

costs and risks global strategic
coordination
Politically acceptable
Inability to realize
location and experience
economies
Wholly owned Protection of technology High costs and risks
subsidiaries Ability to engage in global
strategic coordination
Ability to realize location

and experience
economies
(Hill, C.W.L., Hwang, P. & Kim, W.C. 2006)
The magnitude of the advantages and disadvantages associated with each entry
mode is determined by number of factors, including transportation costs, trade
barriers, political risks, economic risks, costs and firm strategy. The optimal entry
mode varies by situation, depending on these factors. (Hill, C.W.L., Hwang, P. &
Kim, W.C. 2002) Thus, whereas some firms may best serve a given market by
exporting, other firm may better serve the market by setting up a new wholly
owned subsidiary or by acquiring an established enterprise. In the opening case
Tesco has primarily entered foreign markets through acquisition of established
players in those markets. (John D. Daniels, et al, 2005)
Strategic alliance are cooperative agreements between actual or potential
competitors. The term strategic alliances is often used to embrace a variety of
41
arrangements between actual or potential competitors including cross-
shareholding deals, licensing arrangements, formal joint ventures, and informal
cooperative arrangements. Strategic alliances have advantages and
disadvantages, and Tesco must weigh these carefully before deciding danger is
that the firm will give away more to its ally than it receives.
Deciding which markets top enter

In deciding to go abroad, the company needs to define its marketing objectives
and policies. What proportion of foreign to total sales will it seek? Most
companies start small when they venture abroad. Some plan to stay small;
others have bigger plans. “Going abroad” on the internet poses special
challenges.
Product
Warren Keegan has distinguished five adaptation strategies of product and
promotion to a foreign market
Straight extension means introducing the product in the foreign market without
any change. Straight extension has been successful with cameras, consumer
electronics, and many machine tools. In other cases it has been a disaster.
General foods introduced its standard powered jell-O in the British market only to
find that British consumers prefer the solid wafer or cake form. Campbell Soup
Company lost an estimated $30 million in introducing its condensed soups in
England; consumers saw expensive small-sized cans and did not realize that
water needed to be added. Straight extension is tempting because it involves no
additional R&D expense, manufacturing retooling, or promotional modification;
but it can be costly in the long run.
42
Product
Do Not Change Adapt Develop

Product New
Product Product
Promotion
Do not Change Straight extension Product

Promotion adaptation
Product
invention
Adapt Communication Dual adaptation
Promotion adaptation
43
44
All types of steel products will be required to support the ongoing industrial
growth in the country. Because there is a little bit of steel in everybody’s life
starting from pin to construction, automobile, railways and engineering. In
short, promotion of steel usage today has gained so much of importance both
at national and international levels. But one needs to be very selective well in
advance today in deciding the product mix that should be able to meet users
demand in domestic international market.
Successful operation of highly sophisticated iron and steel industry depends to
a great extent or technical and commercial information, particularly, the
information in respect of various options of plants and equipments, their
availability, range of investment, selection of sites, use or users of the product,
availability and demand for the product in market (present and future)
prospective competitors, various tariff and non tariff barriers, price trends in
domestic and international markets are some of the essential information
which an entrepreneur must know at least broadly before entering into steel
industry.
However, India’s positioning in the global perspective will depend upon cost
quality improvement. However, India’s positioning in the global perspective
will depend upon cost competitiveness of the Indian. Besides the continuous
emphasis is to given on new technology/process/products developed,
productivity improvement, quality improvement.
45
MAJOR DEMAND DRIVERS FOR STEEL INDUSTRY IN INDIA
Higher infrastructure spending - It is an unquestionable fact that the infrastructure
situation in India is poor. If the Indian economy has to maintain its growth rates,
the infrastructure situation has definitely got to improve. Spending on
infrastructure will definitely lead to a higher demand for steel. (Anthony P
D'Costa, 2000)
Higher standard of living – The standard of living is expected to go up in the
coming decade. This will in turn push up the demand for consumer durable and
automobiles. Percentage of the demand for flat products comes from these
industries. Hence, any pickup in these sectors should lead to a higher demand
for flat products. (Anthony P D'Costa, 2000)
According to Sanjiv J Phansalkar (2003) Steel Products can be categorized as:
Semi-finished: These are intermediate products cast from liquid steel for further
rolling into finished products. These are often sold by Integrated Blast Furnace
Producers (IBFPs) to small mini mills and rolling mills to be rolled into finished
steel. They include billets, blooms, rods, which are rolled into long products or
slabs which are rolled into flat products. While some countries export semis (e.g.
Russia), India uses them in the domestic industry as inputs for higher value-
added long and flat products.
Long products: These include bars, rounds, angles and structural and are
mainly used in construction, infrastructure and heavy engineering. These
products require lesser capacities. Long products are the largest steel category
produced in India accounting for around 50% of total production.
46
Flat products: These include sheets, coils and plates and are mainly used in
automobiles and consumer durable. The technology for the manufacture of flats
is critical and it requires larger capacities for manufacturing. These are high-
value products and enjoy higher margins. These can be hot rolled, cold rolled,
galvanized or coated. This category, usually the largest product category in
developed countries is small in India accounting for about 44%.
Pipes: These include seamless pipes and welded pipes.
Source: Anthony P D'Costa (2008)
Stainless steel is the generic name for a number of different steels used primarily
for their resistance to corrosion. The one key element they all share is a certain
minimum percentage (by mass) of chromium: 10.5%. Although other elements,
particularly nickel and molybdenum, are added to improve corrosion resistance,
chromium is always the deciding factor. The vast majority of steel produced in
the world is carbon and alloy steel, with the more expensive stainless steels
representing a small, but valuable niche market.
47
ANALYSIS OF STEEL INDUSTRY
GLOBAL SCENARIO
According to recent estimates (Metal Bulletin, Feb. 17, 2004) the total world
finished steel consumption is expected to be of the order of 1120mt by the
year 2007.
During the past decade, international trading of steel has been to the tune of
25-30% of the total world production. On an average, around 180-190m tones
of saleable steel drawing (finished products and semis) is traded in the
international market.
China remained the world’s largest Crude Steel producer in 2008 also (220.12
million metric tons) followed by Japan (110.51 million metric tons) and USA
(91.36 million metric tons). India occupied the eighth position (31.78 million
metric tons). EU27, USA, S.korea, China, UAE and Germany were the largest
importers of steel in 2008. China, Japan, EU27 and Ukraine were the largest
exporters of steel in 2008.
The Surplus capacity and prevalence of market distorting practices in the global
steel market have induced protectionist measures from a number of steel trading
countries. In the OECD meeting they suggests that there was a long-term
solution to global steel over-capacity, the proponents of the OECD steel
deliberations are of the view that subsidies and related government support have
caused and are causing significant distortions in the steel markets and these will
be required to be reduced.
48
• In retaliation to the US action EU countries, China, Canada and Thailand
have imposed provisional safeguard measures against import certain steel
products.
Table 2: WORLD TOP STEEL EXPORTERS
(Million of tons of exports)
2007 2008 % change y-o-

y
China 65.2 56.2 -14
JAPAN 35.1 37.1 4
EU25 32.2 34 6
Ukraine 29.9 28.4 -5
RUSSIA 29.2 28.2 -3
South Korea 18.1 19.7 9
Turkey 14.8 18.3 24
USA 10.3 12.6 23
Taiwan 10.9 9.8 -10
BRAZIL 10.4 9.1 -12
(World Steel Dynamics, April 2009)
49
Market Scenario
Liberalization, which started in 1991, changed the market scenario. There
have been no shortages of steel materials in the country after liberalization.
The opening up of the economy has brought in new dimensions in the demand
analysis for the steel sector, with the reduction in import duties and the partial
abolition of the freight equalization scheme being some of the changes. The
implication of these changes is that steel demand is no longer fully supply
determined but is governed by market forces. Carbon steel consumption
increased from 14.84 million tones in 1991-92 to 33.370 million tones in 2004-05.
There was a recession in Steel industry for some time has staged a turnaround
since the beginning of 2002 and the efforts are being made to boost demand.
China has been the main export destination. The Indian steel industry is buoyant
by the reason of strong growth in demand mainly by the demand for steel in
China. Domestic prices have firmed up in the face of strong demand – both
domestic and foreign.
Production
Steel production has gone up considerably during the last decade from 9.4
million tones in 1985-86 to about 21 million tones in 1995-96, that is, a growth of
about 125% within a period of 10 years and planning to reach 49 million tones by
the year 2006-07. In 2004-05, production of finished carbon steel was 38.39
million tones and Pig iron production in 2004-05 was 3.17 million tones. The
market share of main producers (i.e. SAIL, RINL, and TISCO) was 39%
50
Table 3: Production Performance
(In million tones)
Item 2006-07 April – December 2007
Target Actual Fulfilment(% Target Actual Fulfilment(%)

)
Hot 14.10 14.60 104 10.96 11.31 103

Metal
Crude 13.03 13.50 104 10.26 10.37 101

Steel
Saleable 11.86 12.58 106 9.26 9.60 104

Steel
Prime Secondary Total

Producers Producers
Pig Iron 11.00 (8.3) 41.50 (35.8) 52.50 (29.0)
Sponge Iron - 2.26 54.44
Finished Steel 143.00 (9.6) 185.50 (5.5) 32.85 (7.2)

(Steel Scenario, July 2008)
51
i . ex e
Graph 1: Production of pig iron and finished carbon steel
Pig Iron
Finished Carbon Steel
40
30
20
10
0
2001-02 2002-03 2003-04 2004-05 2005-06
(Source: Steel Scenario, July 2005)
The Race to Consolidate
Chinese mills now dominate the list of the world's biggest producers
In 2008 the top 15 steel producers accounted for 36% of world production - 10
years ago the top 15 made just over 25% of world production. Arcelor-Mittal
remains by far the biggest producer but with output down 11% in 2008 its share
of world output fell by 1% to 8%. Nippon Steel remains the 2nd biggest producer
52
but now only marginally ahead of Baosteel which, helped by the acquisition of
Guangdong, increased its output 24% in 2008. Indeed 6 of the top 10 producers
are now Chinese, helped by a spate of merger and acquisition activity in 2008.
Global Steel Price Indicators
Main Regional Steel Trade Flows
53
International Steel Trade
Pricing and Distribution
• Price regulation of Iron and steel was abolished on 16.1.1992.
• The government removed the distribution controls on iron & steel except five
priority sectors i.e. Railways, Defense, Small Scale Industries Corporations,
Engineering Goods Exporters and North Eastern Region.
• Government has no restriction over prices of iron and steel products
• Price increases have taken place mainly in long products than flat products.
Imports of Iron and Steel
Least potential items are ERW and seamless pipes and tubes, since their
imports are controlled.
India has been importing around 1.5 Million Tones of steel yearly.
54
Graph 2:Import of Iron & Steel from 1997-98 to 2003-04
(Stainless Steel Review, Mar 2004)
1.8
1.56 1.59 1.6
1.6
1.55
1.41
1.4 1.27
1.2 1.13
0.8
0.6
0.4
0.2
0
1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
In the case of unbridled imports of cheap/seconds and defective steel there

are several measures like:
a. The Government has fixed floor prices for 7 items of steel products
- HR coils, HR sheets, CR coils, tin plates, CRNO, Plates and Alloy
Steel Rods and Bars.
b. The customs duty on defective HR Coils has been lifted to the

bound rate of 40 per cent.
• The imports of certain steel items have been depend to mandatory

compliance of quality standards certified by the Bureau of Indian Standards
(BIS). Coalition to BIS norms imply supplying information like name and
address of the importer, generic or common name of the commodity, net
quantity, weights and measures, month and year of packaging and maximum
retail sale price. (www.steel.gov.in/annual.htm)
55
Iron and Steel Exports
• Advance Licensing Scheme allows duty free import of raw materials for
exports.
• Duty Exemption Pass Book Scheme also facilitates exports.
• Indian steel exports have been subject to anti-dumping/anti-subsidy duties

actions by the stronger economies over the last few years.
China has imposed safeguard measures on import of various items of steel

products by fixing tariff quotas. However, these measures do not apply to India.
The rising trend in Indian steel exports that was being witnessed in the last
couple of years was halted due to these anti dumping actions initiated by the
advanced, developed nations of the world, which led to the loss of major markets
for the Indian steel exporters. Despite the initial setbacks Indian exports have
recovered - largely due to the ability to find out alternative export markets where
selling steel has been profitable. (www.steel.gov.in/annual.htm)
Table 4: Export of finished carbon steel
Years Exports
2001-02 1.622
2002-03 1.880
2003-04 1.771
2004-05 2.670
2005-06 2.664
2006-07 2.725
2007-08 4.20
(Iron & Steel Review, May 2008)
56
Duties & Levies
Custom Duties
• Peak rate of Custom Duty has been reduced during last 5 years .In the
Union Budget 2003-04 it has been further reduced to 25%. This has
compelled domestic sector to become internationally competitive.
• The custom duty on seconds and defective steel has also been retained at
40%, which would increase the gap between the prime and the defective
category and make the import of seconds and defectives less attractive.
• Custom Duty has been reduced on a wide range of inputs, which cause
the cost of production for the domestic steel industry.
• In the Union Budget 2003-04 the Customs Duty on Met Coke has been
rationalized at 10%. However, the steel manufacturers have been given
exemption from paying 4% SAD. (www.steel.gov.in/annual.htm)
Excise Duty
• Excise Duty on iron and steel has not been reduced in consecutive union
budgets.
• Currently excise duty on all iron and steel is 16% ad valor called CENVAT.
INDIAN STEEL INDUSTRY: AN OVERVIEW
India got into steel making in the early 20th century when JRD Tata set up the
first steel mill in the country in 1907 in Jamshedpur. Since then, the steel industry
has undergone a lot of changes but the TISCO continues to be the largest private
steel maker in the country. Tisco and SAIL dominated the steel industry in the
57
70s and 80s. With the price control regime in place, the steel firms could turn in a
profit without any major effort.
Structure of Indian Iron & Steel Industry

(Capacity in million tonnes)
No.
Working Total Working
Category Sector of
Units Capacity Capacity
Units
Integrated
Crude Steel 9 9 17.78 17.78
Pelts
EAF 188 45 10.68 5.33
IF 934 661 9.41 7.23
Secondary Sector Iron Pig iron

18 16 5.74 5.57
making and Resolvable units
Sponge iron
23 20 6.07 5.79
units
Rerolling
Rerolling/Downstream 2710 2080 27.44 22.81
units
HR Units 12 7 4.59 4.33
CR Units 75 60 2.93 2.7
GP/GC
16 13 1.04 0.96
Units
Tinplates 2 1 0.15 0.09
(Source: Iron & Steel Review, 2004)
58
The categorized steel products
Type End Product User Industries
EAF Units and mini-steel

Semi-finished Ingots, billets & slab
plants
Long Products Wire rods and bars Construction & wires
Hot rolled (HR), cold Rolled (CR) Consumer durable, industry

Flat Products
and Galvanized coils (GC) machinery
Railway
Railway tracks Railways
materials
Automobiles, aircraft &

Special Tin plates and pipes
shipbuilding
(Source: World Steel Dynamics)
59
Production, Performance and Projections
(In million tones)
1999- 2000- 2003- 2004- 2006-07

2002-03
00 01 04 05 (P)
Pig Iron 3.29 3.39 3.00 3.16 3.11 4.65
Sponge Iron 5.00 5.32 5.11 5.34 5.44 6.18
Finished Steel 22.72 23.37 23.82 26.71 29.70 32.01
(Source: Iron & Steel Review)
Production
(In million tones)
Primary Secondary
Total
Producers Producers
0.96.23
Pig Iron 2.15 (11, 40%) 3.11 (-2.2%)
(- 22.58%)
Sponge Iron - 12.51 (11.70%) 5.44 (1.87%)
Finished
12.51 (11.70%) 17.19 (10.83%) 29.70 (11.19%)
Steel
* Figures in brackets indicate percentage increase over last year

(Source: Iron & Steel Review)
60
India’s export of Iron & Steel
(In million tones)
Total Total Total Finished

Year Total Steel
Pig Iron Semis Carbon Steel
2000-01 451 300 1622 1922
2001-02 785 503 1880 2383
2002-03 281 174 1770 1944
2003-04 290 328 2670 2998
2004-05 230 195 2805 3000
2005-06 242 270 2730 3000
2006-07 275 300 2575 3150
2007-08 295 335 2850 3480

(World Steel Dynamics, 2004)
FUTURE PROSPECTS – INDIAN STAINLESS STEEL INDUSTRY
The Indian steel industry has a bright future with 75% of market of stainless steel
is in kitchen segment. 95% of the gas stove market uses only stainless steel.
India has emerged as the largest manufacturer of 200 series low nickel stainless
steel in the world. Railways will used to manufacture of passenger coaches
requiring 15 mt stainless steel per coach in next 5 years. The Delhi Metro Rail
Corporation tendered for 200 all stainless steel coaches. The government of
India is using ferric cold rolled stainless steel strips for making coins.
(www.steel.gov.in/annual.htm) The usage in industrial and other segments is still
very low which will be expected increase in future.
61
Global trends and its affect on Indian markets
The transport and automotive sector accounts for nearly 14% and the
construction sector takes around 12% stainless steel. In India at present
consumption in these two segments put together is just l%. This gives clear
picture of future prospects in both building and transport sectors in India. The
automobile companies also will be demanding the use of stainless steel in
increasing amounts for the production of fume exhaust and catalytic converter
applications. The major international fast food joints are investing in India for the
consumption of stainless steel. Fast food joints using good quantity of stainless
steel for making kitchen equipments, service area and furniture.
The major steel exporting companies aimed on China because it still imports
70% of its total demand of 1.5 million tons. The large potential exists in value
added products like pipes, tubes and kitchen utensils. Also India also good
production environment for stainless steel long products like bar, rod and wires
which has good markets in Europe, South East Asian region and USA.
62
NATIONAL STEEL POLICY
1. OBJECTIVE:
 Strategic Goal :
a) Diversified steel demand through modern and efficient steel
policy.
b) Global competitiveness in terms of cost, quality and product mix.
c) 100(mT) by 2019-20 from the 2005 level of 38 mT.
 IMPORTS:
1. Imports duty rates brought down.
2. Industry should be protected from unfair trade practices.
3. Institutes mechanisms for import surveillance.
4. To monitor export subsidies in other countries.
Production, Imports and Exports and Consumptions
(In Million Tones )
63
SWOT ANALYSIS OF THE INDUSTRY
Strength Weaknesses
 Availability of iron ore  Unscientific mining.
and coal.  Low productivity.
 Low labor wage rates.  Coking coal import
 Abundance of quality dependence.
manpower.  Low R & D
 Mature Production investments.
base.  High cost of debt.
 Inadequate
infrastructure
Opportunities Threats
 Unexplored rural  China becoming net
market. exporter.
 Growing domestic  Protectionism in the
market. west.
 Exports.  Dumping by
 Consolidation. competitors.
Technologies, Research & Development
 Have synergy with the natural resources endowments with the country.
 Conducive to production of high-end and special steel required for
sophisticated industrial & scientific applications
 Minimize damage to the environment at various stage of steel making and
mining.
 Optimize resource utilization
 Development of front end and strategic steel based material.
64
TRADE POLICY
 EXPORTS :
1. 25% of total production in 2019-20 from 11% in 2004-05.

2. 30% share of exports in global production
3. Export credit, trade information.
4. Cut transaction cost and progress of multi-lateral negotiations.
5. Trade agreement to broaden the export base.
6. Export of value-added steel through project exports.
INVESTMENT PROMOTION AND POLICY IMPLEMENTATION
 Provide a single-window clearance for large projects.

 110 mt of steel production by 2019-20.
 Prepare & implement road maps for technological & productivity
improvement.
 Monitor the implementation of the national steel policy to global standard.
65
CASE STUDY
ORGANIZATION: THE JINDAL
When we talk about the business empire, the Jindal group is ranked sixth
amongst the top Indian Business Houses in terms of assets, the Group today is a
US$2 billion conglomerate.
Jindal Organization was set up in the year 1970. It has grown from an indigenous
single-unit steel plant in Hisar, Haryana to the presently one of the largest steel
producer in Asia. The organization is still expanding, integrating, amalgamating
and growing. New directions, new objectives, but the Industries’ motto remains
the same- "We are the Future of Steel".
(www.jpcindiansteel.org/jindalprofile8.htm)
The Jindal group has been technology-driven and has a broad product portfolio.
Yet, the focus at Jindal has always been steel. From mining of iron-ore to the
manufacturing of value added steel products, Jindal has a preminent position in
the flat steel segment in India and is on its way to be a major global player, with
its overseas manufacturing facilities and strategic manufacturing and marketing
alliances with other world leaders.
Jindal Organization aims to be a global player. In achievement of its objectives, it
is committed to maintain world class quality standards, efficient delivery
schedules, competitive price and excellent after sales service. US$2 billion Jindal
Organisation has expanded and diversified into core business areas ensuring
synergy amongst its various business ventures, spreading over 13 plants at 10
pivotal locations in India and two plants in USA.
66
The Jindal team embodies one of the most popular talent pools of technological
acumen available in the country today. With experience that has enabled the
organisation to put up large scale projects within record time.
Jindal Stainless Limited

India's largest integrated manufacturer of Stainless Steel catering to about 40
percent of Indian demand.
Plant Location - Hisar, Haryana
Capacity - 500,000 tpa
High Carbon Ferro Chrome plant at Visakhapatnam, Andhra Pradesh
GROUP COMPANIES
Jindal Iron & Steel Company Limited
Plant Locations - Vasind and Tarapur, Maharashtra
Saw Pipes Limited

Plant Location - Kosikalan, Uttar Pradesh, Gujarat
Jindal Vijayanagar Steel Limited

Plant Location - Toranagallu, Karnataka
Jindal Steel & Power Limited

Plant Location - Raigarh, Madhya Pradesh
Saw Pipes Usa Inc

Location - Bay Town, Texas, USA
Jindal United Steel Corporation

Plant Location - Bay Town, Texas, USA
Vijayanagar Minerals Private Limited

Plant Location - 20 km from JVSL plant
Jindal Thermal Power Company Limited

Plant Location - Toranagallu, Karnataka
Jindal Praxair Oxygen Company Limited

Location - Toranagallu, Karnataka
(www.jpcindiansteel.org/jindalprofile8.htm)
67
PROFILE OF JINDAL STAINLESS LTD
JINDAL is India's largest integrated stainless steel manufacturer, which is
continuing growth through positive measures, such as a construction project of a
new Ferro- chromium factory, as well as pursuing an expansion program of a
new stainless steel plant, and it expects the further development and has keenly
requested cooperation from Nisshin Steel which has many years' experience in
actual performance of various Technical Assistance projects.
JINDAL STRIPS LIMITED was incorporated to manufacture mild steel, HR plates
and coils. It started a mini steel mill at Hisar in 1971. As a strategy to counter low
margins in mild steel, JSL diversified into production of stainless steel in the late
70s. JSL was the first company to produce stainless steel HR coils. . In 1977
stainless steel production started. In 2003 the company was reorganized as
JINDAL STAINLESS LIMITED. (Annual Report, JSL)
In 1983, JSL forward integrated with a CR plant for stainless steels at a site
adjacent to its sister company Jindal Iron's plant at Vasind (near Mumbai). In
1990, JSL embarked upon major backward integration-cum-expansion by
commencing work on a sponge iron plant at Raigad in Madhya Pradesh. JSL has
over the years developed a number of technologically new processes to save on
capital and operational costs. (www.jindalstainless.com)
The Company's indigenously designed rotary kilns, for sponge iron, had teething
problems and the setting up of the sponge iron plants was hence, considerably
delayed. It is the largest (around 40%) integrated producer of Stainless Steel in
India.
68
At Hisar lies India’s only fully integrated Stainless Steel plant. With the expansion
of the unit, the production capacity has increased from 250,000 to 300,000
tonnes per annum. The main reason for the success of JSL is the fact that
everything from the conversion of raw material into billets and slabs to hot rolling
of strips and plates and cold rolling is done in-house. (www.jindalstainless.com)
The Hot Rolling Division at Hisar
At Hisar there are two major operational units’ namely hot rolling unit and cold
rolling unit. The hot rolling unit comprises of steel melting shops, hot rolling mills
(steckel mill, strip mill), finishing units, power plants and oxygen plant etc.
The cold rolling unit comprises of cold rolling, annealing and pickling lines and
finishing facilities. Maximum value addition takes place in cold rolling unit. During
the Financial year 2001-02, the division had produced 326,405mt of stainless
steel that represents around 130 per cent of the capacity utilization.
The higher capacity utilization has been feasible with increased focus of the
company to improve the operational efficiency, which has also supported the
company's strategy to reduce cost. During the year an additional 60,000 tones of
cold rolling capacity was commissioned which has now resulted in total cold
rolling capacity of 90,000 tones per annum. The additional capacity would be
utilized for producing predominately value added stainless steel products for both
domestic and Exports markets. (www.jindalstainless.com)
Highlights
Jindal Organization is a celebrity. Ranked sixth amongst the top Indian Business
Houses.
69
New directions, new objectives... but the Jindal motto remains the same- "We are
the Future of Steel” (www.jindalstainless.com)
The last decade has been very challenging as the business environment was
very competitive, India was globalizing and there were multiple complex issues at
play. But we managed to surmount it all and emerge on the top adding new
parameters to our achievements and bringing in the kind of excellence that will
make the industry and country proud. The company’s net sales stood at Rs.
5,459 crore in 2007-08 as compared to Rs. 377.15 crore in 1998-99 and Profit
After Tax (PAT) at Rs.1,236.96 crore in 2007- 08, while it was Rs. 46.50 crore in
the year 1998-99. JSPL’s compounded annual growth rate in terms of net sales
is 35% & PAT is 44%, a stupendous growth indeed and I am thankful for that to
our committed workforce.
It has been a decade gone well and we look forward to another challenging
decade with our determination to reach for the stars.
Milestones:
* Spreading out globally in steel production and mining.
* The largest private sector investor in the state of Chhattisgarh.
* An ISO 9002 & ISO 14001 certified Company.
* Manufactured 120 meters Rail, longest in the world.
* First to produce the 3.5 meters wide steel plates.
* Pioneered manufacturing of Hot Rolled Parallel Beam & Columns in medium
and large size.
* World’s largest coal based Sponge Iron manufacturing unit with its captive
mines & power plant.

70
Recognitions:
* JSPL was nominated as one of the emerging companies by Economic Times in
2001
* Among the top 20-investor friendly companies listed by Business Today in2004.
* One of the ten fastest growing large size companies listed by Dalal Street,2006.
* One of the ten most investor friendly companies listed by Dalal Street, 2006.
* National Energy Conservation Award six times between 2001-07.
* Eight Environment Awards between 2003-08.
* Six Performance Awards between 2001-2005.
* Three Safety Awards and two HR Awards.
Growth story of the decade
71
72
Exports
Worldwide demand of stainless steel has shown an average growth of around 4-
5 per cent as compared to growth in domestic markets of around 5-7 per cent.
The company started developing new markets for its stainless steel products
around 4-5 years back and has been able to achieve compounded average
growth of 234 per cent based on exports worth Rs. 653.01 Crore during FY 2007-
08 as compared to exports worth Rs. 592.84 Crore during FY 2006-07. During
the FY 2001-02 the company executed order worth US$ 55 million for export of
55,000mt of stainless steel slabs to leading stainless steel producers in US in a
short time span of around five months. The positioning of your company in
international markets has improved extensively with the execution of the above
export order.
As a result of rapid growth of economic development and increase in people's
standard of living in China, demand of stainless steel has climbed to a record
high. China has become the largest stainless steel consuming country with its
stainless steel apparent consumption exceeding that of USA. The stainless steel
markets in China have shown average annual growth rate of 17 per cent will
consumption of 2,253,000mt in 2001 compared to 260,000mt in 1990.
The company has been able to successfully tap the increasing stainless steel
demand in China & other South East Asian countries and has established its
office in China and Vietnam to service the expanding customer base in these
markets.
73
74
NET SALES & OTHER INCOME
75
Projects
Investment in Chhattisgarh:
An MoU was signed between JSPL and the Govt. of Chhattisgarh on 4th May
2007 for additional projects worth Rs. 8,438 crore.
Total Project Cost:
8,720Crore
CHHATTISHGARH
Investment in Chhattisgarh:
An MoU was signed between JSPL and the Govt. of Chhattisgarh on 4th May
2007 for additional projects worth Rs. 8,438 crore.
Further Expansion at Raigarh Plant:
* 2 MTPA Cement Plant
* Additional Power Generation of 270 MW
* Medium Structural Mill
* Pipe conveyor from mines to plant
* Mini Blast Furnace upgradation
* 1 MT SMS Bloom Caster and Oxygen Plant
* Fabrication Plant in Industrial Estate
Investment in Orissa:
JSPL is investing over Rs. 40,000 crore in Orissa in steel production and
76
power generation. It proposes to produce 12.5 MTPA steel in two phases
and generate 2500 MW of power over the next decade or so.
Highlights of Angul Project:
* The Project is proposed to be setup on 5750 acres of land, 93% of which is
barren.
* The technology to be adopted for this Integrated Steel Plant will be the
DRI/BF/EAF route. The DRI Plant has unique feature of using Syn Gas from the
Coal Gasification Plant as reductant. The DRI/coal gasification route is being
used for the first time in the world and has the advantage of using high ash coal
which is predominantly available in the vicinity of the project site.
* Work on setting up of DRI plant of 2.0 MTPA capacity, plate mill of 1.5 MTPA
capacity and power plant has started.
* Plate Mill of 1.5 MTPA has already been ordered and Hot Strip mill is planned
to be finalized by August, 2008.
Investment in Jharkhand:
In Jharkhand the company plans to produce 11 MTPA of steel and 2600 MW of
power in phases at a combined investment of over Rs. 27,000 crore.
Highlights:
* JSPL has taken over the assets of closed Bihar Alloys & Steel Ltd. at Patratu,
about 40kms from Ranchi.
77
* Using the available land and adding some more, the company is setting up
the new steel and power plants, which would provide gainful employment to a
large number of people and will also help in the economic and infrastructure
development of the region.
* Foundation Stone for the Plant was laid by Shri Madhu Koda, Hon’ble Chief
Minister of Jharkhand on 18th March, 2007.
* Feasibility Report and Detailed Project Report completed by MECON for the
Steel Plant.
* Complete plant layout frozen, site activities like leveling started, basic
engineering in progress.
* Bar Mill of 1 MT and Wire Rod Mill of 0.6 MT capacity already ordered and civil
structural work has started.
* Jeraldaburu Iron Ore Mines, Jitpur Coal Block and Amrakonda-Murgadangal
Coal Block allocated.
Marketing
The continuing recessionary trend observed during the first half of the financial
year 2005-06 got reversed during second half. The demand for stainless steel
increased substantially during later part of the year and there were chaotic
activities by the service centers trying to build inventories by placing larger orders
to tile manufacturers. Jindal also benefited by this trend and has resulted in surge
of export volumes. There was almost a three-fold increase in the export
dispatches. This trend continued during the first quarter of 2002-03 also and is
likely to continue further. JSL, in addition to exports, has increased its dispatches
on the domestic front as well as some new areas got special attention from the
78
marketing team, this includes dispatches to auto industry, Govt of India Mint and
Railways. Jindal continues to be regular supplier to large and prestigious
corporate customers like BHEL, NITRO, and Dep’t. Of Atomic Energy, L&T,
Nuclear Fuel Complex etc. (www.jindalstainless.com)
Quality and Research & Development
JSL supplies quality products to a host of industries and customers. The
consistency of the product quality has ensured that stainless steel manufactured
at Hisar is meeting requirements for special applications such as nuclear power,
atomic energy, railway coaches and wagons, coinage, refineries, fertilizers,
copper industry, surgical and razor blades, utensils, etc. Besides the Quality
Assurance Department is working independently to operations so as to ensure
strict compliance to the requirements of the customers. The Company is
upgrading ISO 9002 system to ISO 9000-2000 version, which will be more,
focused towards customers' feedback and hence will bring the company more
closely and responsive to meet the customers requirement. ISO 14001 systems
is in place, which shows the concern of the company towards environment
protection. As a step forward the company is now in process of implementing
OHSAS-18001 which will ensure safe and healthy working condition to the
employees and people living in the vicinity of the Company Research &
Development unit in Hisar is further making rapid strides to introduce more value-
added products in the company's product portfolio, the manufacturing of duplex
stainless steel which finds applications in manufacturing of pressure vessels,
equipment for water treatment, digesters in pulp and paper industry etc. has
been stabilized by the R&D team. The company has also started manufacturing
79
of cupronickel material for coinage and high Nickel alloys such as 'Invar' utilized
in manufacturing of thermostats.
Information Technology
Today's most successful companies take advantage of new technology to
refocus attention on their relationships with stakeholder’s viz. customers and
suppliers. In focusing on complete relationships, rather than independent pieces
of information, they seize opportunities for new avenues of I increased business
opportunities. These solutions include IT Outsourcing, Business and IT
Synchronization, Computer Operations Services, Data base administration
services, CBIT Solutions for Enterprise Internet working, Business Continuity
services, eBusiness solutions, Web application Services. To keep pace with the
technological advancement, JSL has been regularly updating itself on this front.
JSL is also in the process of state-of-the-art ERP systems tightly coupled with
supply chain management.
Subsidiary Companies
The company has 4 subsidiaries namely Jindal Holdings Limited, Jindal Steel &
Alloys Limited, Jindal Stainless (Mauritius) Limited and Massillon Stainless Inc.,
USA.
CATEGORIES OF SHAREHOLDERS (AS ON 31.03.2008)
Category No. of Shares % of Holding

Promoters 9,06,28,615 58.86
FIs/ Banks/MF/UTI 75,10,831 4.88
Corporate Bodies 36,17,765 2.35
NRIs/OCBs/FII 3,71,34,269 24.12
Public 1,50,69,860 9.79
80
Total 15,39,61,340 100.00
Industry Structure and Development
Indian stainless steel industry witnessed a nominal growth of 5% to 7% during

the year 2001-02, though the first half was relatively sluggish. The demand
started picking up during the second half. During the financial year 2007-08 the
expected growth of the stainless steel industry will be about 8 - 10%. This surge
in growth is mainly fuelled by industrial revival in Indian markets and demand for
stainless steel is expected to grow further. In international markets the prices of
stainless steel have gone up, in Europe and US mainly due to de-stocking of
huge inventories and consequently fresh inventory built up. In China domestic
demand outstrips supply and hence prices are very firm and attractive in those
markets. Jindal Strips Limited has continued to manage its leadership position by
recording a turnover of Rs.6180.75 crore during financial year 2007-08 as
compared to Rs3948.76 crore during previous year. The increased sales are
81
mainly on account of rise in level of exports, improvements in domestic price
realization and focus on value added cold rolled stainless steel products.
Jindal’s export turnover has increased from Rs. 592.84 crore to Rs. 653.01 crore
during the financial year 2007-08 as compared to the financial year 2006-07.
Exports now comprise around 30% of company's total turnover. JSL strategy to
combat perceived threat in domestic markets by focusing on exports has started
showing positive results. Due to diversions of capacities from low value added
domestic products to high value products for exports has resulted in two fold
benefits. Firstly this has resulted in firming up of prices of these low value
products in domestic market and increasing their contribution and secondly better
realization from products meant for exports. The focus of JSL to develop 200
series products in South East Asian Markets has shown very good results and
these products have become a favorite with stainless steel users in these
markets. China has also exhibited a great potential as it has posted a growth of
over 20% in stainless steel during the year 2006-07s. Realizing large potential for
its products in China and neighboring countries, JSL has opened a full fledged
office in China. Another high growth area will be other South East Asian markets
and in view of the same, an office of JSL is setup in Vietnam also. Plans are now
afloat to open offices in Europe and other areas to further strengthen overseas
markets of JSL. (Annaul Report, Jindal Steel Ltd.)
Segmentwise and Productwise Performance
Jindal flat produces 2 categories of stainless steel – (a) hot rolled flat base
products that are used for manufacture of stainless steel utensils and (b)
segment uses wider width hot rolled and cold rolled products and includes
coinage, razor blade manufacturing, atomic energy, railways, pipe manufacturers
and fabricators. Jindal Steel Ltd produces hot rolled and cold rolled stainless
steel flat products at Hisar and Ferro chrome at Kothavalasa (AP). The addition
Jindal produces cold rolled products in different finishes such as 2B, 2D, BA,
No.3 and No.4 has helped a lot in increasing the market share in the Industrial
segment of domestic stainless steel industry like nuclear, space, railways, etc.
82
The congruous quality and variety of product mix has created a confidence with
customers and this effected in sustained domestic market share and has also
given a major export promotion.
Production and sales of Jindal strips Ltd
Sales Exports Sales Exports Sales Exports
2007-08 2007-08 2006-07 2006-07 2005-06 2005-06

(Rs in crores) (Rs in crores) (Rs in crores) (Rs in crores) (Rs in crores) (Rs in crores)
6180.75 653.01 3948.76 592.84 2905.46 371.85

(ISSB)
Financial Performance
Jindal keeping its superiority in Indian stainless steel market and it caters to
about 40% of the stainless steel requirement. In the year 2007-08 sales were at
Rs. 6180.75 crore, during this year the company registered export turnover of Rs.
653.01 crore.
In Rs. Crores
Gross Profit 6089.42
Operational Profit 2162.61
Other Income 49.12
Interest Expenses 101.19
corporate tax liability 2.98
Provision for deferred tax 14.07
Net Profit 1236.96
Capital Expenditure 98.08
Equity share capital 15.40
EPS 80.34
INDIA – CHINA TRADE

Table 9: Exports from India to China
The major exports from India to China during January - December 2004 are
given below:
Item description Value during Value during %

January – January – Change
December December 2005
2006 (US $ (US $ Million)
83
Million)
Minerals, slag and ash 626.1 548.5 14%
Plastics & articles thereof 262.1 166.4 57%
Iron & steel 262.0 200.1 31%
Organic Chemicals 234.8 141.5 67%
Cotton 188.5 156.7 -20%
Precious stones 104.7 83.4 26%
Salt, sulphur, earth, stone 104.3 96.2 8%
Inorganic Chemicals 72.6 26.8 168%
Electrical Machinery 62.5 24.1 158%
Fish & crustaceans 49.7 77.5 -54%
Raw hides and skins 43.5 38.9 11%
Paper & paperboard 40.6 9.8 305%
Machinery & Mech. 31.8 25.0 56%

appliances
Prepared feathers and down 28.3 22.3 27%
Mineral fuel and oil 28.1 37.2 -32%
Total 2274.10 1699.97 33.7%
In 2004, the export of Mineral Products from India to China increased by 14%,
compared to 2003. Exports of Cotton (-20%), marine and seafood (-54%) and
mineral fuels (-32%) recorded negative growth in 2004 compared with the
previous years.
Exports of Plastics (57%), Iron & Steel (31%), Organic Chemicals (67%), and
Minerals (14%) registered significant increase. Other star performers that
showed high growth rates included Electrical Machinery (158%), Inorganic
chemicals (168%) and Paper & paperboard (305%). Another encouraging feature
84
was the 56% increase in the exports of machinery and mechanical appliances
from India.
Table 10: India's imports from China

The major items imported by India from China are given below:
Item description Value during Value during %

January – January - Change
December December 2001
2002 (US $ (US $ Million)
Million)
Electrical machinery & 564.6 250.3 125%

Equipment
Organic Chemicals 543.3 378.8 57%
Silk 219.5 181.0 21%
Machinery & Mech. 199.6 157.3 27%

Appliances
Mineral fuels and oils 189.1 268.6 -42%
Optical & Medical 82.66 48.9 69%

Instruments
Impregnated fabrics, 71.82 41.8 71%

textiles
Inorganic chemicals 70.8 63.1 13%
Man-made filaments 65.2 13.8 372%
Edible vegetables 44.9 14.1 221%
Salt, sulphur, stone 37.3 70.6 -90%
Precious stones 32.6 33.9 -5%
Total 2671.7 1896.3 40.8%
Graph 3: Chinese monthly steel Imports, exports
85
(China Business, MARCH. 2009)
Imports of chemicals and allied products increased by 43% in 2002 compared to

2001. Imports of silk increased by 21% while those of Machinery & Mechanical
appliances increased by 27%. Imports of electrical machinery (125%), man-made
filaments (363%), edible vegetable (221%) and Optical & Medical instruments
(69%) increased significantly in 2002.
iron ore constitutes about 53% of India's total exports to China. Value added
items like machinery including electrical machinery dominate Chinese exports to
India, which together constitute about 36% of exports from that country. The top
15 Chinese exports to India have recorded growth between 29% in organic
chemicals and 219.89% in iron and steel products.
Investments
86
China, commodity and capacity known as the 3Cs of corporate India's investment
plans. Chinese demand for steel is fuelling a billion dollar investment cycle
across the country's steel producers. An association of domestic demand and the
promotion of the export market is seeing a host of auto majors planning to invest
another $500-700 million in the four-wheeler passenger segment. However, there
is a quota of 1.3 million tonnes for exports from India, Chinese demand presently
accounts for 29% of Tata Steel's exports, 35-40% of SAIL's and 35% of Essar
Steel's exports.
Major Company’s Investment Plans for next 2-3 years (In Rs crore)
Tisco 2,000
Jindal stainless 1600
Stemcor 250
SAIL 500
Hyundai 1,000
Toyota (two units) 600-700
Honda (possible) 1,000
General Motors 600
Gujarat Ambuja 1,000
(Source: World Steel Dynamics)
JINDAL STAINLESS EXPORTS TO CHINA MARKET
Indian stainless steel makers are resting their business hopes on steadily
growing demand from China, which is gearing up to boost imports following entry
to the World Trade Organisation. The anticipated growth in China's appetite for
stainless steel has prompted India's largest stainless steel maker Jindal Strips
Limited to ponder "some kind of strategic alliance" in China.
India produces about 780,000 tonnes of stainless steel annually, out of which
Jindal Strips contributes about 325,000 tonnes. India exports about 100,000
87
tonnes of stainless steel and the Chinese market accounts for about 25,000
tonnes of that.
China imports about 1.6 million tonnes of stainless steel annually, trade officials
say.
Apart from China, jindal strips was also considering a strategic alliance in
Indonesia in its push to gain Southeast Asian markets. Vietnam's demand for
stainless steel is growing rapidly although the volumes are small. Jindal Stainless
Ltd is also eyeing exports to the United States, Middle East and Africa.
Jindal Stainless Ltd’s long term marketing agreement with Minmetals Steel Co.
Ltd suggests that Minmetals Steel Co., Ltd. will purchase around 50,000 M.T. of
Hot Rolled / Cold Rolled Stainless Steel Coils (more than US$ 60 million), from
Jindal Stainless Ltd. The agreement is the strategy of JSL to strengthen its
foothold in the Chinese market. This will be executed in 12 months time.
Jindal Stainless Ltd. has won an order worth US$60mn to supply 50,000 tons of
steel to Minerals Steel, a Chinese state-run steel-buying house. The 50,000
metric tons export order would consolidate its foothold in the lucrative Chinese
market. The order is valid for a year and could be extended on mutual consent.
This order will enable the company to cross 2,00,000 tons export mark for the
Chinese market, along with which the company was aiming for an export growth
of 20% for FY05.The order is part of efforts by India's largest integrated stainless
steel producer to tap the growing demand in China which imported 28mn tons of
stainless steel coils last year. Jindal Stainless exported 1.9 lakh tons of steel to
China in FY04, accounting for nearly 90% of the company's 2.15 lakh tons of
exports in 2003-04. Minmetals Steel would buy both hot-rolled and cold-rolled
88
stainless steel from Jindal Stainless which has a production capacity of more
than 5,00,000 tons a year. The company planned to increase its exports to
2,70,000 tons during the year ending March 31, 2005 from 215,000 tons in the
previous fiscal year. This year the domestic markets are looking better as of
now, but things are likely to improve from the second quarter onwards for
exports.
JSL Ponder CR plant in China
With China emerging as one the largest buyers of stainless steel products from
Jindal Strips Ltd (JSL) in 2004, the company is seriously evaluating
possibilities to set up cold-rolling manufacturing facilities in the country.
Besides, JSL is also evaluating option to relocate its US plant, Massillon
Stainless, to China. According to JSL CEO N.C.Mathur, with 80% of JSL’s
exports to China, the company is looking at opportunities to tap China’s booming
construction market by setting up production facilities there. The growing demand
from this sector has also led to firming up of stainless steel prices in the domestic
market, said a dealer.
In 1993, the US and Japan were the two main markets for the commodity with a
combined volume of 3.7 MT. In 2002, China alone consumed 3.2 MT. According
to estimates, in 1993, usage of the top seven markets was 73%, which is down to
69% in 2002. This is largely because concentration of the top consumers has
reduced as all other markets managed to expand by 5.8%, while growth in China
has been in excess of 17%. JSL estimates its turnover to cross the Rs. 45,000-
crore mark during the current fiscal as compared to Rs. 3,600 crore during 2006.
89
90
FINDINGS
With the completion of this study I am able to know various aspects of JSL and
also gained huge knowledge about stainless steel and its market situation. This
research enabled me to gain the following findings:
• JSL, one of the top organizations in India, is a celebrity in the

world of business.
• The anticipated growth of stainless steel in China has prompted

Jindal Stainless Ltd. To strengthen relationship with China.
• In the preparation of Olympics the Chinese has begun

construction binge the demands for steel.
• As result, JSL has won an order worth US$60mn. To supply

50,000 tons of steel to China over a period of one year.
• JSL has announced a long term agreement with Mean metals

Steel Co. Ltd. In china.
• JSL is evaluating to set up cold rolling manufacturing facilities in

China.
91
CONCLUSIONS
The export potential of 141236 MT and 107741 MT for the years 2007-08 and
2006-07 respectively, as forecast in the five-year plans, are only indicative.
Factors like capacity utilization, domestic price realization, international price
movements, exchange rate variations etc. would ultimately determine the level
of actual export. Infrastructural constraints like domestic movement, port
facilities, etc. would have important bearing on exports.
The tight demand scenario market is likely to increase the need to reduce cost
of sell material in both the domestic and the international markets at
competitive prices. Superior qualities, determined largely by the requirements
of the cold reducers, who produce cold-rolled sheets for the sophisticated
automobile and white goods industries, would have to be achieved which
would imply attainment of high surface finish, high degree of ductility. This
would make focusing of technologies and technical controls necessary.
Asia, as a whole, will continue to import steel, meaning Asian steel prices are
likely to remain higher than in China. India Integrated steel companies, being
one of the world's lowest cost producers are better placed in terms of exports
to these high growth Asian countries.
The huge need of basic steel froth essential infrastructural development of this
vast under-developed region them are concentrating on development of their
backward infrastructure for which steel is undoubtedly the primary material.
"The growth of infrastructure actives in the Asian region will open up a big
steel market which is till now not properly explored.
India’s exports to China are now growing at a much faster rate than imports, and
balance of trade is stabilizing. For instance, the growth in imports from China
92
between 1997 to 2000 stood at 70 per cent and went up to 171 per cent in the
period 2001-2005. Growth in exports to China meanwhile has jumped from 12
per cent in 1997 to 2000 to 258 per cent in the period 2001-2005.
Inspire of the increase in demand from China this year, the steel industry is still
worried about the possibility of a slowdown in purchases by China by 2004-05.
This could occur on account of two reasons:
• The infrastructure development work related to the 2008 Olympics may start
slowing by that year, and the coming on stream of additional steel producing
capacities in that country.
• India's exports have also been marginally hit by trade actions initiated by,
among others, US, Canada and Thailand.
Since the steel market has just began to grow, if Indian products can
establish themselves right at the beginning, markets should not be neglected
even if initially absolute amounts are low. What is required is a constant
presence.
At present, India has a significant presence tube, pipes and fittings. As
industries develop, demands for other products are bound to rise.
The initial spurt and the subsequent fall in imports of Kuwait can be explained
due to the boom in reconstruction of the economy after the war with Iraq
slowing down.
In order to increase Indian steel exports, good quality material at the most
competitive prices is needs. Considering that more than 90% of steel
produced in India is consumed domestically, for a long time our producers
have had nearly captive market. With the near-removal of the tariff barriers,
93
they care being forced to come to terms with their uncompetitive producers to
deliver goods at lowest operating costs.
In my opinion, unless the Government steps into lend to hand, Indian exports,
not just of steel, are bound to suffer. The additional burden put on the
producers in terms of high freight due to poor infrastructure, various cases
and taxes imposed by both State and Central Governments, etc. cause the
goods to become uncompetitive priced by the time they reach the ports. What
can be a bigger indictment of the conditions than the acknowledged craft hat it
costs three times as much to transport half-way across the globe.
94
RECOMMENDATIONS
After studying the market scenario of stainless steel in India and China, I would
like to recommend the following:
• The production of stainless steel has to be regularly updated with new
technology.
• The stainless steel industry can help in creating more demand for stainless
steel by discovering its new uses.
• High efficiency in mining and transportation of stainless steel has to be
maintained.
• Development of low nickel contents products should be given more priority.
• The Indian market of stainless steel should understand the demand drivers
and explore new applications.
• The Antidumping duties must be levied to overcome the injury caused by

dumping.
• Online customer relationship management has a very good scope in future as
predicted by the world Steel Dynamics. The internet and the intranet should
be exploited to the full extent.
95
BIBLOGRAPHY
Jindal Steel Ltd. - Annual Report 2008-09
Kathuria, S and N. Taneja (1986) India’s Exports: The Challenge from China,
ICRIER, New Delhi.
Wolf, Martin (2002), India's Exports, Oxford University Press for the World Bank,
Washington, D.C.
R Amavis , Refractoriness’ for the Steel Industry, Springer, Google Books

Partner Program World Steel Statistics Monthly
William A. Johnson (2001), The Steel Industry of India. Harvard edition nfs UK &
British.
Liedholm, C. (1998) The Indian Iron and Steel industry: An Analysis of

Comparative Theory of Permanent Revolution, New Left Books, London
Sanjiv J Phansalkar (2002), Opportunities and Strategies for Indian Business:

Preparing for a Global India, Sage Publications Inc
Ramaswamy V.S and Namakumari S.,Marketing Mnagement 3RD Edition (2005)

Macmillan India.
Stainless Steel Review, Mar 2008, July 2008
Links we used are as follows:
ASSOCHAM
• www.jindalstainless.com
• www.steel.gov.in/annual.htm
• www.tradeportalofindia.com
96

Global Marketing Strategies For Indian Firms

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What are the objectives of the study?

What are the objectives of the study?

What are the 7 P's of marketing mix for global marketing?

What are the 7 P's of marketing mix for global marketing?

EXECUTIVE SUMMARY

India’s positioning in the global perspective will depend upon cost

Indian business firms are facing problems on the international

Marketing planning helps you decide what products or services are

The personal, cultural, social and psychological attitudes of your

Product (or service)

This is the most visible aspect of marketing. It pulls together various

• Positioning and differentiating the market offerings through the product

• Developing new market offerings

• Designing global market offerings

India’s positioning in the global perspective will depend upon cost

There is a little bit of steel in everyone’s life

Stainless steel is gaining recognition and it is considered as the friendly and

than witnessed in the last decade.

INDIAN STEEL INDUSTRY

has seriously helped up China’s export.

production and consumption are further elaborated with respect to category of

a department specialized in research and intelligence to help meet the market’s

increasing need for the resolution of complex technological and informational

making India self-sufficient in stainless steel production. (William A. Johnson,

segment. Indian Railways is switching over to manufacture their passenger

still imports 90% of stainless steel. (William A. Johnson 2001)

EXPORTS FROM INDIA

Imports were higher by 26.8 per cent.

in Q1 2002-2003 to 92.0 per cent in Q1 2003-2004.

by India in 2007-08 was about US $ 47 million to Middle-East.

market, to reveal present pattern and possible future developments of supply,

demand and consumption in relevant product specific markets.

trying to become a major player in international market. With a market share of

potential in the Chinese market.

1. To study various global marketing strategies

Developing an International Marketing Strategy

An international marketing strategy involves developing and maintaining a strate-

gic fit between the international company's objectives, competencies, and

resources and the challenges presented by its international market or markets.

objectives in a complex, continuously changing international environment. Given

the changing nature of the environment, the international company's strategic

planning process must be systematic and continuous, and it must re-evaluate

objectives in light of new opportunities and potential threats. (Carol Graham,

Another dimension of international marketing strategy is linked to the company's

commitment to its international markets. Some companies use international

2001) This approach to international marketing, although it might open long-

term opportunities to the company, does not indicate a substantial commitment

to internationalization and is not a premise for success in the long term in

international markets. A long-term international commitment that entails

substantial investment in terms of resources and personnel is likely to bring the

company a stronger competitor in the world market, as well as at home.

International strategic planning takes place at different levels(Isobel Doole and

Robin Lowe, 2003):

long-term focus and involves the highest levels of management. PepsiCo

Beverages headquarters (including its international headquarters) are

located in Purchase, New York, USA. The company's corporate plan is

involves international target market selection decisions:

coordinates all local (country-level) operations. At this point, Pepsi may