Description
Brief profile & vision, mission of Sterlite Industries, corporate governance and philosphy of Sterlite Industries, organization structure, conducive factors of growth identified for Sterlite Industries, factors that led to decline of Sterlite Industries, SWOT analysis of Sterlite Industries
o
Organizational Analysis
A Case Study on Sterlite Industries (India) Ltd.
Anil Agarwal - Chairman
Table of Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. ORGANIZATION STRUCTURE: ............................................................................................................ 3 INTRODUCTION: .................................................................................................................................... 4 STERLITE –VISION AND MISSION: ...................................................................................................... 5 COMPETITIVE ADVANTAGE: .............................................................................................................. 5 EVOLUTION OF THE ORGANIZATION: .............................................................................................. 5 CONDUCIVE FACTORS: ........................................................................................................................ 6 GROWTH OF THE ORGANIZATION: ................................................................................................... 9 FACTORS THAT LEAD TO ITS GROWTH: ........................................................................................ 11 WORKING AT STERLITE INDUSTRIES: ............................................................................................ 16 ORGANIZATIONAL VALUES: ............................................................................................................. 17 REFERENCES: ...................................................................................................................................... 20
Sterlite Industries (India) Ltd.
Page 2
1. ORGANIZATION STRUCTURE:
Sterlite has a flat organizational structure which ensures delegation of authority and quicker access to information bringing about timely and quality decisions. SBU based organization structure ensures every division is empowered to take decisions for themselves in alignment with business goals and heads own the growth and development of their team members.
Job sizes are clearly disproportionate to age and are based on an objective assessment of the individual’s ability and hunger for advancement. Young employees are therefore encouraged to take up responsibilities which would otherwise be available to them several years later in their careers.
Sterlite Industries (India) Ltd.
Page 3
2. INTRODUCTION:
Sterlite Industries (India) Ltd. (SIIL) is the principal subsidiary of the Vedanta Resources Group. Sterlite is a leading producer of copper in India. It was the first company in India to set up a Copper Smelter and Refinery in Private Sector and operate the largest capacity continuous Cast Copper Rod plants. Vedanta Group is a London listed metals and mining major with Aluminium, Copper and Zinc operations in India and Australia. Sterlite Industries (India) Ltd. (SIIL) is involved in Mining, Smelting, and Refining. Sterlite Industries operates one copper mine, Mount Lyell Mine, in Western Tasmania, Australia through its subsidiary Copper Mines of Tasmania. Copper concentrates from Sterlite Industries copper mine is blended with bought out concentrates from other sources and treated to get optimum results. The Smelter is based on IsaProcess technology from MIM, Australia, world leaders in Copper smelting technology. The anode produced by the smelters is processed in the Silvassa and Tuticorin refineries using IsaProcess technology sourced from MIM, Australia. The Refineries convert Copper anodes to electrolytic grade Copper cathodes of 99.99% purity. The company is in the process of setting up a 2,400MW independent power plant through its wholly owned subsidiary, Sterlite Energy Limited. Sterlite is listed on the Bombay Stock Exchange and National Stock Exchange in India and the New York Stock Exchange in the United States.
Sterlite Industries (India) Ltd.
Page 4
3. STERLITE –VISION AND MISSION:
COPPER - VISION AND MISSION
VISION 2010
MISSION
? To harness technology to its full potential in a safe and clean environment in the entire business cycle and integrate quality with continuous improvements. ? To harness the profitable and growing CCR market from 125 KMT to 300 KMT per annum. ? To achieve and sustain cost leadership in the global market. ? To become a vibrant, learning organisation by building skills and competencies of employees for growth. ? To be the best and most respectable corporate citizen.
To be the world’s ‘best-in-class’ copper producer and build a progressive organisation that all stakeholders are proud to be associated with’
STERLITE DNA : Speed, Smart, Humble
4. COMPETITIVE ADVANTAGE:
? ? ? World class technology for all the plants. Knowledge Management Cell called 'Development Cell', which drives various initiatives to bring improvements in operational performance. Constant focus to maintain low cost of production.
5. EVOLUTION OF THE ORGANIZATION:
The sequence of events is arranged in a chronological order:
1975 - The company was originally incorporated as Rainbow Investments Ltd. on 8th September. The Company Manufactured and dealt in electrical wires and cables of all kinds. Sterlite Industries (India) Ltd. Page 5
1976 - The name was changed to Sterlite Cables Ltd. on 19th October, and the Company undertook the manufacture of cables, conductors and enameled copper wires at its factories in Mumbai and Pune. 1981 - 2,10,000 shares were issued without payment in cash to the retiring partners of a partnership firm in which the Company was also a partner. 1986 - On 28th February, the name of the Company was changed to Sterlite Industries (India), Ltd. and a fresh Certificate of Incorporation to this effect was obtained from the Registrar of Companies, Maharashtra. The Company was promoted by Anil Kumar Agarwal, Dwarka Prasad Agarwal and Ishwarlal Patwari.
6. CONDUCIVE FACTORS:
Indian Copper Industry is highly concentrated with three major players ? ? ? Hindalco Sterlite HCL
14% 44% Hindalco 42% Sterlite HCL
The copper industry consists of two segments ? ? Continuous Cast Copper Rod Copper Cathodes Page 6
Sterlite Industries (India) Ltd.
Continuous cast copper rod segment has grown at 10 percent CAGR over the period 2002-2006 and constitutes about 37 per cent of the aggregate market. Copper Cathodes, have grown at 13.17 per cent over the same period, and constitute 63 per cent of total copper production. The aggregate production has grown cumulatively at 11.95 percent.
The Indian copper industry was opened for private sector investments in 1992. Earlier, the industry was dominated by Hindustan Copper Limited (HCL), a public sector undertaking, which had taken over the copper ore mines at Khetri and Kolihan, in Rajasthan and Rakha Copper Complex in Bihar, from National Mineral Development Corporation Ltd. The Industry has three major players at present. • Hindustan Copper Limited [HCL] • Sterlite • Hindalco Other players include around 1000 Small Scale Industries, which are primarily involved in converting scrap into ingots.HCL, is the only primary producer, which mines and refines copper. Hindalco and Sterlite, are secondary producers, who process indigenous and/or import copper concentrate to produce end products such as copper bars, rods and wires. The output from the three major producers accounts for a share of approximately 80 per cent of the total copper consumption in the country. The balance is on account of imports and sales of smaller producers. The capacity for production of primary copper in India has risen from a mere 47,500 tonnes per year in 1997 to 947,500 tonnes in 2006-07, which has enabled India to become a net exporter of refined copper. The Indian Sterlite Industries (India) Ltd. Page 7
copper Industry has a moderate importance in the Indian economy. While it has a number of applications across several sectors, its turnover of around US$ 775.9 million is just 0.2 per cent of GDP. About 40 per cent of the production is exported. The total employment in the sector is less than 40,000.
Global Copper Industry
2006 2005 2004 2003 2002 140 150 152 158 156 166 165 168 Consumption Production 170 173
152 153 160 170 180
Global copper production has grown at 3.16 per cent compounded annually over the period 2002 – 2006, from a level of 15.3 million tons to 17.33 million tonnes. During the same period consumption of copper grew at 2.88 percent, from 15.21 million tonnes to 17.04 million tonnes. Asia and USA are the biggest producers of copper in the world, together accounting for over 70 per cent of global production. Asia and Europe are the key consuming markets, accounting for close to 80 per cent of global consumption of Copper.
Sterlite Industries (India) Ltd.
Page 8
7. GROWTH OF THE ORGANIZATION:
Anil Agarwal has shot into fame over the past five years. Like all first generation entrepreneurs he started quite moderately and turned his metal trading business into a conglomerate of copper, zinc and aluminum assets. Some time back he raised US $ 825 million by listing his Vedanta Resources on the London Stock Exchange, The mid1970s, was a tough time for Indian business men. The License raj was at its peak and the overhanging cloud of bureaucracy, paperwork and red tapism ensured that no entrepreneur could move forward - they could only crawl. Each expansion or purchase required a license, inspection or review. A simple trip to the bank could become an all-day affair. Agarwal says that anything he did for ten years encountered phenomenal roadblocks. In the early part of this decade Anil Agarwal took some fierce bets. All these bets have paid off and catapulted him into the billionaire list. He bought copper mines in Zambia when the metal was at its trough; he aggressively bid for and won the majority shares in BALCO. Now he wants to turn Vedanta into a mining and metals company on quality par with companies like the British giant Anglo American. The listing of Vedanta has attracted both attention and trouble. Investors, bureaucrats and labor unions have all treated Agarwal's ambitions with suspicion questioning the corporate governance practices at Agarwal's flagship company. It has been 30 years since Anil Agarwal started his small time scrap metal trading business in Mumbai. The initial years were tough but he managed to expand his business under the burning fire of rising ambition. In the early Sterlite Industries (India) Ltd. Page 9
1980's Anil Agarwal was waiting for the telecommunication industry to create major demand for copper wires. Anticipating this huge demand Agarwal visited the U.S in 1983 to buy a closed down copper cable manufacturing plant. He managed to buy one of those for about US $ 2 million. He had more than partially funded it with a US $ 1.5 million bank loan. The new company that he formed Sterlite Industries grew very well. To fund his expansion plans he raised money from the Indian equity markets in four separate offerings. With this money and more Anil Agarwal set up aluminum products plant and later put up a copper smelter. All throughout people called Anil Agarwal a bubble but the bubble was rising high in the skies. When environmentalists tried to stop Sterlite's copper plant from being put up in Maharashtra Agarwal showed great strength and character. In a bold move Anil Agarwal moved his metal business to Tuticorin, where again Agarwal tangled with protesters. A 1997 explosion at the plant killed at least two workers and injured several others. But Agarwal has managed himself very well. He has kept these protest, allegations, suits and regulatory problems away from his mental frame work and continues to do what he has done for the past two decades, expand his metal business.
Sterlite Industries (India) Ltd.
Page 10
Growth of Sterlite Industries in terms of Stock Price (An indicator of Sterlite's Performance):
8. FACTORS THAT LEAD TO ITS GROWTH:
8.1. GOOD STRATEGY:
The goal is to generate strong financial returns and create a world-class metals and mining company. To achieve this goal, we intend to take full advantage of our competitive strengths. Key elements of our strategy include: ? Increasing our capacities through Greenfield and Brownfield projects. We intend to continue the construction of new facilities to capitalize upon the growing demand for metals in India and abroad, particularly in China, Southeast Asia and the Middle East. ? Leveraging our project execution and operating skills and experience in building and operating captive power plants to develop commercial power generation business. We believe the commercial power generation business represents an attractive growth opportunity in India and that our experience in building and operating captive power plants positions us to develop this as a stand-alone business. ? Continuing to focus on asset optimization and reducing the cost of production. We focus on Sterlite Industries (India) Ltd. Page 11
?
?
reducing our cost of production, including maximizing our throughput and plant availability, reducing energy costs and consumption, increasing automation, improving recovery ratios, reducing our raw material costs and seeking better utilization of by-products. Seeking further growth and acquisition opportunities that leverage our transactional, project execution and operational skills. We continually seek new growth and acquisition opportunities in the metals and mining and related businesses, primarily in India, including government privatization programs. Consolidating our corporate structure and increasing our direct ownership of our underlying businesses to derive additional synergies as an integrated group. We have exercised our option to acquire the Government of India’s remaining 49.0% ownership interest in BALCO and are seeking to complete this acquisition.
8.2. ORGANIZATIONAL CULTURE:
At SIIL, we have a well defined organizational structure with clearly identified roles and responsibilities. This ensures every individual has clarity of their role and the contribution to the business. Different views and ideas expressed by our employees help in taking quick decisions for better business performance. Cross-functional teams are formed to accomplish special tasks within time and costs with advanced planning and focus. Employee involvement in TPM, TQM, CSR projects, Suggestion scheme like Ideas@Sterlite and other continual improvement activities show our work system that capitalizes diverse ideas, culture and thinking of employees. We have a Global Leadership Program (GLP) wherein employees are selected and posted at international operations for a specific assignment. This program enables the organization to create an elite pool of employees who can excel in a multicultural environment. It also acts as an ideal platform for sharing the best practices across the group.
Sterlite Industries (India) Ltd.
Page 12
Sterlite Industries (India) Ltd.
Page 13
As an evolved and concerned corporate citizen, We do not see CSR as charity; not even as responsibility; but as an opportunity to impact the nearby communities positively and all our activities are determined by the concept of “Changing Lives”: where we constantly endeavor to improve the quality of life of the communities where we operate. Our activities are conceived to bridge gaps in society and help transform communities around our workplace and are concentrated around 25 villages across Tuticorin positively enhancing the quality of life of over one lakh people. Our projects are mainly focused on upliftment of the life of women, children and youth in our field of operations. SWEP :
The Sterlite women empowerment project was conceived to help rural and coastal women to become self confident and economically independent. It aims to promote domestic savings among self help groups (SHGs), which allows them to take up projects that generate supplementary income for their families. Launched in March 2005, and engaged with six NGOs as their project partners and partnering with TamilNadu Women Development Corporation, SWEP has inspired in forming of 730 SHGs covering more than 10,000 rural women. From the time of inceptions more than 150 SHG groups have taken up profitable income generation activities to raise income of families and the combined savings of these SHGs today amounts to Rs.3.5 crores.
Sterlite Industries (India) Ltd.
Page 14
Education Sterlite aims to provide an environment for personal development through education at all levels: We aim to achieve 100% literacy in every community where we work. Our initiatives are:
? ? ? ?
Evening Study Centre Scholastic Excellence Award Career Orientation Adult Literacy Programme
Sterlite Industries (India) Ltd.
Page 15
9. WORKING AT STERLITE INDUSTRIES:
“The real race for excellence is the one where you sprint against yourself, endeavor to outperform, raise the bar, time after time. Excellence is an ever moving target...” What Sterlite looks for in its future employees ? ?
?
Ambitious and Aggressive to take challenges Excellent sense of creativity and desire to challenge the status quo
Longing to learn new things
Employee speaks …. Mr. Nitesh Sharma Manager – Finance
Working with a company that encourages their employees to be creative and approachable is a great attribute for me. I enjoy a work environment that is fast-paced, positive and whose employees can smile even on a bad day. But best of all, you're excited by your work. You enjoy it. You're passionate about it. You're proud of it. That really says a lot about the family orientated division I work for Sterlite provides the stability and benefits I was looking for, as well as opportunities beyond my expectations to utilize my strengths and talents. My co-workers are fun and friendly, and I feel a real sense of belonging to the Sterlite family Geethanjali Officer - Business Excellence
I joined Sterlite family in January 1996 as Process Technician Trainee and currently working as Officer at Business Excellence Dept that supports continual improvement activities in the organization. Sterlite provides opportunity to all youngsters to learn and bring out their potentials for making Sterlite as the Best in-class Manufacturer. The organizational challenges are cracked by effective team involvement with innovative ideas and senior management support.
Sterlite Industries (India) Ltd.
Page 16
10.ORGANIZATIONAL VALUES:
Socialization Technique at Sterlite: At Sterlite the new joinees are given on the job training. It follows individual tactics i.e. every joinee has his/her different learning experience. They are free to talk and seek guidance from the senior employees. The culture being quite a transparent one, they are free to interact with anyone irrespective of his/her designation. The technique is quite informal. From the day of joining they start working in team and learn gradually while working .It is up to the joinees that how much they learn from the people. There is no role model for them as such. So they learn what they want to and also depends upon how eager are they in terms of getting acquainted with the organization.
Sterlite Industries (India) Ltd.
Page 17
ENVIRONMENTAL Quality of Copper and its per capita consumption in India.
? ? ? ? ?
FTA Imports in India. Adequate mining and expansion in copper deposits. High LME prices and inflationary effect on consumption Retention of talented people. Environmental issues and litigations.
STRATEGY TO MANAGE RESOURCE DEPENDENCY
? ? ? ?
Acquisition of mines Securing maximum long term sourcing of concentrate By-products management and revenue generation from untapped resources Retention of key employees, training and development, growth and retention of performers
THREATS TO THE ORGANISATION ? ? Copper can be substituted by aluminium and may lead to the reduction in the copper demand. Countries like Dubai and other gulf countries have a much lower cost of production but are not able to compete with Sterlite presently because of the import duties levied by the government. If in near future the government reduces the duty, it will prove to be a great setback for the organization. ? Rising price of power in India is resulting in higher cost of production but since the price of copper is controlled by LME (London Metal Exchange) therefore it may not address to the Indian market conditions in full strength.
Sterlite Industries (India) Ltd. Page 18
STRENGTHS Today, our organization is growing by leaps and bounds thanks to our competitive strengths, which include: ? High quality assets and resources that make us a low-cost producer of copper and zinc. ? Substantial market shares across the copper, zinc and Aluminium metals markets in India. ? Extensive experience in operating and expanding our business in India that allows us to capitalize on attractive growth opportunities and resource potential in the country. ? Numerous new projects in the pipeline that will enable us to expand our production. ? Experience for entry into commercial power generation business in India with our operations of captive power plants since 1997. ? Experienced and focused management with strong project execution and acquisition skills. ? Ability and capacity to finance world-class projects
Sterlite Industries (India) Ltd.
Page 19
11.
REFERENCES:
? ? ? ? ? ? ? ?
http://www.metalworld.co.in/enews0506.htm#LME http://www.sterlite-industries.com http://www.nseindia.com/ http://www.financialexpress.com/section/markets/96/ http://www.theequitydesk.com/anil_agarwal.asp http://www.businesshumanrights.org/Categories/Individualcompanies/S/SterliteIndustriespartofVedantaResources https://frosttest.com/uat/servlet/exec-brief-movers-feature.pag?mode=open&sid=128898563 http://www.scribd.com
Sterlite Industries (India) Ltd.
Page 20
doc_153860316.docx
Brief profile & vision, mission of Sterlite Industries, corporate governance and philosphy of Sterlite Industries, organization structure, conducive factors of growth identified for Sterlite Industries, factors that led to decline of Sterlite Industries, SWOT analysis of Sterlite Industries
o
Organizational Analysis
A Case Study on Sterlite Industries (India) Ltd.
Anil Agarwal - Chairman
Table of Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. ORGANIZATION STRUCTURE: ............................................................................................................ 3 INTRODUCTION: .................................................................................................................................... 4 STERLITE –VISION AND MISSION: ...................................................................................................... 5 COMPETITIVE ADVANTAGE: .............................................................................................................. 5 EVOLUTION OF THE ORGANIZATION: .............................................................................................. 5 CONDUCIVE FACTORS: ........................................................................................................................ 6 GROWTH OF THE ORGANIZATION: ................................................................................................... 9 FACTORS THAT LEAD TO ITS GROWTH: ........................................................................................ 11 WORKING AT STERLITE INDUSTRIES: ............................................................................................ 16 ORGANIZATIONAL VALUES: ............................................................................................................. 17 REFERENCES: ...................................................................................................................................... 20
Sterlite Industries (India) Ltd.
Page 2
1. ORGANIZATION STRUCTURE:
Sterlite has a flat organizational structure which ensures delegation of authority and quicker access to information bringing about timely and quality decisions. SBU based organization structure ensures every division is empowered to take decisions for themselves in alignment with business goals and heads own the growth and development of their team members.
Job sizes are clearly disproportionate to age and are based on an objective assessment of the individual’s ability and hunger for advancement. Young employees are therefore encouraged to take up responsibilities which would otherwise be available to them several years later in their careers.
Sterlite Industries (India) Ltd.
Page 3
2. INTRODUCTION:
Sterlite Industries (India) Ltd. (SIIL) is the principal subsidiary of the Vedanta Resources Group. Sterlite is a leading producer of copper in India. It was the first company in India to set up a Copper Smelter and Refinery in Private Sector and operate the largest capacity continuous Cast Copper Rod plants. Vedanta Group is a London listed metals and mining major with Aluminium, Copper and Zinc operations in India and Australia. Sterlite Industries (India) Ltd. (SIIL) is involved in Mining, Smelting, and Refining. Sterlite Industries operates one copper mine, Mount Lyell Mine, in Western Tasmania, Australia through its subsidiary Copper Mines of Tasmania. Copper concentrates from Sterlite Industries copper mine is blended with bought out concentrates from other sources and treated to get optimum results. The Smelter is based on IsaProcess technology from MIM, Australia, world leaders in Copper smelting technology. The anode produced by the smelters is processed in the Silvassa and Tuticorin refineries using IsaProcess technology sourced from MIM, Australia. The Refineries convert Copper anodes to electrolytic grade Copper cathodes of 99.99% purity. The company is in the process of setting up a 2,400MW independent power plant through its wholly owned subsidiary, Sterlite Energy Limited. Sterlite is listed on the Bombay Stock Exchange and National Stock Exchange in India and the New York Stock Exchange in the United States.
Sterlite Industries (India) Ltd.
Page 4
3. STERLITE –VISION AND MISSION:
COPPER - VISION AND MISSION
VISION 2010
MISSION
? To harness technology to its full potential in a safe and clean environment in the entire business cycle and integrate quality with continuous improvements. ? To harness the profitable and growing CCR market from 125 KMT to 300 KMT per annum. ? To achieve and sustain cost leadership in the global market. ? To become a vibrant, learning organisation by building skills and competencies of employees for growth. ? To be the best and most respectable corporate citizen.
To be the world’s ‘best-in-class’ copper producer and build a progressive organisation that all stakeholders are proud to be associated with’
STERLITE DNA : Speed, Smart, Humble
4. COMPETITIVE ADVANTAGE:
? ? ? World class technology for all the plants. Knowledge Management Cell called 'Development Cell', which drives various initiatives to bring improvements in operational performance. Constant focus to maintain low cost of production.
5. EVOLUTION OF THE ORGANIZATION:
The sequence of events is arranged in a chronological order:
1975 - The company was originally incorporated as Rainbow Investments Ltd. on 8th September. The Company Manufactured and dealt in electrical wires and cables of all kinds. Sterlite Industries (India) Ltd. Page 5
1976 - The name was changed to Sterlite Cables Ltd. on 19th October, and the Company undertook the manufacture of cables, conductors and enameled copper wires at its factories in Mumbai and Pune. 1981 - 2,10,000 shares were issued without payment in cash to the retiring partners of a partnership firm in which the Company was also a partner. 1986 - On 28th February, the name of the Company was changed to Sterlite Industries (India), Ltd. and a fresh Certificate of Incorporation to this effect was obtained from the Registrar of Companies, Maharashtra. The Company was promoted by Anil Kumar Agarwal, Dwarka Prasad Agarwal and Ishwarlal Patwari.
6. CONDUCIVE FACTORS:
Indian Copper Industry is highly concentrated with three major players ? ? ? Hindalco Sterlite HCL
14% 44% Hindalco 42% Sterlite HCL
The copper industry consists of two segments ? ? Continuous Cast Copper Rod Copper Cathodes Page 6
Sterlite Industries (India) Ltd.
Continuous cast copper rod segment has grown at 10 percent CAGR over the period 2002-2006 and constitutes about 37 per cent of the aggregate market. Copper Cathodes, have grown at 13.17 per cent over the same period, and constitute 63 per cent of total copper production. The aggregate production has grown cumulatively at 11.95 percent.
The Indian copper industry was opened for private sector investments in 1992. Earlier, the industry was dominated by Hindustan Copper Limited (HCL), a public sector undertaking, which had taken over the copper ore mines at Khetri and Kolihan, in Rajasthan and Rakha Copper Complex in Bihar, from National Mineral Development Corporation Ltd. The Industry has three major players at present. • Hindustan Copper Limited [HCL] • Sterlite • Hindalco Other players include around 1000 Small Scale Industries, which are primarily involved in converting scrap into ingots.HCL, is the only primary producer, which mines and refines copper. Hindalco and Sterlite, are secondary producers, who process indigenous and/or import copper concentrate to produce end products such as copper bars, rods and wires. The output from the three major producers accounts for a share of approximately 80 per cent of the total copper consumption in the country. The balance is on account of imports and sales of smaller producers. The capacity for production of primary copper in India has risen from a mere 47,500 tonnes per year in 1997 to 947,500 tonnes in 2006-07, which has enabled India to become a net exporter of refined copper. The Indian Sterlite Industries (India) Ltd. Page 7
copper Industry has a moderate importance in the Indian economy. While it has a number of applications across several sectors, its turnover of around US$ 775.9 million is just 0.2 per cent of GDP. About 40 per cent of the production is exported. The total employment in the sector is less than 40,000.
Global Copper Industry
2006 2005 2004 2003 2002 140 150 152 158 156 166 165 168 Consumption Production 170 173
152 153 160 170 180
Global copper production has grown at 3.16 per cent compounded annually over the period 2002 – 2006, from a level of 15.3 million tons to 17.33 million tonnes. During the same period consumption of copper grew at 2.88 percent, from 15.21 million tonnes to 17.04 million tonnes. Asia and USA are the biggest producers of copper in the world, together accounting for over 70 per cent of global production. Asia and Europe are the key consuming markets, accounting for close to 80 per cent of global consumption of Copper.
Sterlite Industries (India) Ltd.
Page 8
7. GROWTH OF THE ORGANIZATION:
Anil Agarwal has shot into fame over the past five years. Like all first generation entrepreneurs he started quite moderately and turned his metal trading business into a conglomerate of copper, zinc and aluminum assets. Some time back he raised US $ 825 million by listing his Vedanta Resources on the London Stock Exchange, The mid1970s, was a tough time for Indian business men. The License raj was at its peak and the overhanging cloud of bureaucracy, paperwork and red tapism ensured that no entrepreneur could move forward - they could only crawl. Each expansion or purchase required a license, inspection or review. A simple trip to the bank could become an all-day affair. Agarwal says that anything he did for ten years encountered phenomenal roadblocks. In the early part of this decade Anil Agarwal took some fierce bets. All these bets have paid off and catapulted him into the billionaire list. He bought copper mines in Zambia when the metal was at its trough; he aggressively bid for and won the majority shares in BALCO. Now he wants to turn Vedanta into a mining and metals company on quality par with companies like the British giant Anglo American. The listing of Vedanta has attracted both attention and trouble. Investors, bureaucrats and labor unions have all treated Agarwal's ambitions with suspicion questioning the corporate governance practices at Agarwal's flagship company. It has been 30 years since Anil Agarwal started his small time scrap metal trading business in Mumbai. The initial years were tough but he managed to expand his business under the burning fire of rising ambition. In the early Sterlite Industries (India) Ltd. Page 9
1980's Anil Agarwal was waiting for the telecommunication industry to create major demand for copper wires. Anticipating this huge demand Agarwal visited the U.S in 1983 to buy a closed down copper cable manufacturing plant. He managed to buy one of those for about US $ 2 million. He had more than partially funded it with a US $ 1.5 million bank loan. The new company that he formed Sterlite Industries grew very well. To fund his expansion plans he raised money from the Indian equity markets in four separate offerings. With this money and more Anil Agarwal set up aluminum products plant and later put up a copper smelter. All throughout people called Anil Agarwal a bubble but the bubble was rising high in the skies. When environmentalists tried to stop Sterlite's copper plant from being put up in Maharashtra Agarwal showed great strength and character. In a bold move Anil Agarwal moved his metal business to Tuticorin, where again Agarwal tangled with protesters. A 1997 explosion at the plant killed at least two workers and injured several others. But Agarwal has managed himself very well. He has kept these protest, allegations, suits and regulatory problems away from his mental frame work and continues to do what he has done for the past two decades, expand his metal business.
Sterlite Industries (India) Ltd.
Page 10
Growth of Sterlite Industries in terms of Stock Price (An indicator of Sterlite's Performance):
8. FACTORS THAT LEAD TO ITS GROWTH:
8.1. GOOD STRATEGY:
The goal is to generate strong financial returns and create a world-class metals and mining company. To achieve this goal, we intend to take full advantage of our competitive strengths. Key elements of our strategy include: ? Increasing our capacities through Greenfield and Brownfield projects. We intend to continue the construction of new facilities to capitalize upon the growing demand for metals in India and abroad, particularly in China, Southeast Asia and the Middle East. ? Leveraging our project execution and operating skills and experience in building and operating captive power plants to develop commercial power generation business. We believe the commercial power generation business represents an attractive growth opportunity in India and that our experience in building and operating captive power plants positions us to develop this as a stand-alone business. ? Continuing to focus on asset optimization and reducing the cost of production. We focus on Sterlite Industries (India) Ltd. Page 11
?
?
reducing our cost of production, including maximizing our throughput and plant availability, reducing energy costs and consumption, increasing automation, improving recovery ratios, reducing our raw material costs and seeking better utilization of by-products. Seeking further growth and acquisition opportunities that leverage our transactional, project execution and operational skills. We continually seek new growth and acquisition opportunities in the metals and mining and related businesses, primarily in India, including government privatization programs. Consolidating our corporate structure and increasing our direct ownership of our underlying businesses to derive additional synergies as an integrated group. We have exercised our option to acquire the Government of India’s remaining 49.0% ownership interest in BALCO and are seeking to complete this acquisition.
8.2. ORGANIZATIONAL CULTURE:
At SIIL, we have a well defined organizational structure with clearly identified roles and responsibilities. This ensures every individual has clarity of their role and the contribution to the business. Different views and ideas expressed by our employees help in taking quick decisions for better business performance. Cross-functional teams are formed to accomplish special tasks within time and costs with advanced planning and focus. Employee involvement in TPM, TQM, CSR projects, Suggestion scheme like Ideas@Sterlite and other continual improvement activities show our work system that capitalizes diverse ideas, culture and thinking of employees. We have a Global Leadership Program (GLP) wherein employees are selected and posted at international operations for a specific assignment. This program enables the organization to create an elite pool of employees who can excel in a multicultural environment. It also acts as an ideal platform for sharing the best practices across the group.
Sterlite Industries (India) Ltd.
Page 12
Sterlite Industries (India) Ltd.
Page 13
As an evolved and concerned corporate citizen, We do not see CSR as charity; not even as responsibility; but as an opportunity to impact the nearby communities positively and all our activities are determined by the concept of “Changing Lives”: where we constantly endeavor to improve the quality of life of the communities where we operate. Our activities are conceived to bridge gaps in society and help transform communities around our workplace and are concentrated around 25 villages across Tuticorin positively enhancing the quality of life of over one lakh people. Our projects are mainly focused on upliftment of the life of women, children and youth in our field of operations. SWEP :
The Sterlite women empowerment project was conceived to help rural and coastal women to become self confident and economically independent. It aims to promote domestic savings among self help groups (SHGs), which allows them to take up projects that generate supplementary income for their families. Launched in March 2005, and engaged with six NGOs as their project partners and partnering with TamilNadu Women Development Corporation, SWEP has inspired in forming of 730 SHGs covering more than 10,000 rural women. From the time of inceptions more than 150 SHG groups have taken up profitable income generation activities to raise income of families and the combined savings of these SHGs today amounts to Rs.3.5 crores.
Sterlite Industries (India) Ltd.
Page 14
Education Sterlite aims to provide an environment for personal development through education at all levels: We aim to achieve 100% literacy in every community where we work. Our initiatives are:
? ? ? ?
Evening Study Centre Scholastic Excellence Award Career Orientation Adult Literacy Programme
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9. WORKING AT STERLITE INDUSTRIES:
“The real race for excellence is the one where you sprint against yourself, endeavor to outperform, raise the bar, time after time. Excellence is an ever moving target...” What Sterlite looks for in its future employees ? ?
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Ambitious and Aggressive to take challenges Excellent sense of creativity and desire to challenge the status quo
Longing to learn new things
Employee speaks …. Mr. Nitesh Sharma Manager – Finance
Working with a company that encourages their employees to be creative and approachable is a great attribute for me. I enjoy a work environment that is fast-paced, positive and whose employees can smile even on a bad day. But best of all, you're excited by your work. You enjoy it. You're passionate about it. You're proud of it. That really says a lot about the family orientated division I work for Sterlite provides the stability and benefits I was looking for, as well as opportunities beyond my expectations to utilize my strengths and talents. My co-workers are fun and friendly, and I feel a real sense of belonging to the Sterlite family Geethanjali Officer - Business Excellence
I joined Sterlite family in January 1996 as Process Technician Trainee and currently working as Officer at Business Excellence Dept that supports continual improvement activities in the organization. Sterlite provides opportunity to all youngsters to learn and bring out their potentials for making Sterlite as the Best in-class Manufacturer. The organizational challenges are cracked by effective team involvement with innovative ideas and senior management support.
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10.ORGANIZATIONAL VALUES:
Socialization Technique at Sterlite: At Sterlite the new joinees are given on the job training. It follows individual tactics i.e. every joinee has his/her different learning experience. They are free to talk and seek guidance from the senior employees. The culture being quite a transparent one, they are free to interact with anyone irrespective of his/her designation. The technique is quite informal. From the day of joining they start working in team and learn gradually while working .It is up to the joinees that how much they learn from the people. There is no role model for them as such. So they learn what they want to and also depends upon how eager are they in terms of getting acquainted with the organization.
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ENVIRONMENTAL Quality of Copper and its per capita consumption in India.
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FTA Imports in India. Adequate mining and expansion in copper deposits. High LME prices and inflationary effect on consumption Retention of talented people. Environmental issues and litigations.
STRATEGY TO MANAGE RESOURCE DEPENDENCY
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Acquisition of mines Securing maximum long term sourcing of concentrate By-products management and revenue generation from untapped resources Retention of key employees, training and development, growth and retention of performers
THREATS TO THE ORGANISATION ? ? Copper can be substituted by aluminium and may lead to the reduction in the copper demand. Countries like Dubai and other gulf countries have a much lower cost of production but are not able to compete with Sterlite presently because of the import duties levied by the government. If in near future the government reduces the duty, it will prove to be a great setback for the organization. ? Rising price of power in India is resulting in higher cost of production but since the price of copper is controlled by LME (London Metal Exchange) therefore it may not address to the Indian market conditions in full strength.
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STRENGTHS Today, our organization is growing by leaps and bounds thanks to our competitive strengths, which include: ? High quality assets and resources that make us a low-cost producer of copper and zinc. ? Substantial market shares across the copper, zinc and Aluminium metals markets in India. ? Extensive experience in operating and expanding our business in India that allows us to capitalize on attractive growth opportunities and resource potential in the country. ? Numerous new projects in the pipeline that will enable us to expand our production. ? Experience for entry into commercial power generation business in India with our operations of captive power plants since 1997. ? Experienced and focused management with strong project execution and acquisition skills. ? Ability and capacity to finance world-class projects
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11.
REFERENCES:
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http://www.metalworld.co.in/enews0506.htm#LME http://www.sterlite-industries.com http://www.nseindia.com/ http://www.financialexpress.com/section/markets/96/ http://www.theequitydesk.com/anil_agarwal.asp http://www.businesshumanrights.org/Categories/Individualcompanies/S/SterliteIndustriespartofVedantaResources https://frosttest.com/uat/servlet/exec-brief-movers-feature.pag?mode=open&sid=128898563 http://www.scribd.com
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