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SUMMER TRAINING REPORT ON

INCREASE IN SALE IN THE UNORGANISED SECTOR IN THE FAN BLADE INDUSTRY

For

HINDALCO INDUSTRIES LIMITED

Under the supervision

Of

Mr. Rajib Dasgupta

(FRP-EAST)

Duration- 2nd May-30th June,2011

Sarathi Bhattacharya

New Delhi Institute Of Management

PGDM 2010-2012

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ACKNOWLEDGEMENT

At the outset I would like to place on record my gratitude to all concerned respectable executives of Hindalco Inds. Ltd., Kolkata for giving me this opportunity of Internship which has been a pure learning experience and has enlightened my knowledge and skills in the industry.

I would also like to express my gratitude towards the New Delhi Institute Of Mnagement for giving me the opportunity to undergo two months internship at Hindalco Industries Ltd., Kolkata.

I am extremely thankful to Mr. Rajib Dasgupta, Territory Manager, (FRP- EAST) , who has been my industry mentor and has helped me immensely to relate theoretical concepts to actual business scenario and has guided me throughout the internship period. I am indeed greatly indebted to him and everybody concerned at Hindalco who have provided me with valuable guidance that contributed to the successful completion of this marketing project.

Sarathi Bhattacharya

PGDM(2010-2012)

New Delhi Institute Of Management

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CONTENTS

SL. NO. DESCRIPTION PAGE NO.

1 Introduction to the project

1.1 Company Background1.2 Overview of the industry1.3 Major players in Indian Aluminium Industry1.4 Fan blade industry1.5 Aluminium consumption in fan blade1.6 Fan blade industry in eastern India1.7 Sale in unorganized sector2 Job assigned/Title2.1 Key responsibilities2.2 Stages of the project2.3 Brief description of the problem3 Objective of study4.1 Methodology4.2 Questionnaire4.3 Project constraints5 Collection and analysis of data5.1 Chapter summary5.2 Data analysis5.3 Observations5.4 Market analysis6 Findings7 Swot analysis8 Recommendations9 Conclusion10 Bibliography

1. Introduction to the project

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1.1 Company Background

Brief Insight of Hindalco Inds.:

An Industry leader in aluminium and copper, Hindalco Industries Limited, the metals flagship company of the Aditya Birla Group is the world’s largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the world’s largrst custom smelterat a single location.Established in 1958, it commissioned aluminium facility at Renukoot in eastern Uttar pradesh, India in 1962. Acquisitions and mergers, with Indal, Birla Copper and the Nifty and Mt. Gordon copper mines in Australia, strengthened their position .The acquisition of Novelis Inc. in 2007 positioned them among the top five aluminium majors worldwide and the largest vertically integrated aluminium company in India. Today, they are a metals powerhouse with high end rolling capabilities and a global footprint in 12 countries. Their consolidated turnover of USD 13 billion ( 60,000 crores ) placed them in the Fortune 500 league.

Hindalco is one of the leading producers of aluminum and copper. Their aluminum units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines.

Their units are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001 certified. Several units have gone a step further with an intrgrated management system (IMS), combining ISO9001, ISO 14001, and OHSAS 18001 into one business excellence model. They have been accorded the Star Trading House status in India. Hindalco’s aluminium metal is accepted for delivery under the High Grade Aluminium Contract on the London Metal Exchange (LME ). Their copper quality standardsare also internationally recognised and registered on the LME with Grade A accrediation.

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Aluminium

Hindalco’s major products include standard and speciality grade aluminas and hydrates, aluminium ingots, billets, wire rods flat rolled products, extrusions and foil.

The integrated facility at Renukoot houses an alumina refinery and an aluminium smelter, along with facilities for the production of semi-fabricated products, namely, redraw rods, flat rolled products and extrusions. The plant is backed by a co-generation power unit and a 742 MW captive power plant at Renusagar to ensure the continuous supply of power for smelter and other operations.

A strong presence across the value chain and synergies between operations has given us a dominant share in the value added products market. As a step towards expanding the market for value added products and services, they have launched various brands in

recent years – Everlast Roofing Sheets, Fresh wrap kitchen foil and freshpack semi-rigid containers.

Hindalco is Asia's largest integrated primary producer of aluminium and among the most cost-efficient producers globally. Their aluminium units across India encompass the entire gamut of operations, from bauxite mining, alumina refining, aluminium smelting to downstream rolling, extrusions and recycling.

In India, they enjoy a leadership position in aluminium and downstream products. Their product range includes rolled products, extrusions, foils, primary aluminium ingots, billets, wire rods and aluminium slabs.

Hindalco’s integrated complex at Renukoot, in Uttar Pradesh, India, houses an alumina refinery, an aluminium smelter and facilities for the production of semi-fabricated products. Power is sourced from their Renusagar power plant,

located about 45 km from Renukoot.

The captive power plant located at Renusagar, Uttar Pradesh, with 10

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power-generating units, has a current generation capacity of 742 MW. Excellent operational standards have ensured a consistent plant load factor of over 90 per cent.

The integrated complex at Renukoot also houses a co-generation plant with a capacity of 37.5 MW. A new co-generation plant with a capacity of 41 MW has just been commissioned to meet the requirements of the enhanced post-expansion capacities.

Other facilities include an aluminium smelter at Hirakud (Odisha) with a captive power plant and coal mine, alumina refineries at Muri (Jharkhand), and Belgaum (Karnataka), and rolling mills at Belur (West Bengal), and Taloja, Mouda (Maharashtra), foil rolling at Kalwa (Maharashtra) and Silvassa (Union Territory of Dadra and Nagar Haveli) and an extrusions plant at Alupuram (Kerala).

As a step towards building the market for value-added products and services, they have launched several brands in recent years, namely, Freshwrapp aluminium foil, Everlast aluminium roofing sheets, Permashield aluminium waterproofing membrane sheeting, and Al Planet, an exhibition showcasing aluminium products for the construction industry.

Primary Aluminium Hindalco is a major player in the primary aluminium market. Their product range includes:

Ingots which Hindalco produces high-purity ingots through smelting. and Alloy ingots of various grades are also produced and mainly used for the production of castings in the auto industry and in electrical applications. Both these products are re-melted and further processed into a large number of products for downstream applications.

Wire rods: Hindalco manufactures wire rods in a continuous casting and rolling process.

Electrical conductor (EC) wire rods are used for the production of cables and ACSR and AAC conductors. Alloy wire rods are used to produce AAAC conductors.

Billets:Hindalco's aluminium billets are produced by a state-of-the-art Wagstaff casting process using Airslip technology.

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These are top-quality billets with a smooth finish. They are used mainly to produce extrusions and forgings.

Copper

Birla Copper, Hindalco’s copper unit, is located at Dahej in Gujarat, India.The unit has the unique distinction of being the largest single location copper smelter in the world. The smelter uses state of the art technology and has a capacity of 500,000tpa.

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Birla Copper also produces precious metals, fertilisers and sulphuric and phosphoric acid. The unit has captive power plants for continuous power generation and a captive jetty to facilitate logistics and transportation.

Birla Copper upholds its longstanding reputation for quality copper cathodes and continuous cast copper rods by assuring its management processes meet the highest standards. It has aquired certification such as ISO-9001:2000(Quality Management Systems), ISO-14001:2004(Environmental Management System) and OHSAS-18001:2007 ( Occupational Health & Safety Management Systems ).

Production Capacity of ALUMINIUM and its Location (2011):

TABLE – IV

No. Key Products Location Capacity(TPA)

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1 Alumina

Renukoot , UP

Belgaum ,Karnataka

Muri , Jharkhand

700000

350000

180000

1230000

2 AluminiumRenukoot , UP

Hirakud , Orissa

375000

143000

518000

3 Extrusions

Renukoot ( UP )

Alupuram ( Kerala )

33000

13000

46,000

4Flat rolld

Products

Renukoot , UP

Belur ,W B

Taloja , Maharashtra

Mouda ,Maharashtra

100000

57000

50000

30000

237000

5 Red raw rods Renukoot ,UP 75000

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6 Foil and Packaging

Kalwa , Maharashtra Silvassa , Dadra

Kollur , AP

6000

30000

4000

40000

7

INDAL ( Subsidiary of Hindalco )

Wheels

Silvassa , Dadra 300000 Pcs

8 Foil rolling Kollur ,AP 4000

1.2 Overview of the Industry

Aluminium Industry in India :

Aluminium Industry in India is one of the leading industries. It is an oligopolistic industry. It is developing fast and the advancement in its technologies is boosting the growth faster. The utilization of both international

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and domestic resources was significant in the rapid development of the Aluminium Industry. The Indian Aluminium Industry has a bright future as it can become one of the largest players in the global aluminium market as in india the consumption is fairly low; therefore the industry may use the surplus production to cater the international need for aluminium which is used all over the world for several applications such as aircraft manufacturing, automoble manufacturing, utensils etc.

Usage Pattern In India:

Aluminium is used in various sectors, such as transportation, packaging, building/ construction and electrical industry. However the usage pattern differs significantly for India and rest of the world. Globally, the automotive, packaging and the construction sectors are the major end users of aluminium, while in India the power sector consumes about 44 percent. Since aluminium is naturally resistant to corrosion aluminium building materials are suitable for excessive environments, such as swimming pool cover ( subject to chlorine attack ), or exposed structures within 50 meters of ocean ( such as port area ).

Aluminium Consumption In India –

Electrical 3249

Automotive 1886

Building & Construction 1362

Packaging 1153

Others 2830

Figure in 00, mts.

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Electrical31%

Automotive18%Building And Construction

13%

Packaging11%

Others27%

Fig. in ,00 Mts

Source: Aluminium Commodity Report, Infoline, 2007

The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. The key consumer industries in India are power, transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (about 44% of total) followed by infrastructure (17%) and transportation (about 10% to 12%). However, internationally, the pattern of consumption is in favour of transportation, primarily due to large-scale aluminium consumption by the aviation space.

Demand for aluminium is estimated to grow at 6%-8% per annum in view of the low per capita consumption in India. Also, demand for the metal is expected to pick up as the scenario improves for user industries, like power, infrastructure and transportation

India is world's fifth largest aluminium producer with an aluminium production competence of around 2.7 million tones, accounting almost 5% of the total aluminium production in the world. India is also a huge reservoir of Bauxite with a Bauxite reserve of 3 billion tones.

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India lies at the eighth position in the list of leading primary aluminium producers in the world. India saw a significant growth in aluminium production in the past five years. In 2006-07, the production target of aluminium in India laid by the Ministry of Mines, Government of India was 1,153 KT, which was augmented to 1,237 KT in the next year (2007-08). Due to the growing demand from the construction, electrical, automobiles and packaging industry, the production of aluminium also hiked up. In FY 09, the total aluminium production in India was around 1.35 tonnes.

After a stagnant consumption of primary aluminium in India from the end of 1990s to 2002 (when the consumptions were between 500 – 600 KT), it started rising sharply since 2002. The consumption reached at 1,080 KT in 2006. The consumption of aluminium in India is dominated by the industries like power, infrastructure, and transportation etc.

The consumption pattern of aluminum in India is different from the global consumption pattern. The demand for the aluminum industry has been predominantly from the electrical sector. This sector is the largest end user of aluminum in India accounting for 36 % of the total aluminum demand. The transport sector contributes to another 22 % of the total demand while the consumer durable and packaging sectors consume 12 % each. The construction sector consumes 7% of the total aluminum demand. Total domestic consumption was about 0.55mn ton in FY98.

Per capita aluminum consumption in different countries

The consumption pattern of aluminum in India is different from the global

consumption pattern. The demand for the aluminum industry has been

predominantly from the electrical sector. This sector is the largest end user of

aluminum in India accounting for 36 % of the total aluminum demand. The

transport sector contributes to another 22 % of the total demand while the

consumer durable and packaging sectors consume 12 % each. The construction

sector consumes 7% of the total aluminum demand. Total domestic

consumption was about 0.55mn ton in FY98.

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Per capita aluminum consumption in different countries

CountriesConsumption

India 0.5

Japan 30.9

USA 26.9

Germany 30.1

Sweden 25.3

Switzerland 32.5

Italy 20.9

UK 11.1

France 17.7

Australia 17.9

Venezuela 8.2

Thailand 0.9

Malaysia 2.4

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CONSUMPTION OF NATIONS

India

JapanUSA

Germany

Sweden

Switzerland

Italy

UK

France Australia

Venezuela

Thailand Malaysia

0

5

10

15

20

25

30

35

1

India Japan USA Germany Sweden Switzerland Italy UK France Australia Venezuela Thailand Malaysia

1.3 Major players in Indian Aluminium Industry:

The aluminium industry in INDIA is concentrated between 3 players :-

1. Hindalco, ( AV Birla Group company)

2. Bharat Aluminium Company ltd. (Balco) [Vedanta group]

3. National Aluminium Company ltd. (Nalco)

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ALUMINIUM SALES IN 2010 IN KILOTONNES

HINDALCO, 147.6, 49%

BALCO, 65.8, 22%

NALCO, 14.4, 5%

IMPORTS, 46.1, 16%

SECONDARIES, 23.1, 8%

HINDALCO BALCO NALCO IMPORTS SECONDARIES

Producers in India:

1- Hindalco, ( AV Birla Group company)

Hindalco, an AV Birla Group company, is India’s largest aluminium producer and has the distinction of being one of the lowest cost producers of the metal in the world. It is an integrated player having captive bauxite mines, power units and high value-added output comprising semi-fabricated aluminium products. The company also has copper as its business segment, which it acquired recently from another group company, Indo Gulf.

2- Bharat Aluminium Company ltd. (Balco) [Vedanta group]

Bharat Aluminium Co. Ltd. (BALCO) was incorporated in the year 1965 as a Public Sector Undertaking (PSU). BALCO has several “firsts” to its credit. It is the first public sector enterprise in the country, which started producing aluminium in 1974. In 1987-88, a captive power plant of 270 MW was added to cater to the power requirement of the unit. BALCO has been the first in the Indian Aluminium Industry to produce the Alloy Rods, which is a Feedstock for

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all Aluminium Alloy Conductors, very much needed for today’s power transmission lines. Till 2001, BALCO was a public sector enterprise owned 100% by Government of India (GoI). In the year 2001, GoI divested 51% equity and management control in favour of Sterlite Industries (I) Limited. The development of special aluminium alloys for “Intermediate Range Ballistic Missile” – Agni and “Surface Missile” – Prithvi have been significant achievements of BALCO contributing to the nation’s defence capabilities.

BALCO is part of the fast moving Vedanta Resources, a London listed metals and mining major with Aluminium, Copper and Zinc operations in UK, India and Australia, and is on the threshold of a new growth phase.

3- National Aluminium Company ltd. (Nalco)

Nalco, is the largest producer of alumina and second largest producer of aluminium in the country. The company is self sufficient in the entire value chain encompassing mining of bauxite, refining of bauxite into alumina and smelting of alumina into aluminium. Nalco produces calcined alumina at its refinery and aluminium ingots, billets, strips, rolled products and wire rods at its smelter. While the surplus calcined alumina is almost entirely exported, wire rods, billets, strips and rolled products are sold in the domestic market. Ingots are sold in both the domestic as well as the international markets.

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The major advantages of using Aluminium are its remarkable properties:

i. Strength to weight ratio –

Aluminium has a density around one-third that of steel. This property is beneficial where high strength and low weight is required.

ii. Corrosion resistance of Aluminium- When the surface of aluminium metal is exposed to air, a protective oxide coating forms almost instantaneously. This oxide layer is corrosion resistant and can be further enhanced with surface treatments such as anodising.

iii. Light & Heat reflectivity of Aluminium –

Aluminium is a good reflector of both visible light and heat making it an ideal materials for roof-sheet.

iv. Recyclability of Aluminium –

When recycled, there is no degradation of properties vis-a-vis virgin materials. Further recycling only require 5% of the input energy required to produce virgin aluminium.

1.4 FAN BLADE INDUSTRY

Fans are one of the largest domestic appliances industries in India. Over a number of years no of players have entered the Fan industry and stayed. The notable entrants in the past few decades are USHA (70’s),

KHAITAN & POLAR (80’s). However 50% of the market is still unorganized.

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Interesting features of the fan industry

1-50% of the fan industry is organized.

2-There is no single market leader.

3-Fakes and trademark violations are rampant.

4-Second hand market is very big.

5-Very low product differentiation between the competing brands.

6-Rural market constitutes major part of the sales.

In a hot country like India fans are a relief. Over the years it has come from being hand held banana leaves to remote controlled multicolor designer fans fitted with exotic lights.

The technology involved in the product is low. This has led to a wide proliferation of the industry by many small-scale manufacturers. The competition from small-scale manufacturers is fierce and a continual worrying factor for the organized sector.

THE PRODUCT:

The fan industry can be broadly classified on the bases of the products offered. The major products are:

• Ceiling fans

• Pedestal fans

• Table fans

• Wall fans

• Exhaust fans

• Others (include car fans, miniature ventilation fans, etc.)

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The fan industry undergoes major seasonal and cyclical changes. A year of growth is generally followed by year of slump. However the product is generic to every home the fundamentals of the industry are strong. Essentially being a low technology industry, unorganized sector occupies the same position as the organized sector in terms of sales.

There is also a major effort to corner the rural markets, which on an average contributes about 30-40%.

1.5 ALUMINIUM CONSUMPTION IN FAN BLADE

MARKET SIZE AND SEGMENTATION

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i- Total Market Size is 13.6KT which is segmented into Organized and Unorganized sector.

ii- Organized Sector contributes 60% share against 40% share of unorganized sector.

iii- Industry is growing at the rate of 10% P.Aiv- Non – Decorative ceiling fans contribute to major consumption among

organized sector.v- Portable fans are sub segmented into Table, Pedestal and wall

mounted fan they contribute to 13% of organized sector.

HINDALCO MARKET SHARE-ORGANIZED SECTOR

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1.6 FAN BLADE INDUSTRY IN EASTERN INDIA

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i- Total Market Size is 2500 MT which is segmented into Organised and Unorganised sector.

ii- Organised Sector contributes 30% share against 70% share of Unorganised sector.

iii- Industry is growing at the rate of 9% P.A

HINDALCO MARKET SHARE IN FAN INDUSTRY (EASTERN INDIA )

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1.7 SALE IN UNORGANIZED SECTOR

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The unorganized sector is being a point of concern for Hindalco. Though the current sales figure is not alarmingly low but it is showing a downward trend in the increasingly competitive market.

On X axis we see the year and on Y we see the sales volume of Hindalco in the unorganized sector. There is a 67 % growth towards supply of 0.91 mm -1.10mm thickness CG sheets to unorganised fan blade industries through Trade.

Hindalco market share in fan industry

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Hindalco contributes 24% in the unorganized sector.

2. JOB ASSIGNED/ TITLE

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Project title- HOW TO INCREASE SALES IN THE COMPARITIVELY LARGER UNORGANIZED SECTOR.

The job assigned to me deals with the complete and detailed study of the unorganized sector.

Key points being-

I. Physically examining the unorganized sector clustered markets in Kolkata.

II. Interviewing the people involved.III. Studying the buying behavior of the players in the unorganized sector-

a) where they purchase the required fan blade sheet from

b) why is the tendency to acquire comparatively lower quality C.G.

sheets.

c) the vendors they acquire it from if not Hindalco

d) the reason behind choosing other vendors

e) their rationale behind acquiring raw material from a vendor and where

hindalco has to better itself for higher sales in this sector.

IV. Analyzing a feasible way for Hindalco to increase its market share.

2.1 KEY RESPONSIBILITIES

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In the process of the 2 months training, I had quite a few responsibilities that can be enumerated as under-

i) Studying the fan market with a keen eye on the fan blade sheet business in perspective.

As a start I had to begin with an intensive study of the material, products and business of Hindalco from material provided by the company. I had to study the a) business trends, b) current customers,c) volume of material sold to them, d) changes in demand, e) reasons behind the aforesaid changesf) process of fan making

ii) Physically visiting the customers of Hindalco.

a) Managers of Orient fans, Khaitan fans and Usha fans were interviewed.

b) I had to visit West Bengal Corporation, manufacturers of fan blades for Usha fans to understand the process of making of fan blades.

iii) Once I had the required knowledge of the industry, I started off with the unorganized sector.

iv) I had to start with the preparation of the questionnaire for the interviews.

v) Visiting and interviewing the unorganized sector fan makers formed the next part in the sequence.

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vi) Analyzing the collected data and trying to find out the reasons of the buying behavior of the unorganized sector.

vii) Trying to find a feasible solution to the problem.

2.2 STAGES OF THE PROJECT

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The project can be categorized into the following stages-

1- Preparation of the questionnaire.

2- Visiting the unorganized fan markets mainly located in and around-

a) Naktala areab) Hospital street, Lenin sarani up to Ganesh Chandra Avenue.

3- Interviewing the fan makers, stockists, distributors and customers.

4- Filling up of the questionnaire.

5- Finding out the price at which different manufacturers are selling fan blade sheet.

6- Trying to find out the reason behind relative difference in price.

7- Analyzing the filled up questionnaire and finding the reason behind the existing problem.

2.3 BRIEF DESCRIPTION OF THE PROBLEM

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With the vision to pro-actively shape the business of distribution and processing of industrial materials in India, HINDALCO Industries Limited aims to become the dominant industrial material management service provider and will create customer value by processing and distributing industrial products like various aluminum made end product. The focus will be on aluminium fan blade sheets. The imminent need being, increasing the sale in the unorganized sector.

With this in mind, Hindalco wants to study the unorganized market in Kolkata, identifying the potential customers and finding out their needs and if Hindalco can provide value to these small scale players in the fan industry.

A survey was conducted in order to find out the relative position of Hindalco with respect to its competitors and how it can increase its market share.

The project also aims to find out why Hindalco’s competitors are in a relatively better position in the unorganized sector and how Hindalco can improve.

3. OBJECTIVE OF STUDY

Purpose –

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Primary objective- To carry out market survey to find out the relative position of Hindalco with respect to its competitors.

Secondary objective- 1. To find out the relative market share of each fan blade sheet materials.2. To find out the preference for a brand of the customers3. Reasons for preference.4. To assess the nature of competition.5. To find what gives the customers the more value and hence find out how Hindalco can improve in those areas for higher sales.

Scope-From the study we can infer that there is huge potential in the unorganized sector market and tapping the market would lead to higher sales by a huge margin and consequently higher profits.

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IV.1 METHODOLOGY

The survey was conducted in Kolkata. Data was taken from 50 respondents –

a) Organized sector representatives- 8b) Stockists- 10c) Unorganized sector fan maker- 15d) Customers- 17

Brainstorming sessions were held so that innovative ideas could be generated and confusion if any could be clarified. While discussing, many factors arose which were not possible if no discussions were held.

Tools for collecting information:

Detailed and descriptive questionnaire was designed to collect the required information Overall, it was an exhaustive questionnaire created to cover the extensive information of the region. (For details see appendix)

Following considerations have been taken into account for the designing, preparation, refinement, administration and analysis of the research questionnaire-

• Collection of primary data..

• Carefully developed, tested and debugged before being administered to the target.

• Care has been taken in framing and sequencing the sentences.

METHOD OF DATA COLLECTION:

The data used in the project is Primary Data collected through-

a) Questionnaireb) Interviews- structured and unstructured (according to convenience).

4.2 THE QUESTIONNAIRE

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The questionnaire that has been used in the survey is as given below. It has been prepared under the guidance of my industry mentor. Some of the questions have been altered depending upon the person being asked to fill it (eg. Stockists, manufacturers etc.)

I. Which are the major vendors you acquire your raw material fromo Hindalco

o Nalco

o Balco

o Others

Hindalco Nalco Balco Others0

5

10

15

20

25

30

35

No. of Customers

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II. What percentage of your raw material requirement do you acquire from Hindalcoo 0-30

o 30-60

o 60-90

o 90 and above

0-30 30-60 60-90 90 and above0

2

4

6

8

10

12

14

16

18

20

Series 1

III. Are you satisfied with the quality of Hindalco fan blade sheetso Yes

o No

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yes no0

5

10

15

20

25

30

35

IV. Does the quality of Hindalco justify the priceo Yes

o No

yes no13.5

14

14.5

15

15.5

16

16.5

17

17.5

18

18.5

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V. If you do, why do you prefer other companies over Hindalcoo Better quality

o Cheaper rate

o Timely supply

o Others

BETTER QUALITY CHEAPER RATE TIMELY SUPPLY OTHERS0

5

10

15

20

25

30

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VI. Rank in order of preference quality wiseo Hindalco

o Nalco

o Balco

o Others

hindalco nalco balco others0

5

10

15

20

25

30

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VII. Rank in order of preference price wiseo Hindalco

o Nalco

o Balco

o Others

hindalco nalco balco others0

5

10

15

20

25

Series 1

VIII. Where do you think Hindalco has to improve to capture a larger market shareo Quality

o Cost effectiveness

o Others

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quality cost effectiveness others0

5

10

15

20

25

30

Series 1

IX. What is the quantity of your raw material requirement per month

X. What percentage of your production is dedicated towards ceiling fans

XI. What is the size of aluminium sheets you acquire

XII. What is the alloy of the sheets that you acquire

XIII. What is the temper of sheets you acquire

XIV. What percent of your raw material usage is aluminium

o 0-30

o 30-60

o 60-90

o 90 and above

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0-30 30-60 60-90 90 and above0

5

10

15

20

25

Series 1

XV. What percent of your raw material cost is aluminiumo 0-30

o 30-60

o 60-90

o 90 and above

0-30 30-60 60-90 90 and above02468

1012141618

Series 1

Analytical tools:

The data, after being collected and tabulated for analysis, the tools that have been used on them are as follows:

Bar Chart

Pie Chart

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4.3 PROJECT CONSTRAINTS

Many times it was difficult to get an appointment with the concerned person.

The concerned person used to be very busy to give answers to all the queries.

Many people were not ready to give the required information because of the company policies.

Many a times the data given to us is an approximate data due to which error in the analysis may occur.

Time was inadequate.

5 COLLECTION AND ANALYSIS OF INFORMATION

5.1 CHAPTER SUMMARY

Survey leads were generated thorough calls and existing data. A lot of data was collected from the internet, which includes the database of the survey also. Structured questionnaires were the way of generating primary data. Information was gathered from the collected data.

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The data collected then was analyzed by filtering information and then certain charts and tables were generated from this information so that at a glance the desired objective can be fulfilled. The analysis and data was collected for the roofing sheet materials.

5.2 DATA ANALYSIS

Points to be noted-a) The option ‘others’ in question I,V,VI and VII refers to the cheaply

available local fan blade and C.G. sheet available in the market manufactured locally at Howrah.

b) Questions numbered XI, XII and XIII have not been tested with statistical tools because of the nature of the data and it does not help in the project at hand but the information was helpful to the company and hence was collected.

5.3 OBSERVATIONS

a) The reply to question I, shows that hindalco is not the leader in this sector. The most common vendors are the local manufacturers of fan blade and C.G. sheets clustered in Howrah. Even then, Nalco is doing better than Hindalco.

b) The reply to question II shows that the most Hindalco supplies in this sector, falls in the 0-30% of the fan makers requirements. Opportunity in this sector is huge for Hindalco and that is what the data proves.

c) Hindalco prides itself in its superior quality and the customers acknowledge that. Throughout the tenure of this survey, not a single

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respondent was found who had complaints with the quality of material supplied by Hindalco.

d) The reply to this question shows that the customers overall feel tha Hindalco is priced at more than its worth. It is the cost disadvantage that is leading to Hindalcos relatively downsliding performance in the fan blade sheet market, specially in the unorganized sector.

e) The reply to the fifth question reiterates the fact that the high price of Hindalco sheets is hindering its growth in the unorganized sector since most of the customers feel that the high price is the reason they would prefer other brands.

f) Reply to question VI proves Hindalcos dominance when it comes to quality of the material. It is the unified opinion of the whole of the industry that Hindalco supplies the best quality material followed by Nalco and that the locally available sheets are the worst in terms of quality.

g) The seventh questions reply shows that the local sheets are performing the best in this sector because of their low cost. Hindalco is the costliest amongst its competitors and that is why it is getting the least favour in terms of price.

h) Cost effectiveness is where Hindalco has to improve and this fact is coming across again through the reply to question VIII.

5.4 MARKET ANALYSIS

AIM: Measurement of success not in absolute sales performance but in their sales performance relative to competitors.

1- To find the estimated demand of Hindalco fan blade and C.G. sheet vis-à-vis. its competitors.

2- To find the main causes of a buyers preference of a particular brand.3- Main decider in the buying process.

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Based on information gathered from 35 respondents (local fan manufacturers and stockists) we get the following information-

1- C.G. sheets are more popular in the unorganized sector and rarely do any manufacturer use Fan blade sheet.Reason behind this being C.G. sheet is cheaper than Fan blade sheet by approximately Rs. 10-12 per kg.

The current price of Hindalco Fan blade sheet- Rs. 170/kg.The current price of Hindalco C.G. sheet- Rs. 159/kg(VAT and Excise duty additional)

2- The unorganized sector fan makers do not go for brands generally eg. Hindalco, Nalco, Balco etc. From information received by the stockists-a) Branded aluminium sheets are rarely demanded by the local fan

manufacturers.b) If demanded, Hindalco is not preferred because of comparatively

higher price.c) Locally manufactured sheets are the most in demand. The difference

in rate being considerable.The difference between branded sheet and local sheet is between Rs. 25-35 /kg.

6 FINDINGS

From the survey conducted in Kolkata, respondents comprising stockists and local fan manufacturers, the following were found out-

1- By analyzing the preference for buying aluminium sheets, it was found that locally manufactured fan blade sheets are the most in demand followed by CG sheets. Fan blade sheets manufactured by Hindalco is the least in demand in the unorganized sector.

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INFERENCE- Greater availability and low cost of local sheets and thereafter CG sheets help them garner majority of the customers.

2- By talking at length with the manufacturers, it was observed that Hindalco sheets are out of the budget of the small scale fan manufacturers though they agree that it is the best in terms of quality.

INFERENCE- Even if brands are considered, Hindalco is not finding favour because of its high price.

3- The unorganized fan market is generally clustered in the same geographical are eg Naktala area and Hospital street area where all the companies do business alongside each other. Competition is intense and there is not much to choose between one brand and the other. The company delivering the cheapest fan makes the highest sale.

INFERENCE- Even if a single player wants to go for Hindalco sheets, the fear of losing business to its competitors because of the increased price of the resultant product stops it from doing so.

4- By analyzing the customer survey it is found that locally made sheets at Howrah enjoy the maximum market share only because of its cheap rate though the customers are unified in their opinion of its comparatively bad quality and uneven sheet size and thickness.

INFERENCE- Cheap and ready availability is the only reason of the popularity of the local blade sheets.

5- The unorganized sector players were largely of the opinion that a difference of Rs. 6-8/ kg can be considered but the current difference of around Rs 25-30/kg is way beyond they can afford in acquiring blade sheets.

INFERENCE- It is a buyers market where these businesses are trying to make profit by the cheapest acquirement of raw material since all these companies sell the final product at almost identical price. Increasing price would lead them to lose competitive advantage.

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6- The small scale manufacturers complain of availability of Hindalco sheets. Occasions, in which they have tried to acquire materials from Hindalco, they have not got their supplies on time. According to them the reason behind this being that their demand is comparatively far lesser in quantity than a branded fan company.

INFERENCE- Supply is short in the unorganized sector leading to more sales by the local sheet manufacturers. The later being readily available.

7- Comparatively bigger businesses in the unorganized sector, eg. Saha Metal Industries, Five Star Engineering Works etc. go for Hindalco because of the brand name of Hindalco and they look to expand their business.

INFERENCE- Apart from these manufacturers, the businesses satisfied with the existing size of it, are not willing to spend that much.

8- The small scale manufacturers going for Hindalco incur almost an additional cost of Rs. 40 in the final product.Finished fan blades made of local sheets- Rs 125- Rs. 135 Finished fan blades made with Hindalco sheets- Rs160- Rs. 170(+VAT)

INFERENCE- Even when the small scale manufacturers are going for Hindalco, they opine- Hindalco, keeping in mind their supremacy in quality, should look to supply at rates of Nalco and Balco. The most they can willingly consider is a difference of Rs. 2/kg.

9- Of all the stockists and small scale manufacturers interviewed,100% go for Hindalco because of their quality of product.40% are of the opinion that they do business with Hindalco because of the relationship they share with the company.

INFERENCE- Customer satisfaction and business relations of Hindalco is top notch and when compared with its competitors, Hindalco enjoys the most popularity.

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7 SWOT ANALYSIS

SWOT = Strengths, Weaknesses, Opportunities, Threats

Strengths: characteristics of the business or team that give it an advantage over others in the industry.

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Weaknesses: characteristics that place the firm at a disadvantage relative to others.

Opportunities: external chances to make greater sales or profits in the environment.

Threats: external elements in the environment that could cause trouble for the business.

SWOT ANALYSIS OF HINDALCO FAN BLADE SHEET

STRENGTH

1. HIGH QUALITY

2. HIGH BRAND VALUE

3. HINDALCO ALUMINIUM IS

THE BIGGEST BRAND IN THE

COUNTRY AND IN THIS

SECTOR,CONSIDERED THE

WEAKNESS

1. HIGH PRICE.

2. THE MOST EXPENSIVE

AMONGST ITS COMPETITORS.

3. IRREGULAR SUPPLY IN THE

UNORGANISED SECTOR.

4. INFREQUENT VISITS IN THE

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BEST AMONGST ITS

COMPETITORS.

UNORGANISED SECTOR MARKETS.

OPPURTUNITIES

1. UNORGANISED SECTOR IS

HUGE.40% OF INDIAN FAN

INDUSTRY AND 70% SHARE IN

THE EASTERN INDIA FAN

INDUSTRY.

2. HIGH BRANDNAME CAN BE

USED TO INCREASE SHARE IN

THE INDUSTRY.ASSOCIATION

WITH HINDALCO WOULD ADD

LEVERAGE TO ANY BRAND.

THREATS

1. PRICE OF ALUMINUM GOING

UP SO THE SHEETS EXPECTED

TO GET COSTLIER.

2. CHEAPER RATES OFFERED BY

COMPETITORS EATING INTO

HINDALCO’S SHARE.

3. PERCEPTION IN THE

UNORGANISED SECTOR IS

THAT HINDALCO IS TOO

EXPENSIVE TO EVEN CONSIDER.

8 RECCOMENDATIONS

The following recommendations are advisable for Hindalco to increase its sale in the Unorganized sector-

I. High price perception is a constraint for Hindalco in its objective. The small scale manufacturers need to be made aware of the superiority of Hindalco and the brand value associated with it and hence encouraged to expand by delivering better quality fans.

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II. The difference in price with that of its competitors eg. Nalco, Balco, Manicksaw etc. is too prominent. Price needs to be brought down to match up to the competitors. A differenxce in price of Rs. 2-Rs.3/kg with other brands and of at lest Rs 10-Rs12/kg with locally available sheets should be targeted.

III. Sales promotion techniques like gold coin distribution or cash incentives to retailers who meet certain inventory figures and sales target in the Unorganized sector.

IV. Investment in Research and development on ways to produce aluminium in cheaper rates. The initial investment would be high but the opportunities in the Unorganized sector can be tapped since price is the biggest hindrance in Hindalcos way in this sector.

V. More advertisements are required to counter the high price reputation of Hindalco aluminium and the dent free, rust free nature should be effectively highlighted.

Advertisements in trade journals, trade fairs and industrial meets should be heavy. The quality should be laid stress upon.

VI. Frequent visits to unorganized sector markets eg. Naktala and Lenin Sarani to educate customers about Hindalco Fan blade and C.G. sheets and its superiority over other brands.

VII. Increase in production and supply of C.G. sheets since it will stand a better chance in the unorganized sector because of its cheaper rate.

VIII. Concentration on production and supply of 0.91mm- 1.10 mm thickness CG sheets since these are the most sought after in the unorganized sector.

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IX. Identifying potential customers in the unorganized sector since there are enthusiastic manufacturers. They should be encouraged to use Hindalco sheets in place of local poor quality blade sheets.

X. Extending support to stockists. There have been stockists saying that some sort of credit period offered by Hindalco would encourage them to keep more stocks of Hindalco sheets. There are stockists who extend a credit period of around 15 days to local manufacturers . A few of such stockists are-

a) Radhika metalb) Hard pointc) Heera metal.

XI. A credit perod of 10-15 days can be offered to stockists in place of the Cash and carry system to encourage them to supply to small scale manufacturers.

XII. To convert all order in wider width order to increase the productivity for Hindalco as well as customers.

XIII. To maintain better delivery and quality of product.

XIV. To keep close watch on competition region wise and customer wise in market as market is highly price sensitive and cheaper competitors’ products are available.

XV. Cheap material fans consume more power though there is no apparent exterior difference. Customers need to be educated of this through advertisement.

XVI. When it comes to production of Flat Rolled Products, the rollind capacity of the various plants are-

Renukoot- 80,000 tpaBelur- 45,000 tpaTaloja- 50,000 tpa

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Mouda- 30,000 tpa

The wider sheets are brought from Renukoot and the rest of the supply is done from Belur. The production capacity of Belur should be increased since the local demand if manufactured locally, reduces Transportation cost, Loading and Unloading cost, Packing cost.

9 CONCLUSION

ALUMINIUM -- ROAD AHEAD

The outlook for the Metal sector in India is bright. Sustained growth is expected across all key segments, aided by several factors such as, growing domestic demand, investment in capacity addition, increasing supply deficit in other countries and favorable government regulations.

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• Government’s initiatives such as power and infrastructure development, reduction in import duties and facilitation of FDI, along with overall economic growth will provide a boost for the Indian metal industry

• With economy projected to grow at 8 to 9 per cent in the coming years, there is expected to be a surge in per capita metal consumption.

• For aluminium, exports will be a major demand source .The metal sector in India, is clearly an attractive sector for investment and offers significant growth potential, both in the domestic as well as exports markets. Metal companies must assess their core competency and realign their strategy to cope with the internal and global competition.

The outlook for domestic aluminium sector is positive. It is predicated on the likely strong growth in the end-use sectors, notably in the construction, transportation, consumer durables and packaging sectors. The positive outlook for the Indian economy, expected GDP growth of 8-9% per annum and accelerating level of industrial activity should give boost to the construction sector. The fiscal incentives for individual housing in recent budgets, availability of cheaper finance, rising per capita income and increasing level of consumer confidence will drive housing demand in future. Together with the renewed focus on infrastructure development, it will reinforce the outlook for the construction sector. Gaining from it and the increasing preference for use of aluminium in curtain walling, partitions and door/window panelling, aluminium consumption in the construction sector is slated to grow in double digits over the next two years.

The expected strong growth in the transportation sector will be a key driver of aluminium demand going forward. The share of transportation in aggregate consumption is expected to rise significantly in the future.

This will be driven by improving volumes of commercial vehicles on the back of a pick-up in industrial activity, introduction of new vehicles by international car manufacturers and a shift towards aluminium use in select applications by domestic car manufacturers.

Additionally, higher disposable incomes and improving level of consumer confidence coupled with rising aspiration levels and changing consumer buying pattern is likely to boost demand for consumer durables in future. The prospects of an increased consumption in the electrical sector are improving with the entry

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of the private sector in the distribution sector and restructuring of the State Electricity Boards by the Government. The need for strengthening distribution network in the power sector also augurs well for aluminium consumption in future.

FUTURE OUTLOOK-

The future in the fan blade industry is bright. The industry is growing in Eastern India at 9% p.a.

The company should run advertising and promotional strategy and campaigning to the full so the awareness is increased by a large percentage.

The metal sector in India, is an attractive sector for investment and offers significant growth potential.

Hindalco aluminium is far superior in quality than that of its competitors.so if the customers can be convinced, the business of Hindalco sheets would increase by a large margin.

If the pricing is made more competitive, it has the potential to go on to become the best in terms of volume of sales.

10 BIBLIOGRAPHY

a) http//www.hindalco.com/aboutus/products etc

b) http//www.indiainfoline.com

c) Journals --

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i. Business India

ii. Business World

iii.The Economist

d) Corporate Observer

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