Description
The doc explains about SAIL using the concepts and theories of Organizational Theory and Practice.
ORGANIZATIONAL THEORY AND PRACTICE
Project: STEEL AUTHORITY of INDIA Ltd.(SAIL)
Table of Contents
An Introduction to the Organization: ............................................................................. 2 Early Outlook: ........................................................................................................ 2 Birth of SAIL: .......................................................................................................... 3 Vision: ...................................................................................................................... 6 CREDO: ..................................................................................................................... 6 Quality PoLIcy: ............................................................................................................. 6 Organization Structure: ............................................................................................... 6 Organization Hierarchy at SAIL: ........................................................................................ 9 Growth of the Organization: .......................................................................................... 13 Factors Contributing to Growth: ................................................................................... 13 Decline of the Organization: .......................................................................................... 14 Financial Highlights: .................................................................................................... 15 SAIL-Into the Future: ..................................................................................................... 17 Modernisation and Expansion: ......................................................................................... 17 Objective of Expansion Plan ........................................................................................... 17 Learning fRom this project ............................................................................................ 17 Ten Years At a Glance: ................................................................................................. 19 Learnings from the Project ......................................................... Error! Bookmark not defined. References: ............................................................................................................... 21
An Introduction to the Organization:
Early Outlook:
?
Till 1967-68, Indian Steel Industry’s growth had pace and rapidity.
?
It was because of the Prof. P.C. Malobani’s “Model of Planned Development” during the 2nd and 3rd 5 year plans which emphasized on allocating more resources to the Capital goods and basic industrial and infrastructural sectors such as steel, power generation, railways etc? Highly optimistic reports in 1961, suggested a per capita demand of 130 kg by turn of century. But this was not possible because of government apathy in mobilizing enough resources for investment and also because of the oil shocks of 1970s. ? New economic reforms of 1991-92, suggested that the State should withdraw from investment in production and domestic and global market forces should determine the production economy and the pattern of investment. This was necessary in the cost competitive and efficient growth of economy.
Birth of SAIL:
?
SAIL finds its root in Hindustan Steel Limited (HSL) which was established in the year 1954, by the government mainly to manage the Rourkela Steel Plant project. ? Later Bhillai and Durgapur steel projects were brought under HSL, in 1957.
Performance of HSL:
Steel Production
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Steel in MT
Year
?
Profit/Loss of HSL:
Profit/Loss
200 In Millions of Rupees 100 0 -100 -200 -300 -400 -500
Year
? Looking at the continuous poor performance of HSL, minister of steel Mr. Mohan
Kumaramangalam, realized the need for restructuring the company for faster development and autonomy.
? He proposed the substitution of Bureaucratic structure by Industrial
Management Structure. He realized that the bureaucrats are procedure oriented, while the industry should be result oriented. Main Objectives of SAIL: ? Plan, promote and organize an integrated and efficient development of iron and steel, in accordance to the economic policies and objectives laid down by the govt. from time to time ? Coordinate the activities of their subsidiaries, determine their economic and financial objectives, targets and to review, control and guide their performance. ? To act as entrepreneur on behalf of the state. ? To formulate and recommend to government a national policy for the development of Iron and Steel. SAIL was formed on 24th January 1973, encompassing all units in the public sector Iron and Steel Industry. SAIL’s social obligations in its annual report: ? Provide concepts of national integration in its broadest sense, through community service, developing and assisting social institutions and act ob the ideals of social justice without discrimination. ? Provide knowhow and assistance towards encouraging talent and growth in the community by assisting the establishment of cooperative institutions. ? Carrying out programmes for peripheral development and supporting educational and welfare institutions outside the steel township. ? Environmental preservation by controlling air and water pollution and proper disposal of industrial solid wastes. Thus emerged India’s public sector, with a philosophy for ushering in a socialistic order in the country, for contributing to economic emancipation through rapid Industrialization. In 1973, with an authorized capital of Rs. 2000 crore, it was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. It was thus a Holding Company. Later in 1978, SAIL was restructured as an Operating Company where the ownership of these plants was brought under SAIL.
?
? ?
?
?
?
Vision:
To be a respected world class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.
CREDO:
? To build lasting relationships with customers based on trust and mutual benefit. ? To uphold highest ethical standards in conduct of our business. ? To create and nurture a culture that supports flexibility, learning and is proactive to change. ? To chart a challenging career for employees with opportunities for advancement and rewards. ? To value the opportunity and responsibility to make a meaningful difference in people's lives. QUALITY POLICY: ? SAIL Vigilance shall establish and continually improve Quality Management System to facilitate environment for enabling people to work with integrity, impartiality, in a transparent manner, upholding highest ethical standards for the Organization.
Organization Structure:
? SAIL is one of the Navratna Public Sector Undertaking of the Government of India, having a production capacity of around 13 million tonnes (MT) of crude steel. ? SAIL owns and operates eight manufacturing plants – five integrated steel plants at
Bhilai, Durgapur, Rourkela, Bokaro and Burnpur producing carbon steels, and three plants at Salem, Durgapur and Bhadravati making stainless and alloy steels. A subsidiary at Chandrapur is a bulk producer of ferro-alloys.
? The company also has the distinction of being India’s largest producer of iron ore.
In fact, owning India’s second largest mines network provides SAIL a competitive edge in terms of captive availability of iron ore, limestone, dolomite, etc. So, in this way it tries to control its external environment for supply of Raw Materials.
? Equipped with the latest steel making technologies, the SAIL plants produce a
variety of steel products that meet the exacting requirements of both domestic as well as overseas customers. Central Marketing Organization, headquartered at Kolkata, markets its vast portfolio of long, flat and tubular products within India, through a vast network of branch offices and stockyards. International Trade Division, headquartered at New Delhi, handles export of the company’s products. SAILCON, another unit in New Delhi, provides consultancy services in iron & steel and related areas to clients worldwide. SAIL has reoriented its product-mix to keep pace with market demand. Higher production of special grade items like API grade HR Coils/Plates/Pipes, HR Coils for cold reducers, etc., have enabled SAIL to maintain and achieve larger market share in value-added segments. By branding some of its products, the company has also been able to achieve better recognition for value in the market. With a strong emphasis on tuning business activities for customer satisfaction, the company ensures supplies of customized products with shorter lead-time. Though primarily a domestic player, SAIL has established a reputation for itself as a consistent and reliable supplier of world-class quality products in the international market as well. SAIL has over the years earned a reputation as the supplier of superior steel products in over 30 countries around the globe. Corporate Units of SAIL have to perform the following general functions: ? Long term strategic planning for the company. ? Policy formulation in consultation with plant personnel. Getting agreed action plans for implementation of the policies and ensuring their fulfillment. ? Developing norms of performance in every functional area and securing commitment to progressively improved norms. ? Ensuring smooth and efficient operations and achievement of optimal performance of existing resources. Ensuring fulfillment of targets and orderly growth of the company. Organizational development to maximize efficiency of the Company. ? Reviewing performance of each unit with respect to targets and suggesting corrective action where necessary. ? Assistance to plants through problem anticipation and resolution and bringing about improvements in the plants.
?
? ? ?
? ?
?
? Centralized control of – Finance ? Coordination with all external agencies, Central and State Governments, Ministries, Railways, suppliers etc. in order to improve overall company operations. ? Development of an efficient and well-designed Data Bank and MIS at all levels within the organization to assist in problem-identification and problem-resolution. ? Corporate Planning department have the following Organizational functions: ? Assisting the Chief Executive in long-term strategic planning for SAIL. ? Developing a system/machinery for institutionalizing long-term strategic planning in each plant or unit. ? Action Plans for development of planning culture in the organization. ? Development of system for dovetailing long-term, medium term and short term plans so as to provide an integrated approach. ? Developing systems for monitoring, implementation and continual updating of plans. ? Operations Directorate, has the following general functions: ? Production Planning and Control ? Adapting to new Technologies to save cost and operate economically ? Quality Management ? Regulating and determining the Inputs ? Developing and maintaining the basic Infrastructure ? Planning for Repairs and Maintenance ? Organizational Decision Making: ? SAIL is a commercial organization functioning in a fiercely competitive environment, facing competition both from domestic and international producers ? In such situations, the speed of decision-making is very important for survival. ? Though, the company has well defined systems with respect to decisionmaking process, it cannot follow, at all time, the rigidity of system. ? Generally, the proposals requiring decisions are initiated at the appropriate level of the executive, depending upon the nature with regard to financial implication, urgency, and importance of the matter. ? Normally, the proposals are initiated at the level of Assistant Manager/Deputy Manger/Manager. The approval is accorded by the
? ? ?
?
executives at the level of Joint Director/Additional Director/Executive Director/Director/Chairman depending upon the Delegation of Powers. The Board of Directors approves the matters, which are beyond the delegated powers of Chairman. Efforts are made so that files pass through minimum levels say 3 levels upto the Approving authority. In case of matters requiring consideration of matter by more than two departments, a multi disciplinary committee consisting of executives of appropriate levels of the concerned departments, is formed to expedite the decision-making. So, from this we can infer that the Decision making process is highly centralized in this organization but efforts are taken to speed up the decision making process based on the urgency of the situation.
ORGANIZATION HIERARCHY AT SAIL:
Figure 1: Brief Organisation Structure of SAIL
Joint Ventures
Subsidiary
SAILThe Holding Company
Integrated Steel Plants
Special Steel Plants
Figure 2: Major Units of SAIL
? The above diagram represents the major units of SAIL. The various firms or organizations under each unit have been mentioned below:
Figure 3: Integrated Steel Plant Unit
Figure 4: Special Steel Plant Unit
Figure 5: Joint Ventures
Figure 6: Subsidiary Unit
GROWTH OF THE ORGANIZATION: ? During the 1980s, SAIL was a large and complex organization and was performing far below its potential in terms of quantity and quality of steel produced, cost of production and customer satisfaction. ? The main reason attributed for this failure was because of the management’s inability to look into the future. ? Therefore a need for change was imminent to keep the organization in “good fit” with its environment and strive to build capability to cope up with the environment. ? SAIL, took ten long years (1985-1995) to transform from an initial loss making entity to a profit making organization. ? The ten year period of change can be divided into 2 phases: ? Phase I (1985-1990)?Pre-liberalization period of a monopoly market. ? Phase II(1991-1995)?Post-liberalization of a competitive market.
FACTORS CONTRIBUTING TO GROWTH:
? Change in Leadership: This was the most significant trigger for development. Appointment of Mr. V.K. Krishnamurthy as Chairman of SAIL in 1985 was the most significant change. He transformed the organization. ? Technical Up gradation: The next important trigger was the adoption of new technology to improve productivity and minimize losses. ? Cost Control: The next big trigger was realization of the fact that, profit can be achieved not by adjusting prices but by controlling the costs. ? Corporate Strategy: Improve operations and credibility of the company. Phase I Time Frame 1985-89 Thrust Activity Consolidation: Improve Performance to fully exploit existing assets. Focus: Organisational Culture, Resource Generation and Commitment of Employees. Modernization: Invest in modernizing steel plant and provide better service to customers. Focus: Cost Reduction, Total Quality and Customer Orientation and Expansion and Growth: Enhance cost
II
1990-95
III
1996-00
Beyond
effective steel production capacity Focus: Global Competitiveness, Cost, Price, Quality and Service. (Table 1: Corporate Strategy)
DECLINE OF THE ORGANIZATION: THE steel-making giant considered as a jewel in the public sector crown, Steel Authority of India Limited (SAIL), faced a massive haemorrhaging in the post-liberalisation era. It witnessed rapid capacity creation in the private sector which was not entirely coincidental. When the government decided to decontrol steel and open up the sector for private capital in the early part of the decade, steel consumption had appeared to be growing at a promising rate and there was a rush of investments into the sector. Not to be outdone, SAIL also planned a massive modernisation and expansion exercise at a cost of Rs.12,000 crores over the last three years, a process that envisaged adding 1.5 million tonnes to its capacity of flat products. Demand projections made during the earlier part of the century were rather optimistic and the capacity addition was made based on these projections. However, these projections were wrong. n the case of flat products, which were earlier in short supply and for the manufacture of which substantial additional capacity has been added, the predominant consumer, the automobile industry, preferred to source them from abroad for reasons of quality or other considerations. The situation has been exacerbated by the growth in imports. Steel imports under the open general licence category were allowed and the duties were brought down from 85 per cent a few years ago to between 20 and 30 per cent now. AIL has hitherto had a domestic orientation with a virtually captive buyer in the government under controlled market conditions. As a public sector unit and a lumbering giant at that, it not only lacked the agility displayed by its private sector counte rparts but lacked the marketing savvy so essential to succeed in a competitive environment, especially when demand projections have gone awry. Lack of vision in designing a comprehensive moder nisation programme has resulted in investments which have not yielded commensurate improvements in productivity and quality. The recession combined with over-capacity led to a demand-supply mismatch. SAIL was bound to feel the impact of the mismatch most. For SAIL, price levels fell even as input costs rose. Defective distribution channels have been another problem for SAIL. Under controlled market conditions, steel was first shipped to stockyards in various parts of the country before being sent on to the buyers, which added to the transportation cost. Unde r the freight equalisation policy, SAIL absorbed the additional costs. There are also historical factors that have aggravated SAIL's woes. Located mainly in the central and eastern parts of the country near coal and iron ore mines, SAIL plants are far removed from the industrialised belt in western India. Private sector sup pliers located closer to
this industrial belt have a distinct advantage over SAIL in terms of cost as well as delivery schedules. FINANCIAL HIGHLIGHTS:
SAIL-INTO THE FUTURE:
? SAIL, has been able to set some ambitious targets for the future amidst this downturn. MODERNISATION AND EXPANSION: ? SAIL, is in the process of modernizing and expanding its production units, raw material resources and other facilities to maintain its dominant position in the Indian steel market. ? The objective is to achieve a production capacity of 26.2 MTPA of Hot Metal from the base level production of 14.6 MTPA (2006-07 – Actual).
OBJECTIVE OF EXPANSION PLAN
? ? ? ? ? ? ? ? ?
100% production of steel through Basic Oxygen Furnace (BOF) route 100% processing of steel through continuous casting Value addition by reduction of semi-finished steel Auxiliary fuel injection system in all the Blast Furnaces State-of-art process control computerization / automation State-of-art online testing and quality control Energy saving schemes Secondary refining Adherence to environment norms
LEARNING FROM THIS PROJECT This project gave us an opportunity to research more about the organization which is called by many as the “Pride of India” - SAIL .Through this project we were able to understand about the structure, culture and challenges faced by the largest steel manufacturer in India. We could clearly study how the organization, over the years, declined and again grew up to where it stands today. Few of the learnings have been summarized below: ? To be effective in leading organizational change, the top management must display, a very high level of commitment to the organization, to its goals and concern for employees ? A hostile environment threatens people’s thinking ? Leadership must be prepared to take unpopular decision
? Mobilization of support of like-minded people is vital for successful implementation of change ? Involvement of people improves their accountability to the problems and solutions ? Effective and continuous communication is the key to successful change efforts ? The senior middle management is generally the source of resistance ? Organization must focus on the few vital aspects for the change ? Change process must begin by putting the customer at the center ? HRD has a crucial role to play in the successful management of change ? Periodic review of progress and follow up action are critical in managing change proactively ? Avoiding actions on difficult issues eg. Structure, overstaffing and culture can be disastrous ? Do not sacrifice the future for short term convenience ? There is a need to pay sustained attention to those parts of the organization which are successful ? To manage the internal environment one has to manage the external environment and once you achieve success externally it becomes easier to manage the internal environment ? Cooperation of unions is important for managing change ? While the continuity of relationship with external consultants is useful for successful management of change, over dependence on them is not healthy ? Success in the past is no guarantee of success in future
TEN YEARS AT A GLANCE:
REFERENCES: http://www.thehindu.com/ http://superbrandsindia.com/ http://www.reportbuyer.com/industry_manufacturing/company_reports_industry_manufacturing http://www.sail.co.in Annual Reports of various years Personal Contacts
doc_755163435.docx
The doc explains about SAIL using the concepts and theories of Organizational Theory and Practice.
ORGANIZATIONAL THEORY AND PRACTICE
Project: STEEL AUTHORITY of INDIA Ltd.(SAIL)
Table of Contents
An Introduction to the Organization: ............................................................................. 2 Early Outlook: ........................................................................................................ 2 Birth of SAIL: .......................................................................................................... 3 Vision: ...................................................................................................................... 6 CREDO: ..................................................................................................................... 6 Quality PoLIcy: ............................................................................................................. 6 Organization Structure: ............................................................................................... 6 Organization Hierarchy at SAIL: ........................................................................................ 9 Growth of the Organization: .......................................................................................... 13 Factors Contributing to Growth: ................................................................................... 13 Decline of the Organization: .......................................................................................... 14 Financial Highlights: .................................................................................................... 15 SAIL-Into the Future: ..................................................................................................... 17 Modernisation and Expansion: ......................................................................................... 17 Objective of Expansion Plan ........................................................................................... 17 Learning fRom this project ............................................................................................ 17 Ten Years At a Glance: ................................................................................................. 19 Learnings from the Project ......................................................... Error! Bookmark not defined. References: ............................................................................................................... 21
An Introduction to the Organization:
Early Outlook:
?
Till 1967-68, Indian Steel Industry’s growth had pace and rapidity.
?
It was because of the Prof. P.C. Malobani’s “Model of Planned Development” during the 2nd and 3rd 5 year plans which emphasized on allocating more resources to the Capital goods and basic industrial and infrastructural sectors such as steel, power generation, railways etc? Highly optimistic reports in 1961, suggested a per capita demand of 130 kg by turn of century. But this was not possible because of government apathy in mobilizing enough resources for investment and also because of the oil shocks of 1970s. ? New economic reforms of 1991-92, suggested that the State should withdraw from investment in production and domestic and global market forces should determine the production economy and the pattern of investment. This was necessary in the cost competitive and efficient growth of economy.
Birth of SAIL:
?
SAIL finds its root in Hindustan Steel Limited (HSL) which was established in the year 1954, by the government mainly to manage the Rourkela Steel Plant project. ? Later Bhillai and Durgapur steel projects were brought under HSL, in 1957.
Performance of HSL:
Steel Production
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Steel in MT
Year
?
Profit/Loss of HSL:
Profit/Loss
200 In Millions of Rupees 100 0 -100 -200 -300 -400 -500
Year
? Looking at the continuous poor performance of HSL, minister of steel Mr. Mohan
Kumaramangalam, realized the need for restructuring the company for faster development and autonomy.
? He proposed the substitution of Bureaucratic structure by Industrial
Management Structure. He realized that the bureaucrats are procedure oriented, while the industry should be result oriented. Main Objectives of SAIL: ? Plan, promote and organize an integrated and efficient development of iron and steel, in accordance to the economic policies and objectives laid down by the govt. from time to time ? Coordinate the activities of their subsidiaries, determine their economic and financial objectives, targets and to review, control and guide their performance. ? To act as entrepreneur on behalf of the state. ? To formulate and recommend to government a national policy for the development of Iron and Steel. SAIL was formed on 24th January 1973, encompassing all units in the public sector Iron and Steel Industry. SAIL’s social obligations in its annual report: ? Provide concepts of national integration in its broadest sense, through community service, developing and assisting social institutions and act ob the ideals of social justice without discrimination. ? Provide knowhow and assistance towards encouraging talent and growth in the community by assisting the establishment of cooperative institutions. ? Carrying out programmes for peripheral development and supporting educational and welfare institutions outside the steel township. ? Environmental preservation by controlling air and water pollution and proper disposal of industrial solid wastes. Thus emerged India’s public sector, with a philosophy for ushering in a socialistic order in the country, for contributing to economic emancipation through rapid Industrialization. In 1973, with an authorized capital of Rs. 2000 crore, it was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. It was thus a Holding Company. Later in 1978, SAIL was restructured as an Operating Company where the ownership of these plants was brought under SAIL.
?
? ?
?
?
?
Vision:
To be a respected world class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.
CREDO:
? To build lasting relationships with customers based on trust and mutual benefit. ? To uphold highest ethical standards in conduct of our business. ? To create and nurture a culture that supports flexibility, learning and is proactive to change. ? To chart a challenging career for employees with opportunities for advancement and rewards. ? To value the opportunity and responsibility to make a meaningful difference in people's lives. QUALITY POLICY: ? SAIL Vigilance shall establish and continually improve Quality Management System to facilitate environment for enabling people to work with integrity, impartiality, in a transparent manner, upholding highest ethical standards for the Organization.
Organization Structure:
? SAIL is one of the Navratna Public Sector Undertaking of the Government of India, having a production capacity of around 13 million tonnes (MT) of crude steel. ? SAIL owns and operates eight manufacturing plants – five integrated steel plants at
Bhilai, Durgapur, Rourkela, Bokaro and Burnpur producing carbon steels, and three plants at Salem, Durgapur and Bhadravati making stainless and alloy steels. A subsidiary at Chandrapur is a bulk producer of ferro-alloys.
? The company also has the distinction of being India’s largest producer of iron ore.
In fact, owning India’s second largest mines network provides SAIL a competitive edge in terms of captive availability of iron ore, limestone, dolomite, etc. So, in this way it tries to control its external environment for supply of Raw Materials.
? Equipped with the latest steel making technologies, the SAIL plants produce a
variety of steel products that meet the exacting requirements of both domestic as well as overseas customers. Central Marketing Organization, headquartered at Kolkata, markets its vast portfolio of long, flat and tubular products within India, through a vast network of branch offices and stockyards. International Trade Division, headquartered at New Delhi, handles export of the company’s products. SAILCON, another unit in New Delhi, provides consultancy services in iron & steel and related areas to clients worldwide. SAIL has reoriented its product-mix to keep pace with market demand. Higher production of special grade items like API grade HR Coils/Plates/Pipes, HR Coils for cold reducers, etc., have enabled SAIL to maintain and achieve larger market share in value-added segments. By branding some of its products, the company has also been able to achieve better recognition for value in the market. With a strong emphasis on tuning business activities for customer satisfaction, the company ensures supplies of customized products with shorter lead-time. Though primarily a domestic player, SAIL has established a reputation for itself as a consistent and reliable supplier of world-class quality products in the international market as well. SAIL has over the years earned a reputation as the supplier of superior steel products in over 30 countries around the globe. Corporate Units of SAIL have to perform the following general functions: ? Long term strategic planning for the company. ? Policy formulation in consultation with plant personnel. Getting agreed action plans for implementation of the policies and ensuring their fulfillment. ? Developing norms of performance in every functional area and securing commitment to progressively improved norms. ? Ensuring smooth and efficient operations and achievement of optimal performance of existing resources. Ensuring fulfillment of targets and orderly growth of the company. Organizational development to maximize efficiency of the Company. ? Reviewing performance of each unit with respect to targets and suggesting corrective action where necessary. ? Assistance to plants through problem anticipation and resolution and bringing about improvements in the plants.
?
? ? ?
? ?
?
? Centralized control of – Finance ? Coordination with all external agencies, Central and State Governments, Ministries, Railways, suppliers etc. in order to improve overall company operations. ? Development of an efficient and well-designed Data Bank and MIS at all levels within the organization to assist in problem-identification and problem-resolution. ? Corporate Planning department have the following Organizational functions: ? Assisting the Chief Executive in long-term strategic planning for SAIL. ? Developing a system/machinery for institutionalizing long-term strategic planning in each plant or unit. ? Action Plans for development of planning culture in the organization. ? Development of system for dovetailing long-term, medium term and short term plans so as to provide an integrated approach. ? Developing systems for monitoring, implementation and continual updating of plans. ? Operations Directorate, has the following general functions: ? Production Planning and Control ? Adapting to new Technologies to save cost and operate economically ? Quality Management ? Regulating and determining the Inputs ? Developing and maintaining the basic Infrastructure ? Planning for Repairs and Maintenance ? Organizational Decision Making: ? SAIL is a commercial organization functioning in a fiercely competitive environment, facing competition both from domestic and international producers ? In such situations, the speed of decision-making is very important for survival. ? Though, the company has well defined systems with respect to decisionmaking process, it cannot follow, at all time, the rigidity of system. ? Generally, the proposals requiring decisions are initiated at the appropriate level of the executive, depending upon the nature with regard to financial implication, urgency, and importance of the matter. ? Normally, the proposals are initiated at the level of Assistant Manager/Deputy Manger/Manager. The approval is accorded by the
? ? ?
?
executives at the level of Joint Director/Additional Director/Executive Director/Director/Chairman depending upon the Delegation of Powers. The Board of Directors approves the matters, which are beyond the delegated powers of Chairman. Efforts are made so that files pass through minimum levels say 3 levels upto the Approving authority. In case of matters requiring consideration of matter by more than two departments, a multi disciplinary committee consisting of executives of appropriate levels of the concerned departments, is formed to expedite the decision-making. So, from this we can infer that the Decision making process is highly centralized in this organization but efforts are taken to speed up the decision making process based on the urgency of the situation.
ORGANIZATION HIERARCHY AT SAIL:
Figure 1: Brief Organisation Structure of SAIL
Joint Ventures
Subsidiary
SAILThe Holding Company
Integrated Steel Plants
Special Steel Plants
Figure 2: Major Units of SAIL
? The above diagram represents the major units of SAIL. The various firms or organizations under each unit have been mentioned below:
Figure 3: Integrated Steel Plant Unit
Figure 4: Special Steel Plant Unit
Figure 5: Joint Ventures
Figure 6: Subsidiary Unit
GROWTH OF THE ORGANIZATION: ? During the 1980s, SAIL was a large and complex organization and was performing far below its potential in terms of quantity and quality of steel produced, cost of production and customer satisfaction. ? The main reason attributed for this failure was because of the management’s inability to look into the future. ? Therefore a need for change was imminent to keep the organization in “good fit” with its environment and strive to build capability to cope up with the environment. ? SAIL, took ten long years (1985-1995) to transform from an initial loss making entity to a profit making organization. ? The ten year period of change can be divided into 2 phases: ? Phase I (1985-1990)?Pre-liberalization period of a monopoly market. ? Phase II(1991-1995)?Post-liberalization of a competitive market.
FACTORS CONTRIBUTING TO GROWTH:
? Change in Leadership: This was the most significant trigger for development. Appointment of Mr. V.K. Krishnamurthy as Chairman of SAIL in 1985 was the most significant change. He transformed the organization. ? Technical Up gradation: The next important trigger was the adoption of new technology to improve productivity and minimize losses. ? Cost Control: The next big trigger was realization of the fact that, profit can be achieved not by adjusting prices but by controlling the costs. ? Corporate Strategy: Improve operations and credibility of the company. Phase I Time Frame 1985-89 Thrust Activity Consolidation: Improve Performance to fully exploit existing assets. Focus: Organisational Culture, Resource Generation and Commitment of Employees. Modernization: Invest in modernizing steel plant and provide better service to customers. Focus: Cost Reduction, Total Quality and Customer Orientation and Expansion and Growth: Enhance cost
II
1990-95
III
1996-00
Beyond
effective steel production capacity Focus: Global Competitiveness, Cost, Price, Quality and Service. (Table 1: Corporate Strategy)
DECLINE OF THE ORGANIZATION: THE steel-making giant considered as a jewel in the public sector crown, Steel Authority of India Limited (SAIL), faced a massive haemorrhaging in the post-liberalisation era. It witnessed rapid capacity creation in the private sector which was not entirely coincidental. When the government decided to decontrol steel and open up the sector for private capital in the early part of the decade, steel consumption had appeared to be growing at a promising rate and there was a rush of investments into the sector. Not to be outdone, SAIL also planned a massive modernisation and expansion exercise at a cost of Rs.12,000 crores over the last three years, a process that envisaged adding 1.5 million tonnes to its capacity of flat products. Demand projections made during the earlier part of the century were rather optimistic and the capacity addition was made based on these projections. However, these projections were wrong. n the case of flat products, which were earlier in short supply and for the manufacture of which substantial additional capacity has been added, the predominant consumer, the automobile industry, preferred to source them from abroad for reasons of quality or other considerations. The situation has been exacerbated by the growth in imports. Steel imports under the open general licence category were allowed and the duties were brought down from 85 per cent a few years ago to between 20 and 30 per cent now. AIL has hitherto had a domestic orientation with a virtually captive buyer in the government under controlled market conditions. As a public sector unit and a lumbering giant at that, it not only lacked the agility displayed by its private sector counte rparts but lacked the marketing savvy so essential to succeed in a competitive environment, especially when demand projections have gone awry. Lack of vision in designing a comprehensive moder nisation programme has resulted in investments which have not yielded commensurate improvements in productivity and quality. The recession combined with over-capacity led to a demand-supply mismatch. SAIL was bound to feel the impact of the mismatch most. For SAIL, price levels fell even as input costs rose. Defective distribution channels have been another problem for SAIL. Under controlled market conditions, steel was first shipped to stockyards in various parts of the country before being sent on to the buyers, which added to the transportation cost. Unde r the freight equalisation policy, SAIL absorbed the additional costs. There are also historical factors that have aggravated SAIL's woes. Located mainly in the central and eastern parts of the country near coal and iron ore mines, SAIL plants are far removed from the industrialised belt in western India. Private sector sup pliers located closer to
this industrial belt have a distinct advantage over SAIL in terms of cost as well as delivery schedules. FINANCIAL HIGHLIGHTS:
SAIL-INTO THE FUTURE:
? SAIL, has been able to set some ambitious targets for the future amidst this downturn. MODERNISATION AND EXPANSION: ? SAIL, is in the process of modernizing and expanding its production units, raw material resources and other facilities to maintain its dominant position in the Indian steel market. ? The objective is to achieve a production capacity of 26.2 MTPA of Hot Metal from the base level production of 14.6 MTPA (2006-07 – Actual).
OBJECTIVE OF EXPANSION PLAN
? ? ? ? ? ? ? ? ?
100% production of steel through Basic Oxygen Furnace (BOF) route 100% processing of steel through continuous casting Value addition by reduction of semi-finished steel Auxiliary fuel injection system in all the Blast Furnaces State-of-art process control computerization / automation State-of-art online testing and quality control Energy saving schemes Secondary refining Adherence to environment norms
LEARNING FROM THIS PROJECT This project gave us an opportunity to research more about the organization which is called by many as the “Pride of India” - SAIL .Through this project we were able to understand about the structure, culture and challenges faced by the largest steel manufacturer in India. We could clearly study how the organization, over the years, declined and again grew up to where it stands today. Few of the learnings have been summarized below: ? To be effective in leading organizational change, the top management must display, a very high level of commitment to the organization, to its goals and concern for employees ? A hostile environment threatens people’s thinking ? Leadership must be prepared to take unpopular decision
? Mobilization of support of like-minded people is vital for successful implementation of change ? Involvement of people improves their accountability to the problems and solutions ? Effective and continuous communication is the key to successful change efforts ? The senior middle management is generally the source of resistance ? Organization must focus on the few vital aspects for the change ? Change process must begin by putting the customer at the center ? HRD has a crucial role to play in the successful management of change ? Periodic review of progress and follow up action are critical in managing change proactively ? Avoiding actions on difficult issues eg. Structure, overstaffing and culture can be disastrous ? Do not sacrifice the future for short term convenience ? There is a need to pay sustained attention to those parts of the organization which are successful ? To manage the internal environment one has to manage the external environment and once you achieve success externally it becomes easier to manage the internal environment ? Cooperation of unions is important for managing change ? While the continuity of relationship with external consultants is useful for successful management of change, over dependence on them is not healthy ? Success in the past is no guarantee of success in future
TEN YEARS AT A GLANCE:
REFERENCES: http://www.thehindu.com/ http://superbrandsindia.com/ http://www.reportbuyer.com/industry_manufacturing/company_reports_industry_manufacturing http://www.sail.co.in Annual Reports of various years Personal Contacts
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