nalco

[Type here]
A REPORT
ON THE
MARKETING STRATEGIES OF
NATIONAL ALUMINIUM COMPANY
BY
ARUN SHEKAR S
14BSPDD01011
NATIONAL ALUMINIUM COMPANY
(NALCO)
BENGALURU
A REPORT
ON THE
MARKETING STRATEGIES OF
NATIONAL ALUMINIUM COMPANY
BY
ARUN SHEKAR S
14BSPDD01011
NATIONAL ALUMINIUM COMPANY
(NALCO)
BENGALURU
A report submitted in partial fulflment of the
requirements of MBA Program of IBS Dehradun
DISTRIBUTION LIST
FACULTY OF IBS DEHRADUN
FACULTY OF IBS BENGALURU
COMPANY GUIDE AT NALCO
DATE:08/06/2015
DECLARATION
‘
I declare that this project report entitled “MARKETING STRATEGY OFNALCO”
prepared by me is a confde record of work done at NALCO, Bengaluru Regional
ofce ,under the guidance and supervision of Mr.K.G Ravi, Regional Manager,
NALCO, Bengaluru
Arun Shekar S
IBS Business School
Dehradun
ACKNOWLEDGEMENT
I am thankful to NALCO for giving me an opportunity to conduct research work
in their esteemed organization. I am honored to take this opportunity to
sincerely thank Mr. Lenkha, ED (Marketing),NALCO, Bhubaneswar, who
allowed me to work underMr.K.G Ravi, Regional Manager, NALCO,
Bengaluru, for expressing his faith & confdence in me by assigning this project
work to me.
I wish to express my sincere gratitude to Mr.K.G Ravi, Regional Manager,
NALCO, Bengaluru,for giving this opportunity to have an enriching learning
experience in this company and also for his keen interest,guidance,continuous
encouragement,support and help throughout the period of the project.
I also wish to extend my gratitude to all members of NALCO, Bhubaneswar,
for providing me the necessary information and relevant data.
I thank all the members of IBS Business School, Dehradun and Bengaluru
also for giving this opportunity as a part of our curriculum.
Arun Shekar S
IBS Business School
Dehradun
CONTENTS
SLNO TITLE Page no
1
EXECUTIVE SUMMARY
7-7
2
INTRODUCTION
8-9
3
PROFILE OF ALUMINIUM
10-27
4
PROFILE OF NALCO
28-37
5
REVIEW OF LITERATURE
38-51
6
ANALYSIS AND FINDINGS
52-56
7
DOMESTIC PROCEDURE
57-61
8
TERM & CONDITIONS
62-66
9
PRICING PROCEDURE
67-67
10
DISTRIBUTION PROCEDURE
68-68
11
EXPORT PROCEDURE
69-71
12
CUSTOMER SATISFACTION
72-76
13
PROMOTIONAL PROCEDURE
77-78
14
SUGGESTIONS
78-78
15
CONCLUSION
79-79
16
BIBLOGRAPHY
80-80
LIST FO TABLE
Table
no
TITLE
1 Aluminium Applications
2 Ranking TOP 10 Countries In World With Respect To Aluminium
Production
3 Production Of Alumina In India.(Unit In Tons)
4
Ranking TOP 10 companies In World With Respect To Aluminium
Production
5 NALCO Capacity
6
Region Wise Sales Structure Of Aluminium
7
Dominant Players Of Aluminium Industry
8 Aluminium Ore Capacity Of Top 10 Countries (In Million Tons)
9 Global Trend Of Aluminium Usage (Consumption):
10 Aluminium Usage Of Western World And India(%)
11 Country Wise Usage Of Aluminium In Diferent Sector
12 Usage Of Aluminium In India
LIST OF FIGURES
SLNO TITLE
1 Bohr Diagram
2
Aluminium Production
3 Entire Bayer Process
4 Alumina-Bauxite Refning
5 Aluminium Sustainability
6
The Marketing Mix
7 BCG Growth-Share Matrix
8 SWOT Profle
9 7s Model
10 BCG Growth-Share Matrix Of NALCO
Executive Summary
Aluminum represents the second largest metals market in the world. Growing
demand for the lightweight metal is fuelled largely by the booming Chinese
economy which already consumes a quarter of the world’s aluminium
production. Analysts predict an annual growth rate of 8 to 16% in the Chinese
automotive industry up to 2010, a 15% increase in construction expenditure
in 2011 and a minimum of plus 16 million annual growths in urban population
during the next 8 years. According to analysts these factors will combine to see
China consume 36% of world’s aluminium production as early as 2010.
Aluminium Industries in India is one of the leading industries in the Indian
economy. The growth of the aluminum Metal industry in India would be
sustained by the diversifcation and exploration of new horizons for the
industry. India has huge deposits of natural resources in form of minerals like
copper, chromites, iron ore, manganese, bauxite, gold, etc. The India aluminum
industry falls under the category of non iron based which include the
production of copper, tin, brass, lead, zinc, aluminum, and manganese.
The main operations of the of the India aluminum industry is mining of ores,
refning of the ore, casting, alloying, sheet, and rolling into foils. At present,
Hindalco and NALCO are one of the most economical in the production of
aluminum in the world. For the sustenance of the growth the aluminum
industry in India has to develop research and development units to assist the
production and improve on the quality measures to keep a stringent quality
control.
Marketing strategy is one of the important partsof company’s development. The
objective of this study was to help NALCO to know it’s own position in
comparison to it’s competitors; to know whether the strategy used by the
company is efective; and to provide a proactive, planed & informed approach to
it’s own strategies in order to gain an upper hand. The study on Marketing
strategy is done by taking all aspects of strategy very keenly like SWOT,BCG ,
7S MODEL , 4P’s.and others procedures.
1.0 Introduction
In the present competitive world every company wants to be the best in their
segment of business. So, company identifes its competitors with whom it has
to compete and according to it the company makes its strategy to survive in the
market. If the company cannot compete in the market then it will become a dog
in the market. Now-a-days each and every company is too aggressive to follow
or lead the market. Therefore, it has become imperative to study the
Marketing strategy of the company and renew it time and again.
Coming to the aluminium industry, this is one of the leading industries in the
Indian economy. The growth of the aluminum Metal industry in India would be
sustained by the diversifcation and exploration of new horizons for the
industry. So the proper use of marketing strategy is very much important and
that to in a planed way.Keeping these facts in view this study was conducted to
know the growth of NALCO as well as to fnd opportunities for expansion of
business and capturing the present market. The analysis of marketing strategy
of NALCO was based on the following parameters: 1) The Marketing Mix (The 4
P's of Marketing); 2) The BCG Growth-Share Matrix; 3) SWOT Analysis; 4) 7S
Framework.And others...
2.0Objectives of the study
? To help the company to understand its position with respect to its major
competitors in the market, and provide business competitive intelligence.
? To understand the present Marketing strategy deeply so to provide a
proactive, planned and informed approach to its future strategies in
order to gain an upper hand.
? To analyze the present product line of the company that how efective
they are.
? To fnd out company’s strengths and weakness and also the threats as
well as opportunities.
? To fnd out the work style of man power.
? To observe the action of competitors, that might help the company to
learn more about the market.
? To show the company new ways of expanding the business
3.0The relevance of the topic for the company
Today is the age of competitions so each and every company is aggressive in
capturing new opportunities available to gain market share. If the company is
aware of its position respect to its major competitors in the market, and have
business competitive intelligence can act proactively to gain an upper hand.
Also the company should have knowledge about the efectiveness of their
products. Apart from these this study also helps the company to know its
strengths and weakness and also the threats as well as opportunities; its work
style of manpower; its competitors; the procedure of pricing. Domestic
procedure, export procedureand show new ways of expanding the business.
These are quite pertinent aspects for the growth of the company.
4.0 Limitations of the Study
The limitations of the study are linked to information gathered from various
sources and the interpretation of the information. Also with the exception of a
few information sources like forecasted fnancial statements, this is particularly
the case if there are a lot of structural changes happening in the sector and all
the players are expected to have dynamic Marketing strategy to capture their
market.
PROFILE OF
ALUMINIUM
5.1 Profle of Aluminium
5.1.1 Background
History of Aluminium
Aluminium is the most abundant metal in the Earth’s crust. Since the
discovery of bauxite in 1821 by P. Bertheir, the metal has gradually evolved as
a cheap, durable metal which fnds applications in several industries.
The metal originally obtained its name from the Latin word for alum, alumen.
The name alumina was proposed by L. B. G. de Moreveau, in 1761 for the base
in alum and it was successfully shown in 1787 that the base was the oxide of a
yet to be discovered metal. The existence of aluminium was established by Sir
Humphry Davy in 1808.
Initially, aluminium was produced by reduction with alkali metals and was very
expensive. In 1886 C. M. Hall and Paul Héroult, working independently, came
up with a cost-efective solution called the Hall-Héroult electrolytic process that
refned aluminium production. In this process, the aluminium oxide is
dissolved in molten cryolite and then reduced to the pure metal. The Bayer
process was deployed to purify the raw material alumina, recover it from
sodium hydroxide and used in the Hall-Héroult process.
The Hall-Héroult process consumes a lot of energy but the development of
alternative processes was scrapped due to technical problems and also because
these were economically unviable. Therefore, the Hall-Héroult process has
remained the relatively inexpensive mode of producing aluminium.
The following is a timeline covering the chief events in the history of
aluminium:
1761 - L.B.G. de Moreveau proposes the name alumina for the base of
alum.
1808 - Sir Humphrey Davy establishes the existence of aluminium
1821 - P. Bertheir discovers bauxite
1825 - Oersted produces the frst pellet of aluminium
1827 - Friedrich Wohler describes a process for producing aluminium as a
powder by reacting potassium with anhydrous aluminium chloride.
1845 - Wohler establishes the lightness of aluminium
1855 - Henri Saint-Clair Deville displays a solid bar of aluminium at a
Paris exhibition. The production cost of the metal is higher than that of gold or
silver
1885 - Hamilton Y. Cassner improves on Deville's process of producing
aluminium
1886 - Paul Louis Toussaint Heroult and Charles Martin Hall, working
separately, come up with the cheaper Hall-Heroult electrolysis process of
producing aluminium.
1888 - The frst aluminium companies founded in 1888 in France, the
USA and Switzerland
1889 - Karl Josef Bayer invents the Bayer Process for the large-scale
production of alumina from bauxite.
P. Héroult. . C.M. Hall.
5.1.4Properties of Aluminium
A piece of aluminium metal about 15 centimeters long, with a U.S. cent
included for scale.Aluminium is a soft and lightweight metal with a dull silvery
appearance, due to a thin layer of oxidation that forms quickly when it is
exposed to air. Aluminium is nontoxic (as the metal), non-magnetic, and non-
sparking. Pure aluminium has a tensile strength of about 49 megapascals
(MPa) and 400 MPa if it is formed into an alloy.
Aluminium is about one-third as dense as steel or copper; is malleable, ductile,
and easily machined and cast; and has excellent corrosion resistance and
durability due to the protective oxide layer. Aluminium mirror fnish has the
highest refectance of any metal in the 200-400 nm (UV) , and the 3000-10000
nm (far IR) regions, while in the 400-700 nm visible range it is slightly outdone
by silver, and in the 700-3000 (near IR) by silver, gold and copper. It is the
second most malleable metal (after gold) and the sixth most ductile. Aluminium
is a good heat conductor, which is why it is often used to make saucepans.
.
Fig 1. BOHR Diagram.
5.1.5.1The ore: Bauxite
The most common aluminium ore is bauxite. The name "bauxite" comes from
the southern France village of Les Bauxs where it was discovered in 1821. The
term bauxite actually refers to any ore or mixture of minerals that is rich in the
oxide that is formed from aluminous rocks. Most bauxite contains about 40-
60% alumina. Deposits are found all over the world, from Spain through
Southern France, Italy, Austria, Hungary and Greece, (providing the base for
the European aluminum industry), with even larger deposits in subtropical and
tropical regions of Africa, West Indies, South America and Australia. Bauxite is
refned frst into aluminium oxide trihydrate (alumina) and they electrolytic ally
reduced into metallic aluminum. It takes two to three tons of bauxite to
produce one ton of alumina and two tons of alumina to produce one ton of
aluminum metal.
ALUMINIUM PRODUCTION
Aluminium ore, most commonly bauxite, is plentiful and occurs mainly in
tropical and sub-tropical areas: Africa, West Indies, South America and
Australia. There are also some deposits in Europe. Bauxite is refned into
aluminium oxide rehydrate (alumina) and then electrolytic ally reduced into
metallic aluminium. Primary aluminium production facilities are located all
over the world, often in areas where there are abundant supplies of inexpensive
energy, such as hydro-electric power.
Two to three tons of bauxite are required to produce one tonne of alumina and
two tons of alumina are required to produce one tonne of aluminium metal.
The aluminium industry relies on the Bayer process to produce alumina
from bauxite. It remains the most economic means of obtaining alumina, which
in turn is vital for the production of aluminium metal - some two tons of
alumina are required to produce on tonne of aluminium
5.1.5.2 The Bayer Process
The aluminium industry relies on the Bayer process to produce alumina from
bauxite. It remains the most economic means of obtaining alumina, which in
turn is vital for the production of aluminium metal - some two tons of alumina
are required to produce one tonne of aluminium.
Fig 2. Entire Bayer Process
The primary aluminium industry is dependent on a regular supply of alumina for four
functions:
1.Basic raw material for aluminium production
2.Thermal insulator for the top of electrolytic cells
3.Coating for prebaked anodes
4.Absorbent flter for cell emissions
5.1.5.3. Alumina Production
Bauxite is washed, ground and dissolved in caustic soda (sodium hydroxide) at
high pressure and temperature. The resulting liquor contains a solution of
sodium aluminate and undissolved bauxite residues containing iron, silicon,
and titanium. These residues sink gradually to the bottom of the tank and are
removed. They are known colloquially as "red mud".The clear sodium aluminate
solution is pumped into a huge tank called a precipitator. Fine particles of
alumina are added to seed the precipitation of pure alumina particles as the
liquor cools.
The particles sink to the bottom of the tank, are removed, and are then passed
through a rotary or fuidized calcite at 1100°C to drive of the chemically
combined water. The result is a white powder, pure alumina. The caustic soda
is returned to the start of the process and used again.
5.1.6Aluminium’s Life Cycle
There exists a signifcant potential to reduce greenhouse gas emissions through
the increased use of aluminium in transportation applications and from the
increased use of recycled aluminium. But there also is a challenge because of
the relatively high-energy consumption and greenhouse gas emissions
associated with the production of primary aluminium.
In 1997 the Member Companies of the International Aluminium Institute (IAI)
(who represent most of the World's production of primary aluminium excluding
Russia and China) concluded that the Industry needed to develop as complete
an understanding as possible of the positive contributions that aluminium
makes to the environmental and economic well-being of the world's population
as well as of any negative economic or environmental impacts that its
production might cause. Therefore a Life Cycle Analysis study was initiated.
The scope of the study goes far beyond the production processes alone. It also
covers the impacts and benefts of the material throughout the lifespan of the
diferent aluminium products including its reuse and recycling.
The IAI therefore chose as its frst task the quantifcation of the carbon dioxide
and per fuorocarbon greenhouse gas (GHG) emissions from the worldwide
aluminium industry and secondly the development of estimates of the
implications in terms of Greenhouse Gas Emissions of the increased use of
aluminium for the manufacture of cars and trucks. Data on energy
consumption and greenhouse gas emissions associated with aluminium
production, product utilization and recycling was gathered from over 80% of
the worldwide industry including estimates from Russia and China.
5.1.6.1 Alumina-Bauxite Refning
To produce primary aluminium metal, bauxite ore is mined , transported to
processing plants called refneries, crushed, digested precipitated and calcined
to produce alumina (Al
2
O
3
) powder in the Process. On average, alumina
refning consumes 75 kg of caustic soda and 48 kg of lime per metric tonne of
alumina. Greenhouse gas emissions of 991 kg of CO
2e
(carbon dioxide
equivalents) per metric tonne of alumina are generated primarily from fuel
consumption and from energy consumed in producing the lime and caustic
soda ancillary materials.
Fig.3 Alumina-Bauxite Refning
5.1.6.2 Aluminium Smelting
Primary aluminium is produced by the Hall-Heroult electrolytic process in
which alumina is reduced to aluminium metal at a carbon electrode or anode
in the following reaction:
2Al
2
O
3
+ 3C -----> 4Al + 3CO
2
This alumina is dissolved in a molten cryolite bath, and electric current is
passed through this solution, thereby separating the alumina into aluminium
and oxygen. The oxygen immediately reacts with the carbon anodes to produce
carbon dioxide as an of gas.
Data was received in 1999 from worldwide aluminium smelters producing 19.8
million metric tons of primary aluminium that represents 89% of worldwide
aluminium smelting operations. Across all technologies, electricity
consumption averaged 15.95 kWh per kg of molten metal. The consumption of
fuels to produce this electricity generated 5.8 metric tons of CO
2
per tonne of
metal. An additional 1.6 metric tons of CO
2
per metric tonne are generated in
the electrolytic process.
5.1.7Aluminium Sustainability
Aluminium is a sustainable material. At the current primary aluminium
production level, known bauxite reserves will last for hundreds of years. More
than 55 per cent of the world's aluminium production is powered by renewable
hydro-electric power. Products made from aluminium can be recycled
repeatedly to produce new products. The increasing use of recycled metal saves
both energy and mineral resources needed for primary production. The IAI has
produced the "Aluminium for Future Generations Sustainability Update".
5.1.8 Transport
High aluminium content vehicles can be up to 50 per cent lighter than
conventional vehicles. The consequent fuel savings over the lifetime of a vehicle
far more than repay the initial investment in energy to make primary
aluminium. Lighter cars, trucks and trains mean less fuel consumption and
emissions, less wear and tear on roads and tracks. As vehicle emissions
contribute up to one-third of global greenhouse Gas emissions, replacement of
the current stock of vehicles with high aluminium content, lighter, low
emission vehicles will make a signifcant contribution to the reduction of
greenhouse gas emissions.
5.1.9 Recyclability
Almost every aluminium product can be commercially (i.e. proftably) recycled
at the end of its useful life, without loss of metal quality or properties. The
increasing use of recycled aluminium in many applications (up to 60 per cent
in vehicles) gives aluminum’s established credibility as a "green" metal a
further boost.
5.1.10 Aluminium in Building
In buildings, aluminium panels are corrosion resistant and therefore virtually
maintenance free. Aluminium's lightness means easy construction, while its
thermal insulation properties derived from the ability to design thermal breaks
in extrusions, and from aluminium foil's refectivity, conserve heating energy.
Aluminium buildings look good too! A large amount of waste building materials
go to landfll sites at a cost to both the economy and the environment. In
contrast aluminium is recycled in a way that pays for itself and is sustainable.
5.1.11 Aluminium in Packaging
Aluminium in packaging preserves food quality and avoids waste, and its low
weight reduces fuel consumption and emissions during transportation.
5.1.12 Aluminium and Electric Power
Aluminum’s high conductivity makes it an excellent material for electrical
power transmission over long distances. The use of aluminium cables reduces
power losses signifcantly and therefore conserves energy.
5.1.13Aluminium and Water
WHO recognized the benefcial efects of the use of aluminium as a coagulant
in water treatment to remove unwanted material including several organisms
known to cause diseaseAluminium has indeed fulflled Dickens's prophecy ...
but even he would no doubt be amazed at the thousands of diferent products
in which it is now used throughout the world.
5.1.14 Aluminium Applications
Aluminium –wonder metal has many remarkable features:-
? Aluminium weighs only 0.34 times as much as iron.
? Aluminium is a good refector of thermal, optical & electromagnetic
radiation.
? Pure unalloyed Aluminium is soft, but Aluminium alloys may surpass
the tensile strength of steel.
? Even minor additions of iron have no signifcant magnetic feld of
Aluminium.
? Aluminium surface can be reinforced to protect from weather & chemical
corrosion.
? The metal & its source are non- toxic and it is therefore an important
packaging material for food.
? Aluminium is equivalent in conductance while being 50% lighter.
? Aluminium can be formed into diferent shapes by any of the usual
process in industry.
? Aluminium permits rapid heat dissipation.
? Many possibilities are available for treating and texturing Aluminium
surface .
Table 1. Aluminium applications
Sector Major application
Transport
Automobiles Radiators, engine components , body sheets
Aerospace Structural components, commercial airframes
Rail Wagons, coaches
Packaging Beverage containers, food containers, aerosols,
Packets, caps and closures.
Building Cladding, roofng, window and door frames,
fencing
Electrical engineering Bus bars, transformers,generators,conductor &
cables
Mechanical engineering Bearings, heat exchangers, hydraulic system
Household application Refrigerators and freezers
Machinery and
equipment
Irrigation piping, agricultural machineries,
chemical Appliances.
Market Position of Aluminium
Table:2 Ranking of the top 10 countries in world with respect to
aluminium production.
NAME RANK
CHINA (16,800 thousand tons) 1
RUSSIA (3850 thousand tons) 2
CANADA (2920 thousand tons) 3
AUSTRALIA (1950 thousand tons) 4
UNITED STATE (1720thousand tons) 5
BRAZIL (1550 thousandtons) 6
INDIA(1400 thousand tons) 7
UNITED ARAB EMIRATES (1400 thousandtons) 8
BAHRAIN (870 thousand tons) 9
NORWAY (800 thousandtons) 10
Table: 3 Production of aluminium in India. (Unit in tons)
Company 2008-09 2009-10 2010-11(up
to Dec
2010**)
Location
NALCO 3,61,262 431488 3,32,195 Damanjodi
(Orissa)
HINDALCO 5,23,453 5,55,404 3,99,253 Renukoot (UP)
MALCO 23,224# _ _ Chennai(Tamil
Nadu)
BALCO@ 3,56,781 2,68,452 1,92,383 Korba (MP)
VAL 82,031 2,69,083 2,76,013 Pune (MH)
TOTAL 13,46,751 15,24,751 11,99,844 _
# MALCO has closed its smelter since December, 2008.
@ BALCO has closed its old smelter of 1,00,000 tons per annum capacity
due to its non-viability.
** Compiled on the basis of information provided by primary aluminium
producers to the Ministry.
It is an intermediate product obtained from bauxite for production of
Aluminium. Many developing countries, which are having plenty of bauxite
reservoirs and are, having high cost of power generation, prefer to produce
Alumina as value added product for export purpose rather than exporting
bauxite. On the other side the countries having cheaper energy availability
want to improve Alumina for their smelter instead of bauxite so as to reduce
tonnage and transport problem. The production of Alumina in India started in
1945. Since then the capacity of the same has increased from 4000 tons to 2.0
million tons at present.
Table 5.NALCO CAPACITY
NALCO EXISTING
CAPACITY
CAPACITY
AFTER(2
ND
)EXPANSION
BAUXITE MINES 4.8 MPTY 6.3 MPTY
ALUMINIUM
REFINERY
1.575MTPY 2.1 MPTY
ALUMINIUM
SMELTER
3,45,000 TPY 4,60,000 TPY
CAPTIVE POWER PLANT
8*120 MW 10*120 MW
5.1.15 Global Consumption and Domestic Consumption
The growth of worldwide consumption has been well over 8% per year till mid
70’s. But by the year 2001, the global consumption of Aluminium has declined
by about 4%.
Out of the global consumes about 27%. Hence, in case of any economic slow
down in the western world , especially in the US and JAPAN , it will afect the
signifcantly by 12% in the USA and 6.7% in JAPAN, where as in china, CIS
and middle east, there was an excellent demand of 10% , 9% and 16%
respectively during the same period.
During the year 2003-04 , the world consumption of primary Aluminium is
about 28,103 MT against the world’s production of about 28, 489 MT million
tons and there by creating a net surplus of 386 MT in the global market.
During the same period the world supply of Aluminium is around 35,085 MT
against the total world consumption of 34, 852 MT there by showing a defcit of
203 MT. since the economies of EUROPE, JAPAN, other western world and US
still remain bearish, the global market has to face uncertainties . However, the
strong Chinese demand has helped the Indian industry.
Table 9. Global Trend of Aluminium Usage (Consumption):
SECTORS USAGE
Transportation 32%
Packaging 21%
Construction 13%
Electrical 07%
Consumer durables 07%
Machinery & equipment 06%
Others 14%
Table 10. Aluminium Usage of Western World and India (%)
SECTORS WESTERN WORLD INDIA
Transportation 27% 18%
Packaging 22% 07%
Construction 21% 06%
Electrical 08% 35%
Consumer
durables
07% 72%
Others 15% 22%
Table 12. Usage of Aluminium in India
SECTORS INDIA
TRANSPORTATION 18%
PACKAGING 07%
CONSTRUCTION 06%
ELECTRICAL 35%
CONSUMER DURABLES 12%
OTHERS 22%
PROFILE OF NALCO
5.2 Profle of NALCO
5.2.1 Mission
• To achieve sustainable growth in business through diversifcation,
innovation and global competitive edge.
• To satisfy the customers and shareholders, employees and all other stake
holders.
• To continuously develop human resources, create safe working
conditions, improve productivity and quality and reduce cost and waste.
• To be a good corporate citizen, protecting and enhancing the environment
as well as discharging social responsibility in order to ensure sustainable
growth.
• To intensify R&D for technology development.
5.2.2 Vision
• To be reputed global Company in the Metals and Energy Sectors.
5.2.3 Objectives
• To maximize capacity utilization.
• To optimize operational efciency and productivity.
• To maintain highest international standards of excellent in product
quality, cost efciency and customer service.
• To provide a steady growth business by technology up gradation,
expansion of diversifcation.
• To have global presence and earn foreign exchange.
• To maintain leadership in domestic market.
• To install fnancial discipline at all levels for achieving cost and
budgetary controls , optimize utilization of working capital and
efective cash fow management
• To maximize return on investment
• To develop a strong R&D base and increase business development
activities.
• To promote a result oriented organizational ethos and work culture
that empowers employees and helps realization of individual and
organizational goals.
5.2.4 AWARDS & ACCOLADES
Indra priyadarshini Vrikshamitra Award by Govt.of India-1994 ?
First CAPEXIL Export Award-1988 ?
London Metal Exchange Registration-May 1989 ?
First EEPC Export Award-1998-99 ?
Indra Gandhi Paryavaranpuraskar by Govt. of India-2000 ?
FIEO Niryat Shree Awartds-2005-06 ?
Navaratna Status-2008 ?
Premier Trading House Status-2009 ?
500th shipment of Alumina from Vizag port-2010 ?
Best listed CPSE Awards-2010 ?
ISO 9001:2000,ISO 14001,OHSAS 18001 & SA 8000 Certifcations ?
NALCO achieves record production and sales in 2010-11
NALCO Today
Today as an ISO 9001 company, NALCO has emerged as the largest integrated
Bauxite-Alumina-Aluminium complex in Asia enabling India to witness a
quantum jump in Alumina and Aluminium production. The company for the
fnal time created exportable surplus Alumina and Aluminum production. The
company for the frst created exportable surplus in Alumina and helped India
top focus on its massive Bauxite resources in the east coast export oriented
Aluminum plants.
5.2.5 Segments of NALCO
NALCO has emerged as the largest integrated Bauxite-Alumina-Aluminium
complex in Asia enabling India to witness a quantum jump in Alumina and
Aluminium production. The company for the fnal time created exportable
surplus Alumina and Aluminium production. The company for the frst created
exportable surplus in Alumina and helped India top focus on its massive
Bauxite resources in the east coast export oriented Aluminum plants.The
integrated complex has fve segments like Bauxite mine, Aluminum refnery,
Aluminum smelter, Captive power plant and port facilities.
5.2.5.1 Bauxite Mine
On Panchpatmali hills of Koraput district in Orissa, a fully mechanized
opencast mine is in operation since November, 1985, serving feedstock to
Alumina Refnery at Damanjodi located on the foothills. Present capacity of
Mines is 68.25 lakh TPA. Panchpatmali plateau stands at elevation of 1154 m
to 1366 m above mean sea level. Bauxite occurs over the full length of the
Panchpatmali plateau, which spans over 18 kms.
The salient features:
• Area of deposit - 16 sq. KM
• Resource - 310 million tonnes
• Ore quality - Alumina 45%, Silica 3%
• Mineralogy - Over 90% gibbsitic
• Over burden - 3 meters (average)
• Ore thickness - 14 meters (average)
• Transport - 14.6 KM long, single fight, multi-curve cable belt
conveyor of 1800 TPH capacity
Alumina refnery
The Alumina Refnery is located at Damanjodi, Odisha, approximately 14 KM
from the bauxite mine at Panchpatmali. The mined-out bauxite is transported
from captive mine to refnery by a 14.6 KM long single-light multi-curve 1800
tonnes per hour (TPH) capacity cable belt conveyor. The alumina produced is
transported to aluminium smelter at Angul (Odisha) and to Vizag (Andhra
Pradesh) port by rail.
The present capacity of Alumina Refnery is 22.75 lakh TPA. Alumina produced
is used to meet Company's requirements for production of primary aluminium
at smelter. The surplus alumina is sold to third parties in the export markets.
The salient features:
• Atmospheric pressure digestion process
• Pre-desilication and inter-stage cooling for higher productivity
• Energy efcient fuidised bed calciners
• Co-generation of 4x18.5 MW power by use of back pressure turbine in
steam generation plant
.2.5.3 Alumina Smelter
The present capacity of smelter is 4.60 lakh TPA. Alumina is converted into
primary aluminium through a smelting process by using electrolytic reduction.
From the pot-line, the molten aluminium is routed to either the casting units,
where the aluminium can be cast into ingots, sow ingots, tee ingots, billets,
wire rods, cast strips and alloy ingots, or to RPU where the molten aluminium
is rolled into various cold-rolled products or cast into aluminium strips.
Aluminium products are sold in the domestic market and also exported
through Kolkata, Paradeep&Vizag ports.
Nalco acquired and subsequent merged International Aluminium Products
Limited (IAPL), the 50,000 tpa export-oriented Rolled Products Unit with Nalco.
The RPU is integrated with the Smelter Plant at Angul for production of
aluminium cold rolled sheets and coils from continuous caster route based on
the advanced technology of FATA Hunter, Italy. It has also started production of
another variety of rolled product named as chequered sheet with thickness
ranging from 0.60mm to 3.0mm.
The salient features:
• 180 KA cell technology
• Micro-processor based pot regulation system
• Fume treatment plant with dry-scrubbing system for pollution control
and fuoride salt recovery
• Integrated facility for manufacturing carbon anodes, bus bars, anode
stems etc.
• Hyper Dense Phase System (HDPS) for alumina feeding.
• 4 x 35 Tonne and 4 x 45 Tonne furnaces and 2 x 15 TPH and 2 x 20
TPH ingot casting machines
• 4 x 45 Tonne furnaces and 2 x 9.5 TPH wire rod mills
• 2 x 45 Tonne furnaces and 60/42 per drop billet casting machine
• 2 x 1.5 Tonne induction furnace with a 4 TPH alloy ingot casting
machine
• 26,000 TPA strip casting machines
• 2 x 45 Tonne furnaces and 9 TPH tee ingot casting machine
• 2 x 45 Tonne furnaces and 20 TPH sow ingot casting facility are being
installed.
Rolled Products Unit
Nalco has set up a 50,000 MT per annum Rolled Products Unit, integrated with
the Smelter Plant at Angul, for production of aluminium cold rolled sheets and
coils from continuous caster route, based on the advanced technology of FATA
Hunter, Italy.
Port Facility
On the Northern Arm of the Inner Harbour of Visakhapatnam Port on the Bay
of Bengal, Nalco has established mechanized storage and ship handling
facilities for exporting Alumina in bulk and importing Caustic Soda.
The salient features:
• Maximum ship size for loading Alumina : 40,000MT DWT
• Maximum Alumina loading rate : 2,200 TPH (Avg. 1,500 TPH)
• Receipt of Alumina from Damanjodi by: Rakes consisting 48 (x53 MT)
BTAP wagons.
• (Two) numbers of BTAP wagon unloading stations by pneumatic
means.
• Alumina storage capacity: 3 x 25,000MT RCC Silos.
• Caustic soda Lye storage capacity: 3 x 10,000LMT.
• Maximum caustic soda unloading rate from ship : 600LMT / Hr
• One Caustic Soda wagon (BTCS) loading station.
• Despatch of Caustic Soda lye to Damanjodi by: Rakes consisting 58
(x55MT) BTCS wagons.
5.2.5.4 Captive Power Plant
Presently the Captive Thermal Power Plant has a generation capacity of 1200
MW (10X120MW). While the captive thermal power plant provides entire
electric power requirement of aluminium smelter, it also feeds for approximately
35 MW of the power requirement to the alumina refnery through the State
Grid.
The location of captive thermal power plant at Angul is also strategic to the
availability and supply of coal from nearby Talcher Coalfelds. The 18.5 KM
captive railway system links the captive thermal power plant to the Talcher
coalfelds, enabling transport of the critical and bulk requirement of coal.
The salient features:
• Micro-processor based burner management system for optimum
thermal efciency
• Computer controlled data acquisition system for on-line monitoring
• Automatic turbine run-up system
• Specially designed barrel type high pressure turbine
• Advanced electrostatic precipitator (99.9% efciency) to control
pollution.
• Wet disposal of ash
• Zero discharge of efuents
• High Concentrate Slurry Disposal (HCSD) System for ash disposal
• High plant load factor
The water for the Plant is drawn from River Brahmani through a 7 KM long
triple circuit pipeline. The coal demand is met from a mine of 3.5 Million TPA
capacity opened up for Nalco, initially at Bharatpur in Talcher by Mahanadi
Coalfelds Limited. The Power Plant is inter-connected with the State Grid.5.2.6
Raw Materials Used
The basic raw materials required for the production of aluminum are electronic
energy alumina, CGM line white brand, caustic soda, hydrate alumina, some
other raw materials required for smelter like calcinade petroleum, coke and coal
for pitch, available from Baruni-Haladia-refneries and Vishakapatinamsteel
plant respectively, the actual requirements of other raw material of this plant
as follows.
• Calcined petroleum coke-87.100 tons
• Coal tan pitch-27,000 tons
• Heavy fuel oil – 12,390 tons
• Heal transper fuid- 3000
• Process water- 20000M
5.2.7 Products
5.2.7.1 Aluminium Metal
(CG, EC&LME grades)
1.Ingots (Standard Ingots,sow Ingot,T-ingots)
2.Wire Rods
3.Billets (in 5 size)
4.Alloy wire rods
5.Cast strips
5.2.7.2 Alumina & Hydrate
1.Calcinated Alumina
2. Alumina hydrate
5.2.7.3 Rolled products (coils & sheets)
(INGOTS) (SOWS INGOTS)
(BILLETS) (T-INGOTS)
(WIRERODS) (ROLLED PRODUCT)
Financials of NALCO
Balance Sheet
(In Rs. Crores)
Particulars For the year
2013-'14
For the year
2012-'13
Equity and Liabilities
Shareholders' funds
Share capital1288.62 1288.62
Reserves and surplus 10833.83 10643.83
Non-current liabilities
Deferred tax liabilities (Net)910.13 903.13
Other Long term liabilities 54.96 70.86
Long-term provisions 218.22 208.62
Current liabilities
Trade payables 531.12 509.17
Other current liabilities 2564.38 2545.75
Short-term provisions 147.25 162.67
Total16,548.51 16,332.61
ASSETS
Non-Current Assets
Fixed Assets
Tangible assets 6,688.80 6,523.80
Intangible assets 103.14 105.09
Capital work-in-progress 768.74 1,001.92
Non-current investments 1.04 161.04
Long-term loans and
advances
1,517.27 1,474.04
Other non-current assets 43.32 36.49
Current assets
Current investments 1,244.00 1,329.02
Inventories 1,173.66 1,380.64
Trade receivables 243.57 148.65
Cash and Bank Balances 4,048.29 3,504.38
Short-term loans and
advances
481.38 473.76
Other current assets 235.3 193.78
Total16,548.51 16,332.61
Income Statement of the Company
(In Rs Crores)
Particulars 2013-'14 2012-'13
Revenue from operations (Net)6781 6916
Other income 558 511
Total income 7339 7427
Cost of materials consumed
Power and Fuel
1063 1168
Power and fuel2018 2432
Employee benefts expenses
Finance costs
1245 1154
Other expenses 1521 1256
Finance expenses 0 7
Depreciation and amortization
expenses
525 505
Total expenses 6372 6522
Proft before exceptional
items
967 905
Exceptional items 49
Proft Before Tax 918 905
Tax expense 276 312
Proft After Tax 642 593
Shareholders in NALCO
NALCO issued shares worth Rs.3000 crores @ Rs.5 each. The holding of the
shares are as follows
• President Of India holds 81.01%
• Life Insurance Corporation holds 5.79%
• Franklin Templeton Investment holds 2.44%
• HINDALCO industries LTD holds 1.11%
• Others hold 9.65%
5.2.8 Plant Location
NALCO Nagar is situated within 5km of Angul town. Angul was once a tidal
state. It is fairly big and bustlingly town on the national highway no.42 which is
the main highway connecting Bhubaneswar with Raipur (MP),Sambalpur,
Sundarghar and Rourkela. NALCO has established its smelter plant, captive
power plant and its town ship close to the national highway. The place is easily
accessible from Cuttack and Bhubaneswar by road and rail. Today in the
vicinity of Angul a large number of industries have come up. The other
important industry in and around this place are heavy water of atomic energy
Commission, Talcher coal mines of Mahanadi coal felds limited and thermal
power plants of NTPC.
The NALCO town ship known as NALCO Nagar is modern and well planned. In
addition to 2947 dwelling units and trainees hostel with 300 rooms,
NALCOnagar may civic facilities like community centres, clubs , stadium ,
swimming pool, market complexes etc. it has establish 50 bedded hospital with
ultra-modern facilities.
5.2.9 Organizational Structure
NALCO is a Govt. of India enterprise under the administration control of the
ministry of mines. The company is managed by board of directors appointed by
the president of India. The board consists of 16 directors including the
chairman-cum managing director of the company. There are 6 full time
functional directors heading production, fnance project & technical, personnel
&administrative disciplines. There are our senior govt. ofcials nominated to
the board as directors on ex-ofcio basis. Besides there are 2 non ofcial
directors in the board appointed to present the interest of fnancial institution,
allied industry & R&D objectives of the company. Thus the board of company is
a full of highly experienced & outstanding potentials drawn from various felds
of specialization.
The management control system is based on delegation of authority &
individual accountability for results. The responsibility and authority to take
decisions on various matters are delegated by the chairman-cum-MD to
diferent levels in the management.
5.2.10 Human Resource
About 7393 persons possessing a verity of skills, qualifcations and competence
are at the services of NALCO, NALCO is truly youth with the average age of the
employees being below 40 years. Starting with a core group of 262 employees in
the 1982, the progressive growth in man power has taken place in a planned
manner matching the diferent stages of the project.
5.2.10.1 Composition of Manpower
• Skilled personnel-3717
• Semi skill & unskilled personnel- 1041
• Executives-1783
• Supervisors-852
• On contractual basis 10000from 10 contractors
TOTAL:17393 (Human Resources)
5.2.12 Organizational Culture
NALCO being a proftable public sector unit concerned about good
relationships among the superior and subordinate, employee etc. in normal
time people work loosely, thinking that the company is fulflling its target. So
there is no need for hard work. But in 1998 while it was facing a bad situation
people devoted their heart and soul to the organization. The worked for day and
night and brought the situation under control.
The employees of NALCO are given a very big package with number of
incentives and other facilities. But these actually do not motivate employees.
Because incentives work for a short time. It is the fear motivation which works
behind every employees and makes the employee motivated towards their
respective jobs. Employees in NALCO are individually accountable towards
their work. If a task is given to them, they accomplish the task in a proper
manner and in a proper time.
REVIEW OF
LITERATURE
5.3 Marketing Strategy
A marketing strategy is a process that can allow an organization to concentrate
its limited resources on the greatest opportunities to increase sales and achieve
a sustainable competitive advantage. A marketing strategy should be centered
around the key concept that customer satisfaction is the main goal.
A marketing strategy is most efective when it is an integral component of frm
strategy, defning how the organization will successfully engage customers,
prospects, and competitors in the market arena. Corporate strategies, corporate
missions, and corporate goals. As the customer constitutes the source of a
company's revenue, marketing strategy is closely linked with sales. A key
component of marketing strategy is often to keep marketing in line with a
company's overarching mission statement.
5.3.1 Basic theory
The basic theory of marketing strategy is:
• Target Audience
• Proposition/Key Element
• Implementation
• The Five D's
• Tactics and actions
A marketing strategy can serve as the foundation of a marketing plan. A
marketing plan contains a set of specifc actions required to successfully
implement a marketing strategy. For example: "Use a low cost product to attract
consumers. Once our organization, via our low cost product, has established a
relationship with consumers, our organization will sell additional, higher-
margin products and services that enhance the consumer's interaction with
the low-cost product or service."
A strategy consists of a well thought out series of tactics to make a marketing
plan more efective. Marketing strategies serve as the fundamental
underpinning of marketing plans designed to fll market needs and reach
marketing objectives. Plans and objectives are generally tested for measurable
results.
A marketing strategy often integrates an organization's marketing goals,
policies, and action sequences (tactics) into a cohesive whole. Similarly, the
various strands of the strategy , which might include advertising, channel
marketing, internet marketing, promotion and public relations can be
orchestrated. Many companies cascade a strategy throughout an organization,
by creating strategy tactics that then become strategy goals for the next level or
group. Each one group is expected to take that strategy goal and develop a set
of tactics to achieve that goal. This is why it is important to make each strategy
goal measurable. Marketing strategies are dynamic and interactive. They are
partially planned and partially unplanned. See strategy dynamics.
5.3.2 Types of strategies
Marketing strategies may difer depending on the unique situation of the
individual business. However there are a number of ways of categorizing some
generic strategies. A brief description of the most common categorizing
schemes is presented below:
Strategies based on market dominance - In this scheme, frms are classifed
based on their market share or dominance of an industry.
Typically there are three types of market dominance strategies:
• Leader -
• Challenger -
• Follower –
Porter generic strategies - strategy on the dimensions of strategic scope and
strategic strength. Strategic scope refers to the market penetration while
strategic strength refers to the frm’s sustainable competitive advantage.
• Product diferentiation
• Market segmentation
Innovation strategies - This deals with the frm's rate of the new product
development and business model innovation. It asks whether the company is
on the cutting edge of technology and business innovation. There are three
types:
• Pioneers
• Close followers
• Late followers
Growth strategies - In this scheme we ask the question, “How should the frm
grow?” There are a number of diferent ways of answering that question, but
the most common gives four answers:
• Horizontal integration
• Vertical integration
• Diversifcation
• Intensifcation
A more detailed scheme uses the categories:
• Prospector
• Analyzer
• Defender
• Reactor
Marketing warfare strategies - This scheme draws parallels between
marketing strategies and military strategies.
5.3.3 Strategic models
Marketing participants often employ strategic models and tools to analyze
marketing decisions. When beginning a strategic analysis, the 3Cs can be
employed to get a broad understanding of the strategic environment. An Ansof
Matrix is also often used to convey an organization's strategic positioning of
their marketing mix. The 4Ps can then be utilized to form a marketing plan to
pursue a defned strategy.
• Marketing in Practice
• The Consumer-Centric Business
There are a many companies especially those in the Consumer Package Goods
(CPG) market that adopt the theory of running their business centered around
Consumer, Shopper & Retailer needs. Their Marketing departments spend
quality time looking for "Growth Opportunities" in their categories by
identifying relevant insights (both mindsets and behaviors) on their target
Consumers, Shoppers and retail partners. These Growth Opportunities emerge
from changes in market trends, segment dynamics changing and also internal
brand or operational business challenges.The Marketing team can then
prioritize these Growth Opportunities and begin to develop strategies to exploit
the opportunities that could include new or adapted products, services as well
as changes to the 7Ps.
Real-life marketing primarily revolves around the application of a great deal of
common-sense; dealing with a limited number of factors, in an environment of
imperfect information and limited resources complicated by uncertainty and
tight timescales. Use of classical marketing techniques, in these circumstances,
is inevitably partial and uneven.
AldredRiachiPh.D Developed a new strategic approach called the Five D's of
competitive Advantage. The model emphasized on adopting the following:
Develope, Distinguish, Diagnose, Decisiveness and Doctrine.
Thus, for example, many new products will emerge from irrational processes
and the rational development process may be used (if at all) to screen out the
worst non-runners. The design of the advertising, and the packaging, will be
the output of the creative minds employed; which management will then
screen, often by 'gut-reaction', to ensure that it is reasonable.
For most of their time, marketing managers use intuition and experience to
analyze and handle the complex, and unique, situations being faced without
reference to theory. This will often be 'fying by the seat of the pants', or 'gut-
reaction'; where the overall strategy, coupled with the knowledge of the
customer which has been absorbed almost by a process of osmosis, will
determine the quality of the marketing employed. This, almost instinctive
management, is what is sometimes called 'coarse marketing'; to distinguish it
from the refned, aesthetically pleasing, form favored by the theorists.
5.3.3.1 The Marketing Mix(The 4 P's of Marketing)
Marketing decisions generally fall into the following four controllable categories:
• Product
• Price
• Place (distribution)
• Promotion
The term "marketing mix" became popularized after Neil H. Borden published
his 1964 article, The Concept of the Marketing Mix. Borden began using the
term in his teaching in the late 1940's after James Culliton had described the
marketing manager as a "mixer of ingredients". The ingredients in Borden's
marketing mix included product planning, pricing, branding, distribution
channels, personal selling, advertising, promotions, packaging, display,
servicing, physical handling, and fact fnding and analysis. E. Jerome
McCarthy later grouped these ingredients into the four categories that today
are known as the 4 P's of marketing, depicted below:
Fig 4.The Marketing Mix
These four P's are the parameters that the marketing manager can control,
subject to the internal and external constraints of the marketing environment.
The goal is to make decisions that center the four P's on the customers in the
target market in order to create perceived value and generate a positive
response.
i) Product Decisions
The term "product" refers to tangible, physical products as well as services.
Here are some examples of the product decisions to be made:
• Brand name
• Functionality
• Styling
• Quality
• Safety
• Packaging
• Repairs and Support
• Warranty
• Accessories and services
ii) Price Decisions
Some examples of pricing decisions to be made include:
• Pricing strategy (skim, penetration, etc.)
• Suggested retail price
• Volume discounts and wholesale pricing
• Cash and early payment discounts
• Seasonal pricing
• Bundling
• Price fexibility
• Price discrimination
iii) Distribution (Place) Decisions
Distribution is about getting the products to the customer. Some examples of
distribution decisions include:
Distribution channels
• Market coverage (inclusive, selective, or exclusive distribution)
• Specifc channel members
• Inventory management
• Warehousing
• Distribution centers
• Order processing
• Transportation
• Reverse logistics
iv) Promotion Decisions
In the context of the marketing mix, promotion represents the various aspects
of marketing communication, that is, the communication of information about
the product with the goal of generating a positive customer response. Marketing
communication decisions include:
• Promotional strategy (push, pull, etc.)
• Advertising
• Personal selling & sales force
• Sales promotions
• Public relations & publicity
• Marketing communications budget
Limitations of the Marketing Mix Framework
The marketing mix framework was particularly useful in the early days of the
marketing concept when physical products represented a larger portion of the
economy. Today, with marketing more integrated into organizations and with a
wider variety of products and markets, some authors have attempted to extend
its usefulness by proposing a ffth P, such as packaging, people, process, etc.
Today however, the marketing mix most commonly remains based on the 4 P's.
Despite its limitations and perhaps because of its simplicity, the use of this
framework remains strong and many marketing textbooks have been organized
around it.
5.3.3.2 The BCG Growth-Share Matrix
The BCG Growth-Share Matrix is a portfolio planning model developed by
Bruce Henderson of the Boston Consulting Group in the early 1970's. It is
based on the observation that a company's business units can be classifed
into four categories based on combinations of market growth and market share
relative to the largest competitor, hence the name "growth-share". Market
growth serves as a proxy for industry attractiveness, and relative market share
serves as a proxy for competitive advantage. The growth-share matrix thus
maps the business unit positions within these two important determinants of
proftability.
Fig 5. BCG Growth-Share Matrix
This framework assumes that an increase in relative market share will result in
an increase in the generation of cash. This assumption often is true because of
the experience curve; increased relative market share implies that the frm is
moving forward on the experience curve relative to its competitors, thus
developing a cost advantage. A second assumption is that a growing market
requires investment in assets to increase capacity and therefore results in the
consumption of cash. Thus the position of a business on the growth-share
matrix provides an indication of its cash generation and its cash consumption.
Henderson reasoned that the cash required by rapidly growing business units
could be obtained from the frm's other business units that were at a more
mature stage and generating signifcant cash. By investing to become the
market share leader in a rapidly growing market, the business unit could move
along the experience curve and develop a cost advantage. From this reasoning,
the BCG Growth-Share Matrix was born.
The four categories are:
• Dogs - Dogs have low market share and a low growth rate and thus
neither generate nor consume a large amount of cash. However, dogs are
cash traps because of the money tied up in a business that has little
potential. Such businesses are candidates for divestiture.
• Question marks - Question marks are growing rapidly and thus
consume large amounts of cash, but because they have low market
shares they do not generate much cash. The result is a large net cash
comsumption. A question mark (also known as a "problem child") has the
potential to gain market share and become a star, and eventually a cash
cow when the market growth slows. If the question mark does not
succeed in becoming the market leader, then after perhaps years of cash
consumption it will degenerate into a dog when the market growth
declines. Question marks must be analyzed carefully in order to
determine whether they are worth the investment required to grow
market share.
• Stars - Stars generate large amounts of cash because of their strong
relative market share, but also consume large amounts of cash because
of their high growth rate; therefore the cash in each direction
approximately nets out. If a star can maintain its large market share, it
will become a cash cow when the market growth rate declines. The
portfolio of a diversifed company always should have stars that will
become the next cash cows and ensure future cash generation.
• Cash cows - As leaders in a mature market, cash cows exhibit a return
on assets that is greater than the market growth rate, and thus generate
more cash than they consume. Such business units should be "milked",
extracting the profts and investing as little cash as possible. Cash cows
provide the cash required to turn question marks into market leaders, to
cover the administrative costs of the company, to fund research and
development, to service the corporate debt, and to pay dividends to
shareholders. Because the cash cow generates a relatively stable cash
fow, its value can be determined with reasonable accuracy by calculating
the present value of its cash stream using a discounted cash fow
analysis.
Under the growth-share matrix model, as an industry matures and its growth
rate declines, a business unit will become either a cash cow or a dog,
determined soley by whether it had become the market leader during the
period of high growth.
While originally developed as a model for resource allocation among the various
business units in a corporation, the growth-share matrix also can be used for
resource allocation among products within a single business unit. Its simplicity
is its strength - the relative positions of the frm's entire business portfolio can
be displayed in a single diagram.
Limitations
The growth-share matrix once was used widely, but has since faded from
popularity as more comprehensive models have been developed. Some of its
weaknesses are:
• Market growth rate is only one factor in industry attractiveness, and
relative market share is only one factor in competitive advantage. The
growth-share matrix overlooks many other factors in these two important
determinants of proftability.
• The framework assumes that each business unit is independent of the
others. In some cases, a business unit that is a "dog" may be helping
other business units gain a competitive advantage.
• The matrix depends heavily upon the breadth of the defnition of the
market. A business unit may dominate its small niche, but have very low
market share in the overall industry. In such a case, the defnition of the
market can make the diference between a dog and a cash cow.
While its importance has diminished, the BCG matrix still can serve as a
simple tool for viewing a corporation's business portfolio at a glance, and may
serve as a starting point for discussing resource allocation among strategic
business units.
5.3.3.3 SWOT Analysis
SWOT analysis is a simple framework for generating strategic alternatives from
a situation analysis. It is applicable to either the corporate level or the business
unit level and frequently appears in marketing plans. SWOT (sometimes
referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and
Threats. The SWOT framework was described in the late 1960's by Edmund P.
Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in
Business Policy, Text and Cases (Homewood, IL: Irwin, 1969). The General
Electric Growth Council used this form of analysis in the 1980's. Because it
concentrates on the issues that potentially have the most impact, the SWOT
analysis is useful when a very limited amount of time is available to address a
complex strategic situation.The following diagram shows how a SWOT analysis
fts into a strategic situation analysis.
SWOT Analysis Diagram
The internal and external situation analysis can produce a large amount of
information, much of which may not be highly relevant. The SWOT analysis can
serve as an interpretative flter to reduce the information to a manageable
quantity of key issues. The SWOT analysis classifes the internal aspects of the
company as strengths or weaknesses and the external situational factors as
opportunities or threats. Strengths can serve as a foundation for building a
competitive advantage, and weaknesses may hinder it. By understanding these
four aspects of its situation, a frm can better leverage its strengths, correct its
weaknesses, capitalize on golden opportunities, and deter potentially
devastating threats.
Internal Analysis
Situation Analysis
Internal Analysis
External Analysis
Threats Opportunities Weakness Strengths
The internal analysis is a comprehensive evaluation of the internal
environment's potential strengths and weaknesses. Factors should be
evaluated across the organization in areas such as:
• Company culture
• Company image
• Organizational structure
• Key staf
• Access to natural resources
• Position on the experience curve
• Operational efciency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets
The SWOT analysis summarizes the internal factors of the frm as a list of
strengths and weaknesses.
External Analysis
An opportunity is the chance to introduce a new product or service that can
generate superior returns. Opportunities can arise when changes occur in the
external environment. Many of these changes can be perceived as threats to the
market position of existing products and may necessitate a change in product
specifcations or the development of new products in order for the frm to
remain competitive. Changes in the external environment may be related to:
• Customers
• Competitors
• Market trends
• Suppliers
• Partners
• Social changes
• New technology
• Economic environment
• Political and regulatory environment
The last four items in the above list are macro-environmental variables, and are
addressed in a PEST analysis.
The SWOT analysis summarizes the external environmental factors as a list of
opportunities and threats.
SWOT Profle
When the analysis has been completed, a SWOT profle can be generated and
used as the basis of goal setting, strategy formulation, and implementation.
The completed SWOT profle sometimes is arranged as Fig
When formulating strategy, the interaction of the quadrants in the SWOT
profle becomes important. For example, the strengths can be leveraged to
pursue opportunities and to avoid threats, and managers can be alerted to
weaknesses that might need to be overcome in order to successfully pursue
opportunities.
Multiple Perspectives Needed
The method used to acquire the inputs to the SWOT matrix will afect the
quality of the analysis. If the information is obtained hastily during a quick
interview with the CEO, even though this one person may have a broad view of
the company and industry, the information would represent a single viewpoint.
The quality of the analysis will be improved greatly if interviews are held with a
spectrum of stakeholders such as employees, suppliers, customers, strategic
partners, etc.
SWOT Analysis Limitations
While useful for reducing a large quantity of situational factors into a more
manageable profle, the SWOT framework has a tendency to oversimplify the
situation by classifying the frm's environmental factors into categories in
which they may not always ft. The classifcation of some factors as strengths or
weaknesses, or as opportunities or threats is somewhat arbitrary. For example,
a particular company culture can be either a strength or a weakness. A
technological change can be a either a threat or an opportunity. Perhaps what
is more important than the superfcial classifcation of these factors is the
frm's awareness of them and its development of a strategic plan to use them to
its advantage.
5.3.4 7S Framework
It's all very well devising a strategy, but you have to be able to implement it if
it's to do any good. The Seven S Framework frst appeared in "The Art Of
Japanese Management" by Richard Pascale and Anthony Athos in 1981. They
had been looking at how Japanese industry had been so successful, at around
the same time that Tom Peters and Robert Waterman were exploring what
made a company excellent. The Seven S model was born at a meeting of the
four authors in 1978. It went on to appear in "In Search of Excellence" by
Peters and Waterman, and was taken up as a basic tool by the global
management consultancy McKinsey: it's sometimes known as the McKinsey 7S
model.
Managers, they said, need to take account of all seven of the factors to be sure
of successful implementation of a strategy - large or small. They're all
interdependent, so if you fail to pay proper attention to one of them, it can
bring the others crashing down around you. Oh, and the relative importance of
each factor will vary over time, and you can't always tell how that's changing.
Like a lot of these models, there's a good dose of common sense in here, but
the 7S Framework is useful way of checking that you've covered all the
bases.The Seven Factors are:
Fig 6. 7s Model
Strategy A set of actions that you start with and must maintain
Structure How people and tasks / work are organised
Systems All the processes and information fows that link the organisation
together
StyleHow managers behave
Staf How you develop managers (current and future)
Superordinate Goals Longer-term vision, and all that values stuf, that
shapes the destiny of the organisation
SkillsDominant attributes or capabilities that exist in the organisation
There's a lot more to the 7S framework of course, especially how you apply it in
practice. It may appear as an outmoded concept in today's environment of
"constant change and learning", but the basic principle that you've got to watch
a lot of factors all the time as you implement any strategy still applies. Just
don't let the apparent rigidity of the framework make you heavy on your feet.
For more about strategy and strategic management in general, look out
"Strategic Management" by Dess& Miller (McGraw Hill 1993). It's not a bedtime
read, but is a useful reference work of ideas and case studies. If you want
more on the 7S model, read Richard Pascale's subsequent "Managing on the
Edge" (1990).
Tools for Tracking Customer Satisfaction Strategy
The very success of any enterprise depends largely on its ability to satisfy
and retain their customers. Any business without a focus on customer
satisfaction is at the mercy of the market. Without loyal customers eventually a
competitor will take away your customers and your customer retention rate will
decrease. A successful enterprise knows very well what the key drivers of
satisfaction are, the areas that will have the greatest impact in improving
customer’s overall perception of our service. Best practice companies
also monitor customer feedbacks over time and communicate a strong message
about their commitment to serve their customer. As per the marketing concept,
a frm can realize all its business goals by generating customer satisfaction.
The idea may sound somewhat utopian. In reality, it is an eminently workable
proposition.
The satisfaction is a function of perceived performance and expectations.
If the performance falls short of expectations, the customer is dissatisfed. If
the performance matches the expectations, the customer is satisfed. If the
performance exceeds the expectations, the customer is highly delighted. Many
companies aim for high customer satisfaction, because the customers who are
just satisfed fnd it better to switch to other companies when a better ofer
comes along. Those who are highly satisfed are much less ready to switch.
High satisfaction or delight creates an emotional bonding with the brand. The
result is high customer loyalty. Xerox’s senior management believes
that a very satisfed or delighted customer is worth ten times as much to
the company as a satisfed customer. A very satisfed customer is likely to stay
with Xerox many more years and buy more than a satisfed customer will.
Benefts of Measuring Customer Satisfaction
• Learning strategies for improving services
• Learning customer expectations
• Identifying common reasons for customer dissatisfaction
• Improving customer retention
• Making customers feel valued
• Uncovering missed opportunities to demonstrate your capacity
to solve problems and win back customer’s confdence
• Improved competitive position
• Helping to decide where best to spend improvement dollars to
make sure you spend it where it matters the most.
Customer satisfaction surveys:
Studies show that although customers are dissatisfed with one out of every
four purchases, less than fve percent will complain. Most customers will buy
less or switch suppliers. Responsive companies measure customer satisfaction
directly by including periodic surveys. While collecting customer satisfaction
data, it is also useful to ask additional question to measure repurchase
intention and to measure the likelihood or willingness to recommend the
company and brand to others.
Complaint & Suggestion System:
A customer-centered organization makes it easy for customers to
register suggestions and complaints .Some customer-centered companies
establish hotlines with toll free numbers. Companies are also using websites
and e-mails for quick two-way communication
Ghost Shopping:
Companies can have people to pose as potential buyers to report on strong and
weak points experienced in buying the company’s and competitor’s products.
These mystery shoppers can even test how the the company’s sales personnel
handle various situations.
Customer Complaints
When you receive a customer complaint, you know exactly where you
stand with the customer. This is especially true if the organization broadly
interprets “customer complaints” as any negative feedback that the
organization receives. Whether the complaint is justifed or not is irrelevant;
perception becomes the customer’s reality. But trouble starts when
organizations rely on customer complaints as their jointly gauge of customer
perceptions. The weakness inherent in relying solely on complaints is two fold.
First, many dissatisfed customers simply do not bother to complain.
They have decided that it is not worth the time and efort for them to
communicate the problem. In fact, they might just decide that it is not worth
the risk of placing another order. The organization might lose a customer and
not even understand what went wrong. And it is much more expensive to regain
a customer that to retain one. Second, complaints, by defnition provide only
negative feedback. An organization cannot understand the full range of
customer perceptions based on negative feedback alone. A system for gathering
customer perceptions should present a balanced picture of where the
organization stands, which does not happen when customer complaints are
isolated from other aspects of customer relations. That being said, customer
complaints can be an efective part of an overall system for gathering data on
customer perceptions. The trick is to pair this method with at least one other,
the combination of which will give an organization a more accurate view of its
status in customers’ minds. Two specifc types of complaints can be especially
useful in maintaining an organization’s success repeat complaints (eg.
Complaints about the same product, for the same reason or from the same
customer) and complaints that pose signifcant risk to the
organization. Analysis of complaint data can identify these
phenomena, and management can then take appropriate action on the
underlying issues. In these cases, the complaint system becomes a critical
survival barometer for the organization. When complaints are not promptly
resolved, frustrated customers seek redress in diferent agencies or at diferent
parts or levels of the same agency, resulting in duplicate efort and
compounding costs. There are costs associated with a poor complaint system
and there are benefts associated with a good one. Studies have shown that
handling customer complaints well can be a critical part of a turn
aroundstrategy. If a complaint is handled well, it sustains and strengthens
customer loyalty and the company’s image as a leader. It also tells the
customer that the company cares and can improve because of
their contact. In government agencies, it promotes public confdence in
government services. Customer complaints strategies also represent valuable
information about recurrent problems. They can point the way to
understanding the root causes of customer problems.
ANALYSIS
AND
FINDINGS6.0 Marketing Strategy Analysis
of NALCO
6.1 4P’S of NALCO
i) Products
• Calcined alumina.
• Alumina metal.
• Zeolite.
• Special products.
• Alumina hydrate.
• Rolled products.
ii) Pricing
The pricing committee (domestic) have been defned as under: Chairman-cum-
Managing Director is authorized to make appropriate changes in the sale price
of the Company's products as and when necessary based on the
recommendation of a Pricing Committee to be constituted by CMD consisting of
Senior Ofcers who would review the market situation periodically and put up
its recommendations for approval. In exercise of the above delegation of powers,
CMD has constituted a pricing committee consisting of the following ofcers:
• Executive Director (Marketing)
• General Manager (Marketing)
• Dy. General Manager (Marketing-Finance)
• Dy. General Manager (Marketing-Domestic)
Considering the Market Scenario, Demand supply trend in domestic market,
inventory holding, LME Price trend and other factors, the Committee puts up
its recommendation to make appropriate changes in the sale price & other
terms and conditions, if any. Based on the approval of Chairman-cum-
Managing Director, the prices & terms and conditions are made applicable for
sale of metal to Domestic buyers. Subsequently, an agenda on any changes in
prices, terms and conditions, is put up to Board for its kind information. The
review is made by the committee generally at about 4 weeks interval, unless
any unexpected movement takes place either in change in domestic market /
global market scenario, or abnormal changes in inventory status.
The pricing Policy is applicable to all the customers as per the details laid
down therein. Special considerations are sometimes made for Public
sector undertakings (PSUs)/Govt./State Undertakings. Generally`
PSUs/Govt./State Undertakings seek ofers from NALCO on monthly
basis / quarterly basis. Company's applicable prices and terms are
submitted to them and wherever required, it may be submitted on frm
and fxed price basis based on approval of CMD. ln the case of PSU
units, whenever NALCO is asked to ofer matching discounts, the same
may be scrutinised depending on the volume of order, the inventory
holding, quantum of discount requested for and the fnancial
implications involved. Based on above, and on obtaining due approval
from the Competent Authority, the matching discount may be confrmed
to the PSUs/Govt./State Undertakings. Sometimes, quotations are sent
to PSUs on the basis of price ruling on the date of despatch depending
on the procurement practice of such undertakings.
Cash discounts, Flat discounts, Special discounts and monthly graded
quantity discounts are also ofered to attract customers.
iii) Promotion
As the company’s present market is a buyer's market, soit's not required to
spend money. butsomewhere as a global company it need some promotion,
NALCO use to do some small promotional activities, which we can see in
form of CSR (Corporate Social Responsibility) like organizing cricket
matches, funding journals etc…
iv) Place
DISTRIBUTION PROCEDURE ATNALCO
Under this segment we will consider about how company move it’s products
from place of production to place of consumption. For this NALCO has it’s
stockyards almost all around the country which makes its logistics more
efcient.
Bauxite mined from
Panchamali hill at koraput.
Transportation through 14.6 km long
cable belt.
Alumina refnery at Damanjodi.
Here bauxite ore converts to Alumina
Transportation
Through train
Aluminum smelting at Anugul
Here alumina converts into
aluminum &Aluminium is converted
into ingot rod,billet.
Transport through truck & Railway.
Stockyards
Jaipur, Visakhapatnam, Banglore,
Silvasa Bhiwandi, Kolkata
Transport through rail, truck& ship
Sell the products
Both in domestic and
export.
The current stockyard are
1. Baadi, Himachal Pradesh
2. Bangalore, Karnataka
3. Biwandi, Mumbai
4. Chennai, Tamil Nadu
5. Faridabad
6. Jaipur, Rajastan
7. Kolkata, West Bengal
8. Silvassa, Daman
9. Vishakapatnam, Andhra Pradesh
10.Vadodara, Gujarat
BCG Growth-Share Matrix of NALCO
STAR
1)T.Ingots
QUSTION MARK
1)Billets
CASH COW
1)Aluminum sows
2)Calcined alumina
3)Alumina hydrate
DOG
1)Rolled products
2)Special products
2)Zeolite
Fig 7. BCG Growth-Share Matrix of NALCO
SWOT Analysis of NALCO
Strengths
1.Skilled and committed manpower,
2.Commercially viable quality bauxite reserves,
3.Efcient technology,
4.Various well planned and ideally located infrastructure facilities, efcient
operations, production of quality alumina and aluminium products,
5.Transparent & competitive procurement practices, meticulous marketing
strategy, excellent customer service,
6. Prudential fnancial management,
7.The Directors are committed to bank upon these strengths for the
sustained growth of your company
Weakness
1.Non availability of requisite quantity of coal at reasonable cost.
2. Escalating production cost including that of labour.
3.Fluctuations in the LME prices
4.As NALCO is now in 33
rd
year it needs new technologies to compete.
Opportunities
1.In the Indian context, future growth is likely to be robust in the
transport, building and construction sectors. With Government’s
emphasis on infrastructure development, power sector is likely to grow.
2.However, opportunity exists in the domestic market as per capita
consumption of aluminium in India is among the lowest in the world
standing at 1.4 kg as compared to the world average about 7 kg.
Signifcant opportunity exists for exports to neighboring countries
because of their low production levels.
3.Growth is also expected to be higher in consumption of downstream
products and semis, particularly for sheets, extrusions and castings.
R&D eforts to bring in new usages and applications, exploration and
collaboration with other industries where aluminium could substitute
other materials, development of alloys to suit the requirements of various
industries, changing the design pattern with a view to improving the
functionalities of diferent products etc. may be attempted.
4.The Company is actively pursuing for allocation of a captive coal block for
the project under government dispensation route.
5.Rich Geological Resource base
6.Growing Skilled and Technical Human Capital.
Threats
1.Instability in LME aluminum price (currently at fve year low) will afect
margin badly
2.Despite some capacity closures, China’s increase in production has been
putting the aluminium market under pressure. The Chinese Govt. has
been providing power subsidies thus helping aluminium smelters avoid
losses and in fact, leading to some aluminium capacity being restarted in
the country.
3.Although aluminium prices remained low, output has actually continued
to grow despite subdued demand thus having a negative impact on the
primary metal market.
4.Power is one of the major inputs for aluminium production, constituting
roughly 40% of the production cost. Substantial increase in cost of coal
in recent past has put additional cost pressure on aluminium producers
in India.
5. On the other hand, the availability of low-cost aluminium from smelters
in West Asia is expected to impact Indian smelters, where production
capacity has increased considerably in the past decade due to cheap gas
from oil refneries making the region ideal to set up aluminium plants.
6.The other threat perceptions includes competition from scrap imports,
large scale availability of substitute materials particularly plastics, and
increasing raw material costs.
7.The cost of coal and its sustained availability is a problem for energy
intensive aluminium industry. Rise in input material cost is a major
threat for aluminium producers like NALCO.
8.The threat perceptions for the company include price instability at LME,
shrinking proft margins, competition from private players. Maintaining
the proft margin with signifcant cost push is a challenge.
6.4 7s Strategy Model Describing (NALCO)
1.Structure: How people and tasks / work are organized.NALCO is one of
the well-organizedorganization. The role of every employee is very clear to
them. They are aware of the performance expected from them, So
according to that they perform.
2.Strategy:A set of plan for the future actions that you start with and
must maintain.
Strategy applied by NALCO is basically a long term strategy.
3.System: A set of actions that is according to the strategy. In system we
will consider the fow of information. Here the fow of information is from
top to bottom i.e. the decision is taken at the upper level.
4.Style: How managers behave. As NALCO is one of thenavaratna
certifed organization , it is very simple to say the upper level employees
are very much cooperative to their subordinates, because of which they
are today at this stage.
5.Staf: How you develop managers (current &future ). The stafng in
NALCO is very good every department is headed by diferent chief
manager, who are really deserving , and further more they are again
provided with junior managers who are there to provide cooperation. So
we can say the span of control is wide for the director but it is very easy
to handle because of this stafng.
6.Superordinate Goals: Long term vision , and all that values stuf that
shapes the destiny of the organization. Super ordinates goals in case of
NALCO is same as that of the mission of the organization.
7.Skills: Dominant attributes or capabilities that exist in the organization.
As the selection procedure of NALCO is very stringent, quality people are
selected as employees. Therefore NALCO has a good reservoir of skills.
DOMESTIC PROCEDURE OF NALCO,INDIA
NALCO started sale of metal in domestic market from its smelter plant, Angul
on Ex-works basis during 1987-1988 Based on the MOU between the
company and Ministry of mines, the annual targetis set for all products
including metal . it is then bifurcated into export & domestic sales target.
This annual target is further broken down product wise into monthly targets
Sale Order Booking: `
NALCO's products in the domestic market are open for purchase by any
domestic customers. Normally Domestic Marketing books orders through
following means;
• Direct enquiries from customers.
• Sales Conferences / Customer meet Contacting buyers directly
• Responding to tenders foated usually by PSU's/Govt./State
Undertakings.
Domestic customers who are interested to buy material from the
Company have to make frm fnancial arrangement and provide required
statutory documents like Purchase order, ‘C' form, etc.
On getting the purchase order from the customers, initially an Interim
Contract Review is sent along with the standard terms and conditions of sales
of NALCO. Subsequently, the terms and conditions stipulated in the Purchase
Order of the customers are reviewed and then response in terms of Detailed
Contract Review is sent to them for their acceptance within 10 days.
If no response is received from the buyer within 10 days, it shall be
considered that the order can be executed as per Nalco's stipulated terms and
conditions. If buyer does not accept the Contract Review and sends their
diferent views, the matter is required to be put separately for competent
authority’s approval. This practice is followed commensurate with the ISO
requirements. In case of PSUs like SAIL, NSIC, Mil/ITC, etc., ‘C’ forms are
submitted by the buyers at the end of the fnancial year. For other customers,
who do not submit the ‘C’ forms while placing the order/making payment, are
required to deposit the diferential sales tax amount to be retained by NALCO
till the receipt of the ‘C’ form. In case of any deviation on collection of 'C' form
from any Non-PSU/Govt./State Undertakings customers, approval of CMD is
required for acceptance and execution of the order. The collection of ‘C’ form
shall be as per the prevailing statutory requirements.
The company has started entering into MOU with some customers since year
2002-03 based on their past of take. The MOU is governed by the terms and
conditions stipulated therein i.e.
• The minimum quantities to be lifted during the MOU period,
• Tonnages on the monthly basis during the MOU period.
• Number of minimum months the party has to lift the monthly
stipulated quantity.
• Any other conditions as per the approved MOU terms, from time to
time.
Such MOU customers are given additional discounts and priority in dispatch
as per the approved MOU terms or any other facilities decided by NALCO from
time to time.
Sometimes, depending upon market conditions, through specifc short term
measures, orders could also be obtained, such as entering into short term
arrangement with the buyers to lift a minimum quantity in a particular
period.
The customers, who have defaulted in making payments against supplies or
non-compliance of any statutory provision or if any, penalty / claim is
pending from statutory authority on NALCO against NALCO's supplies, such
customers are not supplied metal either directly or as consignee.
Modes of payment:
The sales are executed through
• Advance payment in form of DD /Cheque / SBI FAST CASH system etc.
• Sight/Usance LCs
Respective Regional Marketing Ofces/Branch Ofces issues Daily
Cash Abstracts (DCA) on receipt of DDs/SBI FAST CASH/realisation of
cheques& other required documents such as Purchase Order and ‘C' form, etc
On receipt of such DCAs, Corporate Marketing issues the Despatch
Instructions (Dls) indicating the Di quantity commensurate with the quantum
of payment received.
The Letters of Credit issued by Banks as accepted as per the list
circulated by Marketing-Finance from time to time are sent directly by the
opening bank to NALCO's Bankers who on due authentication advises the
same to Marketing Finance. Marketing Finance after scrutinising the L/Cs
and fnding them in order, forwards copies of such Letters of Credit to
Domestic Marketing for issuance of DI. Whenever the L/C’s do not confrm to
the NALCO's required standard approved clauses, Marketing Finance
intimates the customers with a copy to Regional Ofce/Corporate Ofce
indicating the amendments required and a copy of the same is forwarded to
Domestic Marketing Section for follow up with the concerned customers.
Despatch Instruction (DI):
Based on the Purchase Order of the customers and fnancial
arrangements, Corporate Domestic Marketing prepares Despatch Instruction-
DI whose numbering is computer controlled for dispatches from Plant. The
stock transfer Dl's to diferent stockyards are also prepared based on the
indents received from the respective regions. For issuance of Dl's for
despatches from diferent stockyards the details are given in section 2.10.
(i) ln case of fnancial arrangements through L/C the Dl is prepared in
accordance with accepted UC terms. Six (6) copies of Dls are prepared
to be distributed as follows:
• Smelter Despatch -for organisingdespatch and for preparation of
relevant documents. For Dls issued against letter of credit where
transportation by “BA approved transporter" is mentioned the validity
of IBA approval is checked by Despatch Section before despatch of the
material.
• Smelter Finance -for raising commercial invoices as per DI terms and
despatch details.
• Respective Regional - for record &realisation of dues if any.
• Marketing Finance -to check and ensure that the Dl and the related
commercial invoice raised are commensurate with the fnancial
arrangement and as per the laid down terms & conditions.
• Marketing master fle - for record
• Customer File - for record in the party fle
The transmission of Dl`s from Corporate Marketing to Despatch Section of
Smelter Plant is computerised. Hard copies are sent to Despatch along with
other receipts. Daily DI status report refecting the Dl quantity, dispatch
quantity and outstanding quantity is generated by Smelter Despatch Section.
The Dl information are sent from Corporate Marketing to Regional Ofces
through Email and to those customers directly who have E-mail addresses.
Once the DIs are issued, the DI No. is generated by the Systems itself on day
to day basis and has running serial numbers. The DIs are serviced from plant
in sequence of seniority subject to availability of the particular grade of metal
stipulated in the DI at the plant. However, priority in despatch is given in the
following cases:
Once the Dls are issued, the Dl No. is generated by the Systems itself on day
to day basis and has running Sl. Nosl The Dis are serviced from plant in
sequence of seniority subject to availability of the particular grade of metal
stipulated in the DI at the plant. However, priority in despatch is given in the
following cases:
• To MOU customers: on the 3ra day from the date of issuance of Di
subject to the seniority of MOU Dls (as per approved MOU terms
• Specifc priority in despatch is also given to PSU customers on request
and need basis with the approval of competent authority.
Contents of Delivery Invoice
• Name and address of the buyer.
• Name and address of consignee if the consignee is other than the buyer`
• Buyers Sales Tax
• Registration number,
• Despatch Instruction Number
• Pricing details
• LR/RR Nor,
• Carrier’s name and address
• Buyer's Order Number
• Financial arrangement reference to LC or DD etc
• Truck Number/Wagon Number and ECC Number.
Three copies of Delivery Invoices are prepared on the basis of Dl & distributed
as follows:
• Original copy to Smelter Finance for preparing invoice,
• Duplicate copy handed over to transporter for claiming CENVAT
• Third one is kept in dispatch section.
Contents of Packing list cum material gate pass cum despatch advice:
• DI No. & Date,
• Buyer's name & consignee's name if the consignee is otherthan the
buyer,
• Description & specifcation of material & quantity loaded.
• Transporter's details,
• Freight clause,
• Wagon/Lorry No.
• Serial No & Dateof Debit in personal ledger account(PLA), etc.
SALES FROM STOCKYARDS :
• The sales from the stockyard takes place under the control of
regional ofces/Branch ofces
• Besides efecting sales from plant to meet the requirement of local
manufacturers’ /SSI customers, NALCO also moves metal to its
various stockyards for sale from stockyards.
• For declaration of basic price for sale from stockyards ,the
stockyard recovery charges are added to the basic price ex-smelter
plant as ruling on date of removal of material to stockyard from
smelter plant.
• While removing goods from smelter plants for sales from
stockyards, Excise duty is paid at smelter plant based price ex-
smelter plant, stockyard recovery charges and applicable discounts
ruling on date of removal of goods from plant as per the statutory
requirements.
• Customer makes fnancial arrangements i.e. Advance payment by
DD/SBI FAST/ Cheque, or letter of credit with the Regional Ofces
for lifting material from stockyards.
• On receiving frm fnancial arrangements and other statutory
documents, metal is delivered to the customers from stockyards.
• Respective stockyards under the Regional Ofces keep a detailed
record of opening stock, receipt, sales and closing stock product
wise.
“E 1” FORMS :
Buyers who sell in transit normally ask for E-1 forms. In such a case the
customer has to submit the following documents to the respective
Regional ofces for verifcation and forwarding it to Corporate Ofce for
further checking & issuance of E-1 forms.
• Sales Tax Registration Certifcate copy of the customer specifying
resale of aluminium metal/non-ferrous metal/aluminium products
as the case maybe
• Duly endorsed Lorry Receipts.
• Copy of the C-form submitted.
• Certifcate from the customer confrming the sale of metal in transit
under Section 6(2) of CST Act 1956.
• Invoice copy of the Customers (to the third party).
• Any other statutory documents required from time to time.
However no E-1 form would be issued for resale of metal to any
defaulting parties of Nalco either as buyer or as consignee.
REFUNDS:
Quite often, the customers after completion of monthly transactions ask
for refunds for left over amount which are normally routed through
Regional ofces. On getting recommendations from Regional ofce the
same is forwarded by corporate marketing section to marketing fnance
incorporating the necessary details based on which refunds may be
efected to the customers through Regional Ofces. In case of Orissa
based buyers and some Govt. /State undertakings/PSUs who directly
deal with corporate marketing, the refund advice is processed from
corporate marketing fnance. After checking the correctness of the refund
amount, Marketing Finance makes the refund.
FOLLOW UP WITH THE CUSTOMERS:
A constant interaction is maintained by corporate marketing personnel
as well as Regional Marketing personnel with the customer to book
orders.Besides,through interaction a reciprocation system is established
in which NALCO personnel give details of metal position, dispatch
details, amendments to L/C required, change in the product mix,
etc.from time to time to the customers.
11.0. EXPORT PROCEDURE 0F NALCO:
NALCO, in 1981, as a public sector enterprise of the government of India,
National Aluminium Company (NALCO) is Asia’s largest integrated aluminium
complex, encompassing bauxite mining alumina refning, aluminium smelting
and casting, power generation, rail and port operations.NALCO started exports
of Aluminium metal in September 19238 The Company’s metal was registered
with the London Metal Exchange (LME), London in 1989' The Company
Presently exports Primary Aluminium in the form of Ingots and Sows. The
lngots and Sows that are exported are normally Of LME Grade i.e. conforming
to the specifcation: Al. 99.7 pct min, Fe4 020 DCt max and Si 0.10 pct max.
Export of other products` such as Wire Rods, Billets, etc., have been done in
the past and could be considered in future depending on the market situation
and availability of products of required quality.
Considering the production schedule for the year, the expected domestic and
international market scenario during the fnancial year the target for export of
metal is set at the beginning of the fnancial year. However, these targets are
subject to change depending on the domestic and export market scenario
prevailing then, production plan, the commercial considerations, saleability
and maintenance of NALCO's presence in these markets.
Depending on such export targets and revision thereof from time to time order
booking/ contract for forward /current months are done.
The schedule for export and movement of metal by rail to diferent ports during
a month is fnalized in the beginning of the month in a meeting held with
smelter plant.
NALCO presently exports metal through the sea-ports in Kolkata`
Paradip& Visakhapatnam and through Land to Bangladesh. Generally` all
exports are On CIF or C&F Basis. The exports are made against contracts
entered into by NALCO with Overseas Customers and against frm fnancial
arrangements mostly in the form of irrevocable Letter of Credit. The contracts
are entered into with registered Customers generally through the tenders
foated by NALCO. Contracts are also sometimes by NALCO participation in
Global Tenders foated by buyers abroad and through one to one negotiations
Registration of Customers is done by NALCO in order to enable them to
participate in the limited tenders foated from time to time. Such registration
continues to be an ongoing process for expansion of Customer base
However the expansion of Customer base is done keeping in View the
credentials and ability of the prospective Customers so that contracts if
entered- into with them could be executed smoothly. The eligibility to get
registered with NALCO for metal exports therefore, are as follows.
• Only overseas Buyers having sound fnancial credentials. Certifed by
their bank, and business credentials & experience in international
trading are eligible to apply for registration Overseas ofces of Govt. of
India undertakings are also eligible to apply.”
• The annual turnover of the buyers should not be less then USD 6.0
million or equivalent.
• In case of manufacturer i.e. Direct & User,the above criteria could be
relaxed
NALCO presently exports through the sea-ports in Kolkata,Paradip&
Vishakhapatnam and through land to Bangladesh, All export are on FOB ST
(Spout Trimmed) & CIF basis (Custom, Insurance &Freight)
The annual turnover of the buyers should not be less then USD 6.0
million or equivalent.
1.In case of manufactureri.e. Direct & User,the above criteria could be
relaxed
? ORDER BOOKING:
Order booking activities of metal is done through the process of,
LIMITED TENDERING
1.Based on thetarget, order booking position,metal availability LME price and
prevailing domestic and international market scenario,proposal for foating the
tender is initiated and open approval by competent authority is made, then the
tender is foated
2. LME cash settlement price of a quotational period (QP).the premium could
vary depending upon the market perception of bidder & could sometime be
also negative. The QP could be month prior to the month of scheduled
shipment or few days,depending on the shipment schedule.The average LME
cash settlement price would unknown both to the buyers & sellers.
ONE-TO ONE CONTRACTS
One-one contract shall eithers be on LME links basics or on fxed price
basics.
LME linked basics : Price are computed by adding the premium or
discount fnalized the contract, to the average LME cash settlement price of
a Quotational period.
Fixed price basics: Depending upon the market buoyancy
inventories,holding & the LME trends,contracts could be made at fx price
by striking the price considering the fuctuating trend of LME with future
reference LME screen price at that point of time and date.
PARTICIPATION IN GLOBAL TENDERS
For participation of global tenders issued by various overseas customer the
department may frst study the tender requirement & obtained conformation
from plant regarding production/availability of required quantity & quality of
the materials as per buyers’ schedule.
? SALE ORDER:
Material description ?
Quantity ?
Shipment schedule ?
Delivery base Price ?
Mutational period ( in case of lame linked contracts ) ?
Payment terms ?
Standard terms and conditions ?
Name & addressee of advising/ negotiating ban ?
? DISPATCH INSTRUCTION
Based on the on going contract the metal planning,fnalized during the
monthly meeting between corporate marketing & smelter production, and
taking in to account metal movement to diferent to diferent port,a dispatch
instruction should be send to smelter dispatch during the beginning of every
month.
? LETTER OF CREDIT
The export of aluminium metal would be done against the irrevocable Letter of
The Credit at sight open by a frst class international bank acceptable at
NALCO having provision for TT reimbursement with in two or three working
days of receipt of tested message from the negociating bank.
? RAKE DISPATCH DOCUMENTS :
[A] APPLICATION FOR REMOVAL OF EXCISABLE GOODS FOR EXPORT

(ARE-1 FORM)
PACKING LIST
RESHEDULING : All possiable efort may be made both by the buyers and
seller so that the goods are sheet as per the schedule of contract.if due to any
circumstance the seller approaches the buyer for reseheduling of the cargo.
12,0CUSTOMER SATISFACTION OF NALCO
Major Customers of NALCO( Domestic)
NALCO plays a vital role in the Indian Aluminium industry. The
Aluminium producing capacity of the country has witnessed a
quantum jump after the entry of NALCO. Through its quality
products it gets about 800 direct reputed customers and some of them are
cited below:
• JINDAL ALUMINIUM LTD
• NATIONAL SMALL INDUSTRIES CORPORATION
• HINDUSTAN SEALS LTD
• BAJAJ AUTO LTD
• GOETZE INDIA LTD
• TATA MOTORS LTD
• GANGA JAMUNA LTD
• HIREN ALUMINIUM LTD
• STERLITE INDUSTRIES LTD
• METAL POWER COMPANY LTD
• SUNDARAM CLAYTON LTD
• INDIA PISTONS LTD
• ORDNANCE FACTORY AMBAJHARI
• HINDUSTAN AERONAUTICS LTD
• BHILAI STEEL PLANT
• ROURKELA STEEL PLANT
• VISAKHAPATNAM STEEL PLANT
• BOKARO STEEL PLANT
Customer Satisfaction Index
Customer Satisfaction Indicator (CSI) is an indicator of customer
satisfaction on diferent aspects of products and services ofered
by NALCO. This feedback helps NALCO to take various
corrective measures to enhance customer satisfaction level in order to retain
send expand NALCO’s customer base.CSI of each customer in each product
category is arrived at by the following method
Initial Calculation of Weight age:
Regional Ofces and Corporate Marketing Department calculate the
average weight age of each value category / factor based on feedback
received from their respective segment of customers. The fnal
average weight age for each value category factor, product segment-
wise is calculated by corporate marketing department taking into
consideration the weight age of each value category / factor calculated by the
zonal ofces and corporate marketing department... The fnal average
weights is of diferent
value categories / factor for various product segments are
calculated through feedback from the customers.
Determination Of CSI:
Feedback from customers is obtained on regular basis twice a year
i.e. June / July and December /January for the half year ending
June and December. The feedback form, analysis and review of CSI,
rating obtained in respect of value categories / factors are carried out
by respective Regional Ofces / Corporate Marketing. Based on the fnalized
weight structure so arrived for each value category / factor product
wise and quality rating obtained from the customers for each
product, the CSI is computed for each customer in respect of each
product.CSI of each customer in each product category .(The ratings are in the
scales of 1 to 10.)
CSI = ? (w * r) / ? (w*10)
Where,
? w = weight of value categories / factors
? r = rating of value categories / factors
Thus, CSI is expressed as fraction.
Respective in charge marketing of regions reviews the CSI and quality rating
obtained from the customer. If the index is found to be low , specifc interaction
is made with the concerned customer. The concerned agencies and the plant
personnel then take it up so that suitable corrective action is taken to improve
the same. The respective in charge marketing of regions give
periodic feedback to the corporate Marketing regarding the CSI,
rating of the value categories / factors, corrective actions taken and
the efect of the same. Corporate Marketing reviews the process
on quarterly basis and provide feedback to ED(Marketing ). ED
( Marketing ), thereafter, reviews the entire process on quarterly basis and
takes suitable corrective action for improving the efectiveness of the
same . Trend analysis, Histograms and other statistical analysis tools are
used for analysis and review, as necessary , from time to time.
CSR Activities by the company
The CSR activities of the Company are undertaken through:
• Board level CSR & SD Committee
• Rehabilitation and Periphery Development Advisory Committees(RPDACs)
• Nalco Foundation.
Rehabilitation and Periphery Development Advisory Committees(RPDACs)
From the allocated amount (1% of net proft) for Peripheral Development
Programme, 40% is for S&P Complex, Angul, 40% for M&R Complex,
Damanjodiand 20% for corporate level activities. Govt. of Odisha has
constituted Rehabilitation & Periphery Development Advisory Committee
(RPDAC) for AngulSector and Damanjodi Sector under the Chairmanship of
respective Revenue Divisional Commissioner. Other Members of the Committee
includes District Collector, Local MLAs, MPs, People’s representatives and
representatives from Nalco. All projects and policies related to this earmarked
fund allocation for Anguland Damanjodi Sectors are decided by RPDAC. Most of
the projects are implemented by District Administration and some projects by
the Companydirectly.
Nalco Foundation
Nalco Foundation is focused on development of villages located within 15
kms. radius of Nalco’s operational areas. Nalco Foundation has adopted a
project based accountability approach through baseline surveys and by
ensuring participation of the primary stakeholders at the grassroots in the
decision
14.0 Suggestions
Nobody in this world is perfect. Everybody needs a feedback/suggestion for
their development.
NALCO is not an exception. So, in spite of many good things there are still
areas where NALCO could improve more. Like as a public sector it’s decision
making process is a bit slow. Here the organization should think to make it
faster to compete with the competitors especially from private sectors. Coal
and electricity one of the must needed resources for the organization. As coal is
a natural resources and now a days its amount is decreasing so, company
should think about alternatives.where asNALCOhas been already allocated
Utkal-E coal block ,Orissa,for its expansion unit. Even the project was
allocated but still it not work properly. If NALCO will work in this project as
soon as possible it would have an extra advantage to the companyand company
may add another new product.
Regarding electricity NALCO has signed a MOU with NTCIL (Nuclear Power
Corporation of India) for setting of Nuclear power plant in India.In joint venture
for generating and selling electric power, Ifthis project will exercise in time then
NALCO can play a pivotal role in the power market.
NALCO’s market share it has good position in its primary segment but it
should modify its product mix which will help itself to gain a good position
other than primary product segment. As NALCO is a quite old organization, it
needs some technological improvement also.
As NALCO is a cash reserve organization so the company has the opportunity
to expand its business in diferent segments. As now the global economic
recession has afected world business very deeply. So, the company should be
always prepared to face such kind of satiation in future.
In our report we have seen almost all of the NALCO’s products are in cash cow
segment, except T-ingots, here company has some areas of improvement and
they should be observed keenly.
15.0 Conclusion
Jules Verne, the father of modern science fction, wrote "From Earth to the
Moon", describing a manned trip to the moon over 100 years before the Apollo
landings. The protagonists' space craft is to be fred from a giant gun and they
decide there is one material which is ideally suited to the application -
aluminium: "This valuable metal possesses the whiteness of silver, the
indestructibility of gold, the tenacity of iron, the fusibility of copper, the
lightness of glass.
It is easily wrought, is very widely distributed, forming the base of most of the
rocks, is three times lighter than iron, and seems to have been created for the
express purpose of furnishing us with the material for our projectile."
Aluminium industry in general and NALCO in particular have very bright
future. It is quite sure that NALCO will prove it’s worth and cement a good
position for itself in near future. Proper identifcations of new business
opportunity in the international market can help it gain it’s market share. It
has already taken the required measures for this purpose. All its expansion
program are the vital examples of achieving its goal of securing a good status at
the international level.
Hence the strategy part of NALCO will defantly play a vital role in its goal
achieving process. So, we hope this project will help full in order to increase its
reputation as well as also to fulfll the demands of the customers.
16.0. BIBLOGRAPHY
Kotler, P. (2014). Marketing Management. New Delhi: Published by Tata
McGraw Hill.
Annual report of NALCO (March, 2014). Published by NALCO.
ParichayabyNALCO
Minerals Metal Review, Gujarat. (October 2014& April 2015 & April 2015)
Published by Gujarat Mineral Development Corporation Ltd
www.wikipedia.com
www.NALCOindia.com

doc_141203807.docx