Assignment Point
A TERM PAPER
ON
BSRM Steel
Supply Chain management (SCM) means managing the supply of inbound and outbound goods and services in the most cost effective and time sensitive way. This can be done by designing a strategic route plan for the quickest possible pick-up and delivery regimen, from the appropriate suppliers, for all points throughout the assembly line, in order to achieve cost and time related efficiency levels. Then optimum operational smoothness can be guaranteed giving a business an edge over competitors in marketing goods and services by introducing goods and services quicker than established trend.
Bangladesh Steel Re-rolling Mills (BSRM) is one of the largest groups of companies operating in Bangladesh. At BSRM, the consumer is at the centre of business. Here people operate in a high speed environment and under tremendous pressure, so they need the strength of mind to make quick decisions, often basing them on limited information. They also need to be open to innovative solutions that can improve their processes and balance supply and demand while minimizing working capital.
BSRM supply chain is there to ensure uninterrupted supply of plan and materials to manufacturing, finished goods to customers, indirect goods and services to all through integrated supply chain management of logistics and sourcing at optimum cost while ensuring customer satisfaction.
Supply chain department of BSRM is the heart of all the business activities. From procurement of raw materials to deliver the product to the ultimate consumers is under the supply chain functions. This report basically focuses on the supply chain strategies practiced by BSRM. . There are an imitable supply chain strategies and functions which will be role model for every local & multinational company.
The goal of a supply chain should be to maximize overall supply chain profitability. Supply chain profitability is the difference between the revenue generated from the customer and the total cost incurred across all stages of the supply chain. Supply chain decisions have a large impact on the success or failure of each firm because they significantly influence both the revenue generated as well as the cost incurred. BSRM follows world’s standard supply chain strategies where we can’t find any inaccuracy or inconsistency. But there are some basic observations that can be taken into the consideration for further improvement.
Today’s shared knowledge and collaborative abilities of BSRM and is supply-chain members are the results of transparency in information sharing. The clear visibility in material ordering, production planning, inventory supply and management does lead to significant improvements in the overall performance of the supply chain of BSRM
Bangladesh Re-Rolling Mills (BSRM), after hearing this name people starts to visualize an organization which has several characteristics. One of them is it sales of Steel products, besides this it has a very attractive working environment and it is of the gigantic steel manufacturer in Bangladesh. This is the largest steel product producer and manufacturer in Bangladesh after its close competitor. The BSRM Group of Companies traces its origins and inception to a set of 4 small manual rolling mills in Nasirabad, Chittagong. The mill produced reinforcing bars and structural sections.
As a student of Masters of Business Administration, it was required to submit a project paper to enrich our knowledge level and to gain some practical experiences. We are proud to state that we have got the opportunity to do our project paper of the course Business Marketing on BSRM. All of these helped us a lot to learn the new concepts, to gain practical experiences and to know the corporate cultures.
The basic purpose of this experience is to expose the student to the real business situation and accustom his or her with the practice of modern business world. This exposure is very rewarding for one self to see how things move and to find the gap and as well as the similarities between theoretical knowledge and practical operations. It is one of the giant steps which will help us in corporate career.
Background of the Group
The BSRM group was established in 1950 in steel business under the splendid initiates of five brothers (African Origin) of a single family. Later on, the business concerns under of this group were run by the families of late Mr. Akberali. Since its inception, the Group is involved only in the steel sector. The family has been successfully running the group for the last 55 years and regarded as the best managed steel units in the country. The group is also the largest contributor to the national exchequer under the steel sector and also having largest set up in the country considering its integration in all areas of steel industry.
Building the Nation since 1952
The BSRM Group of Companies traces its origins and inception to a set of 4 small manual rolling mills in Nasirabad, Chittagong. The mill produced reinforcing bars and structural sections. The mill gradually expanded, adopting new technology by setting up a cross country European mill in 1987 which included a wire-rod mill. In 1996 the group added a captive billet making plant to ensure a steady supply of quality billets for its rolling mills. A pilot cold rolling mill to manufacture ribbed high strength wires was installed in 2006. Finally in 2008 a state-of-the-art DANIELI built rolling mill, incorporating technological features such as:
Horizontal / Vertical housingless stands.
Multiple slit rolling for sizes 14 mm to 8 mm.
Stepless DC drives for accurate speed control, for tension free rolling.
A large “Quench and Temper” facility for up to 75 tons/hr. production of 500 Mpa strength bars.
The new rolling facility is one of the largest in the region, producing world quality bars conforming to all major international standards.
Milestone - 1987
The four old manual mills were scrapped and an automatic billet-based rolling mill was installed with continuous up gradation. The two highway bridges over the rivers Meghna and Gumti, the Chittagong Airport, the KAFCO Fertilizer factory, most of the country’s large prestigious projects and many high-rise buildings in Bangladesh were then built with BSRM bars.
Achievement - 1996
A captive billet-making plant was commissioned, under the name of Meghna Engineering Works. Cost-saving Technology - 2006The first and only ribbed wire cold-rolling plant in the country started operations using European technology to make 500 Mpa yield strength wire reinforcements in sizes 4.5mm, 5.7mm and 7.1mm, significantly reducing construction costs.
Steel is a basic raw material for infrastructural development and multiple other uses. The demand for steel will inevitably grow in line with the country’s economic and infrastructural development. Major buyers of mild steel and re-rolled products include individuals, government and institutional buyers (developers). The government’s infrastructure building activities is an important source of demand. The demand of MS rod in Bangladesh has been increasing day by day and expected to increase at the rate by 8% due to the economic and infrastructural development of the country, expansion of urbanization and booming construction of shopping mall, market, real estate and other construction for industrial purposes. Construction of bridge as well as public awareness and preference is increasing for quality building materials to ensuring safety and better building construction; more particularly, in recent time to save from earthquake. Due to growing consciousness among buyers and the generic nature of the products; new manufactures with efficient and high quality technology will dominate over the existing players using old technology, because of their quality and price advantage.
There are approximately 300 re-rolling mills in Bangladesh. Except some, most of the projects use crude technology resulting in production of low quality steel bar. The domestic consumption of rods/ bars as a whole is met through local production fully. This steel re-rolling sector continues to be a predominantly fragmented one, with a few well-known established mills controlling about one third of the entire market and many more small scale manual operators controls the rest. As the larger producers expanding their capabilities and take advantage of economies of scale- smaller mills will find it harder to compete with the larger firms. Under the above scenario, smaller mills will have have to face serious market competition in future. Currently, they are questioned in terms of quality. As the larger mills consolidating their positions, the smaller companies which are already high-cost players, will find it increasingly difficult to complete. Most steel re-rolling mills in Bangladesh depend on scrap, leading to lower quality rods used in the market. Very few re-rolling mills use billets as raw materials. The reasons for this is generally available regularly locally.
However, the price of scrap and billets during FY 2008 broke the record of the past. Leaders of the steel and re-rolling industry urged the government to free the import of old scrap ships and vessels from the control of certain vested groups to reduce the cost of scraps and building materials. In comparison to the previous records of import, one must say that the steel industry of the country is passing through one of its worst times in history. Steel is a basic sector of any industrial economy. Except re-rolling of the scrap steel, Bangladesh lacks this very basic ingredient of heavy industry. And without heavy industry, the slogan of industrialization sounds hollow. The idea of developing a viable steel sector appears implausible seeing that Bangladesh has no iron ore as one of its mineral resources. But absence of ore does not disqualify a country from becoming a producer of steel and steel-based commodities.
|Bangladesh Steel Re-rolling Mills BSRM |35% |
|Kabir Steel Re-rolling Mills KSRM |16% |
|Rahim Steel |10% |
|Ratanpur Steel Re-rolling Mills RSRM |12% |
|GPH Ispat |5% |
|Anwar Ispat |15% |
|Others |7% |
BSRM always has a solid reputation in the local steel market as one of the oldest establishments producing the quality rods available in the country. This has enabled BSRM to command the premium prices and still retain the largest market share in a highly fragmented industry with so many players. Following are the main competitors of BSRMS:
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In the steel industry, BSRM is operating as a subsidiary of the market leader in Re-rolling industry, experienced management team, State-Of-The-Art Plant, Quality products, sound infrastructural arrangement and sound debt servicing history of the Group. The first of its kind in the country, BSRM was set up to produce plain bars for the construction industry. Since 1952 it has started its journey and has always been in the leading position in the market.
Attaining the 35% of the market share of steels re-rolling industry, BSRM is in the leading position. The nearest competitors are KSRM, Rahim Steel, RSRM, GPH Ispat, and Anwar Ispat all consecutively holding 16%, 10%, 12%, 5%, and 15%. The rest 7% is of other companies.
Ratanpur Steels and Rerolling Mills (RSRM), is a Chittagong-based manufacturer. The RSRM was launched as a manual low-grade rod producer in 1984. But the company, which uses scraps to produce billets, overhauled its manufacturing plant late last year to produce 75-grade MS rod. Currently it holds 12% of the market share in steel re-rolling industry.
Rahim steel mills co. (pvt.) Ltd., backed by the energy and experience of its entrepreneurs, has made a name for it self in the field of steel making and is now one of the leading Quality steel manufacturing company in Bangladesh. It holds 10% of the current market share in this industry at present.
Anwar Ispat, a sole concern of Anwar Group in Bangladesh, currently possess 15% of the market share in steel re-rolling industry. Anwar Ispat Limited is amongst the leading re-rolling mills in the country. Use of most modern fully automatic re-rolling mill and high quality imported billets assures that the produce meets international quality parameters. Anwar Ispat specializes only in ‘Graded’ products, 40 Grade and 60 Grade High Strength Deformed Bars (HSD-Bars), which are superior to general bars / rods.
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The BSRM Group has been managing seven sister concerns, among which, six companies are at present in operation. All the sister concerns of the Group are private limited companies with a net asset base of Tk. 4216.34 million as per un-audited balance sheet at the year 2007. Against the above net assets, the company has non-current liabilities of Tk. 2377.41 million and resting an equity amount of Tk. 1934.94 million. The above equity amount consists of share capital of Tk. 806.09 million and reserve of Tk. 1132.85 million. The group has also three loosing concerns namely Karnafully Engineering Works Limited, BSRM re-cycling industries Ltd. and BSRM Wires Limited. The above financial position represents 4.32 times leverage of the group based on un-audited financial statements. The group has outstanding bank liability of Tk. 3,039 million as term loan/project loan and Tk. 2,449 million as working capital loan from about 18 commercial bank and financial institutions. All the group liabilities are unclassified status, as reported by the company.
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|SL# |Product Name |Product Size |Ex-Factory Chittagong |
|01 |DEFORMED BARS Xtreme-500W |8 mm |TK.45,000 |
| |DEFORMED BARS Xtreme-500W |10 mm to 25 mm |TK.45,000 |
| |DEFORMED BARS Xtreme-500W |28 mm to 32 mm |TK.45,500 |
|02 |DEFORMED BARS (GR-400) |8 mm |TK 45,000 |
| |DEFORMED BARS (GR-400) |10 mm to 25 mm |TK 45,000 |
| |DEFORMED BARS (GR-400) |28 mm & 32 mm |TK.45,500 |
| |DEFORMED BARS (GR-300) |8 mm |TK. 44,000 |
| |DEFORMED BARS (GR-300) |10 mm to 20 mm |TK. 44,000 |
|03 |DEFORMED BARS (GR-75) |7 mm |TK.53,000 |
| |DEFORMED BARS (GR-75) |5.7 mm |TK. 55,000 |
| |DEFORMED BARS (GR-75) |4.5 mm |TK.55,000 |
|04 |M.S.ANGLE |38X38X 3, 4, 5 & 6 MM |TK.49,000 |
| |M.S.ANGLE |50X50X 4, 5& 6 MM |TK.49,000 |
| |M.S.ANGLE |63X63X 5& 6 MM |TK.49,000 |
| |M.S.ANGLE |75X75X 5 & 6 MM |TK.49,000 |
| |M.S.ANGLE |75X75X 8 & 9 MM |TK.49,000 |
| |M.S.ANGLE |90X90X 6 MM |TK.63,000 |
| |M.S.ANGLE |90X90X 8 MM |TK.63,000 |
| |M.S.ANGLE |100X100X 6 MM |TK.63,000 |
| |M.S.ANGLE |100X100X 8 MM |TK.63,000 |
| |M.S.ANGLE |100X100X 10 MM |TK.63,000 |
|05 |M.S.CHANNEL |100 X 50 X 5 MM |TK.51,500 |
| |M.S.CHANNEL |75 X 40 X 5 MM |TK.51,000 |
| |M.S.CHANNEL |125 X 65 |TK.66,000 |
| |M.S.CHANNEL |150 X 75 |TK.66,000 |
| |M.S.CHANNEL |200 X 75 |TK.69,000 |
| |M.S.CHANNEL |250 X 82 |TK.69,000 |
| |M.S.CHANNEL |300 X 90 |TK.70,000 |
|06 |WIRE ROD(Commercial) |5.5, 6, 6.35 & 8 mm |TK.51,000 |
| |WIRE ROD(WR-8) |5.5,6 & 6.35 mm |TK.57,000 |
|07 |I. BEAM |150X150 |TK.73,000 |
| |I. BEAM |100X100 |TK.68,000 |
| |I. BEAM |150X75 |TK.68,000 |
| |I. BEAM |198X99 |TK.68,000 |
| |I. BEAM |200X100 |TK.68,000 |
| |I. BEAM |200 X 200 |TK.68,000 |
| |I. BEAM |248X124 |TK.68,000 |
| |I. BEAM |298X149 |TK.68,000 |
| |I. BEAM |300 X 150 |TK.68,000 |
| |I. BEAM |450X200 |TK.72,000 |
| |I. BEAM |400X200 |TK.72,000 |
|08 |RAIL |60 Ib |TK. 68,000 |
|09 |SHAFT |40 mm |Tk. 48,000 |
| |SHAFT |46 mm |Tk. 48,000 |
| |SHAFT |52 mm |Tk. 48,000 |
Reinforcing steel production is a major industrial segment in every country of the world. It is generally produced to national standards specification. As international trade has grown in volume and scope the demand for a material specification across major national standards has grown. The Geneva based International Standards Organization (ISO) under the guidance of the World Trade Organization (WTO) played a pivotal role in the internationalization of material standards. Today the European Community nations follow common material specifications for thousands of items and reinforcing steel is no exception. Standardization of products to national and international specifications serves three useful purposes. First, it simplifies the exchange of goods as buyers and sellers have a common specification. Further, legal enforcement of contract specifications becomes easier and transparent. Most important the design profession can prescribe material specification as per well-defined norms which are available in the area.
The international standard for reinforcing bar specification is ISO 6935. It has been adopted by the national reinforcing steel standards of the entire European Community of nations as well as Russia and all the CIS nation states. In Asia India, China and Japan along with the ASEAN nations has adopted the ISO based standards for steel and many other material standards as well. Bangladesh adopted the standard in 2006. The strongest motivation, for this move is to remain globally competitive, by making a product for both the domestic and international market. It is worth mentioning that many of the nations adopting the ISO based standard are in the high seismic category.
Chemistry of ASTM and ISO Standards
|Chemical Composition |ASTM A 615 |ISO 6935 |
| |Grade 60 |Grade 500W |
|Carbon % |No limit |0.24% Max |
|Manganese % |No limit |1.65% Max |
|Silicon % |No limit |0.60% Max |
|Phosphorous% |0.06% Max. |0.06% Max |
|Sulphur % |No limit |0.06% Max |
|Carbon Eqv. |No limit |0.51% Max |
ASTM and ISO compared
For a long time the US national standard ASTM 615 reinforcing steel specification was most widely used in many parts of the world including Bangladesh. One of the reasons for the widespread use of ASTM 615 reinforcing steel was that it could be easily manufactured using simple and relatively inexpensive equipment and technology.
ASTM 615 is an open chemistry specification, the mechanical properties are defined, the test procedures are relatively straightforward but the chemical composition of the steel are not specified. The yield strength is derived by increasing the carbon content of the steel, but this increases fragility as well. Practicing engineers will recall the common site experience of ASTM 615 Grade 60 bars breaking while bending. The open chemistry specification was a further reason for the widespread adoption of the ASTM 615 specification as raw material (billets) from a variety of sources could be used to manufacture ASTM 615 Grade 60 bars. This is reflected in the wide variation of the mechanical properties of the ASTM 615 Grade 60 steel. In our country old demolished structures, such as anchor chains and propeller shafts of ships and railway rails are used to make ASTM 615 Grade 60 reinforcement.
In stark contrast ISO 6935 standard has a highly restricted chemistry where the principal alloying elements such as carbon, manganese, silicon which affects the mechanical properties of steel and several other trace elements which have deleterious effects on steel property. The logical consequence of a restricted chemistry reinforcing steel means the raw material [billet] has to be custom made for the purpose. The chemistry of both the standards are compared below:
Both the ISO and ASTM standards steel have various strength categories. These enable structural engineers to use steel as per design and service requirement. The strength categories ASTM and ISO standards are compared below for easy reference. The ASTM standard follows the traditional US customary units for stress which is pounds per square inch or psi. The ISO standard follows the System International or SI units for stress which is indicated in Pascal. One million Pascal is abbreviated to MPa. For easy conversion 1 MPa = 145 psi.
As the demand for economy and cost control in the construction industry has raised worldwide the demand for high strength steel reinforcement and high strength concrete. All buildings and structures in the developed world and in the Middle East and in the ASEAN region are designed and built on Grade 500 steel only. The reason is not only economy but better performance of the structure under conditions of earthquakes and storms.
Economic consideration
Traditionally construction in Bangladesh has relied on Grade 400 strength steel for all types of construction. The scenario changed rapidly with the introduction of Grade 500 steel last year by BSRM Steels Ltd. As the use of Grade 500 steel reduces steel consumption by up to 15 per cent compared to Grade 400 steel the introduction was an instant success. Many of the country's top developers and designers of high rise buildings switched to Grade 500 for the inherent economy in the use of this grade of steel.
The world is going toward progress. Establishments are gradually becoming large and strong. To keep pace with this forward-movement and to make constructions cost-effective, bold, long-lasting and safer, next generation rod is required.
This rod is called ‘Grade 500’ rod. This ‘Grade 500’ rod is heavily used in construction works all over the world specially Europe, Malaysia, Thailand, Singapore, Middle-east and India. Now BSRM has brought that similar kind of rod that is available in every district of Bangladesh.
To meet the demand for quality and standard rods in construction works, BSRM has established an automatic rolling mill having production capacity of 3,75,000 ton per annum using European technology.
1. Cost-effective Design:
The minimal strength of Xtreme-500W is 500MPA (72,500PSI). It is 20.8% s5tronger than 60 Grade Bar. Eventually, this rod is required 15%-20% less than 60Grade Bar in construction works.
2. Cost-effective Establishments:
Xtreme-500W can be welded easily. Hence to join column and found beam, rod is not wasted. Usually splice of the bar have to be kept 20D during joining the column. But welding requires only splice of 8D. It is calculated that welding saves rod of Tk.70-80.
3. Safer Design:
The flexibility and elasticity of Xtreme-500W is much greater than other rods due to limited carbon as per international and BSTI standards. The elongation and elasticity of this rod is greater than that of 114-rod and so it can be bent easily. Hence, during the fabrication in construction works, there is no possibility of cracking or breaking. It is unique in protecting earth-quake. It is capable to face shaking and shock loading. BSRM is the country’s only rod manufacturer that use sophisticated European Technology to produce rod of international standard.
4. Safer Establishments:
Xtreme-500W can be welded. It can protect sheering easily since the box of welded bar becomes bold. Its shape can’t be changed during putting concrete or shake. So BSRM’s Xtreme-500W is free from these weaknesses.
5. Financial Savings:
Unlike other rods, Xtreme-500W is free from artificial dust or mill scale and it creates firm joint with concrete in addition to .25% savings in weight. There is no alternative to use Xtreme-500W for making your dreamed home long-lasting and to reduce costs in constructions or to protect yourself losses.
Exposures in Backward Linkage of Steel Re-Rolling
As mentioned earlier, the group is involved in the manufacturing of Billet, the basic raw materials of MS rod production and also in scrap processing business. The billet manufacturing plant under the Meghna Engineering Works(“MEW”) established in the year 1953 as a Kodali plant and was also producing cast iron and pipes at that time. Eventually in 1994 this industry was closed and a new steel melting shop was established there. The production capacity of MEW has increased to about 10,000 M. Ton per month from 5,000 M. Ton per month earlier, which was enough to meet the demand of BSRM. The increased capacity was due to commissioning of the following two projects:
132/33 KV 41 MW sub station (the largest private sector sub station at Khulshi feed bulk power to different projects of the group).
A 16 ton induction Furnace has been installed with the existing facility.
Again the company also planned to increase additional 3000 capacity per month by replacing its two 8 Ton capacity furnace into 16 Ton furnace to meet the increased billet requirement of the group.
Though, BSRMS presently imports the basic raw materials, however, the group is also implementing another billet manufacturing plant of 152,000 M. Ton capacity per annum by 2009, which will help for smooth delivery of billet for the group. The Group management has decided to set up the above modern billet manufacturing plant namely “ BSRM Iron and Steel Co. Ltd.” of 1,52,000 M. Ton capacity per annum with an estimated project cost of Tk. 2560 million. Accordingly 20% cost of the furnace cost, percentage of payments for Continuous Casting Machine, Ladle Refining Furnace, new 80 MVA Transformer etc. has been already been remitted through the Islami Bank Bangladesh Limited. This plant is estimated to be established by 2009.
Planning department in BSRM is responsible for the overall planning for the organization. Integration in the planning process is the major activity for the success of the overall organizational flow. Planning process starts from the field level of the market. Here the demand forecasting was made by the marketing department. According to the yearly demand forecast send by the Depot’s the top planning team take the step for Demand planning, which is the ground for production plan.
Detail Production Process
Production of high-tensile rebars and other deformed-type long products for concrete reinforcement is a key issue for countries where the construction of buildings and infrastructures is growing. This type of product is even more important for geographical areas with high seismic activity.
The ideal answer to these needs is the most advanced technologies for low-cost production of high-tensile commercial steel long products. The Danieli QTB, processes, installed at the BSRM Steels Ltd rolling mills, is the most efficient available today to produce these types of steel.
A fast growing building and infrastructure construction activity characterizes the economy of Bangladesh which means increasing demand of high-tensile rebars and other deformed-type long products for the concrete reinforcement.
The typical basic arrangement for such a plant foresees a rolling mill for production of high-tensile deformed bars in straight bundles.
The new rolling mill, that started rolling its first bars in early March 2008, has introduced the latest long product hot-rolling technologies for the first time in Banglagesh, making this plant the most advanced and highly-productive rolling mill in the whole area.
The state-of-the-art bar mill, fed by a 75-tph pusher-type reheating furnace (supplied by BENDOTTI), is basically composed of 18 SHS stands, QTB on-line rebar quenching & self-tempering system, automatic cooling bed and finishing facilities for straight bars production.
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Fig 3 - B.S.R.M. Rolling mill layout
The mill is designed to produce 8 to 38-mm-dia quenched and self tempered deformed bars for reinforced concrete, at rates of up to 75-tph. The Danieli supply also included a complete water treatment plant for the new rolling mill.
Electricals, automation system and process control for the rolling mill and auxiliary plants are from Danieli Automation.
Plant description and highlights:
The mill is entirely made up of the latest generation Danieli heavy-duty SHS housingless-type rolling stands, arranged in H and V sequence for twist-free rolling at the roughing and intermediate/pre-finishing area.
The last portion of the finishing mill, arranged in H-H sequence, is specifically designed for the slit rolling process for production of smaller size deformed bars.
Fig 4 - SHS stands in operation at BSRM mill
The multi-strand slitting system, performed at the finishing mill, grants high output rates, enabling to reach the full reheating furnace nominal capacity even with the smallest rebar size range.
This system is a combination of special roll pass design and designated guide equipment to shape and longitudinally separate the incoming rolled stock into two, three or four individual strands, then simultaneously rolled down to the final rebar size at the finishing mill stands.
The new mill slit rolls on 4, 3 and 2 strands, for production of 8-mm, 10-mm, 12 and 14-mm-dia rebars, respectively, at speeds of up to 12.5 meters per second.
Fig 5 - 4 strand slitting operation
A multi-strand QTB line is provided at finishing stand delivery side, for on-line rebar quenching and self tempering.
This is a significant technological step-forward that will make possible production of on-line treated high-tensile/wieldable rebar’s for the first time in Bangladesh.
The straight bars production outlet includes dividing shear for multiple-length bars at cooling bed entry, 66-m-long automatic walking beam type cooling bed with associated feeding and delivery devices, bar cut-to-length system with stationary cold shear, automatic bundling, weighing and collecting facilities. Fig 6 – Rebars on cooling bed at BSRM mill
Infrastructural Set-up
The plant is a pioneering project in the steel industry of Bangladesh with the latest available State-of-The-Art Technology. The main infrastructures includes- Factory Building and Shed, Re-rolling Mills (furnace exit area, rolling stand, QTB, cooling bed, binding and bundling area), Furnace, EQT Crane, Sub-station, Water Treatment Plant, Laboratory (Universal Testing Machine, Wielding Machine etc), Workshop, Compressore, Diesel Generator, Other Electrical installation, Administrative Office. It has own arrangement of electrical installation for about 5 KM from the nearest 33 KV substation to ensure the continuous power supply. The complete re-rolling mills with water treatment plant were supplied and commissioned by Danielli Group of Italy, one of the three largest suppliers in the metal industry worldwide. And the furnace was supplied by another Italian company namely “Bendotti”. It is producing Xtreme branded Thermo Mechanically Treated (TMT) bars, a new generation bar with lower carbon content and greater wielding ability than the standard 60 grade deformed bars, which are currently available in the local market.
Procurement Strategy
The company will produce its raw materials mainly from International market as well as from its sister concern “Meghna Engineering Works Limited”. It adopted a policy to maintain inventory of “Billet- the basic raw materials”, both in stock and on pipe line, ofr at least equivalent to three months production requirements, through alternative arrangement to reduce the single source dependency. Due to high price volatility of Billet in the international market, the company always faces a market force to adjust with its pricing of finished products. The existing high quality re-rolling mills are always facing severe competition in price adjusting with the international market especially due to availability of low quality products in the local market. On the above ground, the Group has decided to establish backward linkage industry to ensure large quantity of billet supply for BSRM Steels Limited.
Distribution Strategy
The group has well established distribution channel all over the country, subsequently the same channel will also be used for BSRM products. It has three types of distribution network as: Factory- Dealer- End Users, Factory- Retailers- End Users, and Factory- End Users. Its country wide 80 dealers are the key channel to reach to the consumers. In addition, the company’s own six sales depots at Dhaka, Comilla, Sylhet, Bogra, Khulna and Moulavi Bazar works as the market stimulating agent and works as part of the channel. To cater the need of the growing demand, the company has a plan to increase its dealership outlet and already 80 dealer arrangement has been made.
Marketing Strategy
The company is moving towards mass market with a comprehensive marketing plan under it dynamic marketing team. It has also appointed renowned professional marketing company namely Unitrend Limited to develop brand image. Its existing product line has already availed sound market image in view of its high quality with consistence efficiency. To further upgrade the corporate image as well as brand image, it reshaped its brand name as “BSRM Xtreme”- to substantiate its new quality as well as higher strength.
The entire marketing campaign entails complete 360 degree communications plan, embracing television, print media and bill boards throughout the length and breadth of the country. The media effort if further complemented by the Company’s own arrangement of extensive workshops at the upazila headquarters level to educate customers on the benefit of using steels from reliable and proven source. It also arranges professional seminar for the engineering community, conducted by the top teaching faculty of the country’s leading engineering university, on the proper and safe use of its new generation products. The main feature of Xtreme Bars is that it will save 15% in steel costs as compared to Grade 60 deformed bars.
Goodwill Trust
As BSRM is the first steel industry in Bangladesh and operating since 1950 it has a market goodwill which is also another source of trust among the participants of the supply chain. BSRM follows transparent information sharing systems thus provide greater empowerment to the partners which is enhancing factor of trust.
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As the level of trust between the supplier and the dealers are high it also shows that the interdependence among the supply chain partners is also high. According to the above curve we can identify the relationship by means of level of trust and interdependence we can say that the relationship between the parties are relational contracting.
Technical Analysis:
In last one year BSRM share price is given below:
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Here we looking form given chart share price is same behave from last year to this year, as company fall share value December to May and June to September share value randomly rise. At last 03 September, 2013 share price was open 74.2 Tk. and close 75.6 Tk.
The analyst looks for patterns, whether trading is taking place in an upward flat.
In a downward market the analyst look for the trough which can be identified only after reversal of the downward pattern after confirmation on of the reversal the investor by.
Comparison between Two companies (BD Thai Aluminum vs. BSRM)
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In BD Thai Aluminum share price of last month is up and BSRM still share price is down.
CONCLUSION
The demand for steel is expected to continue to rise at a greater rate in the future in the line with the country’s economical development and requirement for infrastructure, despite a bit slow down in recent months in the real estate sector. However, BSRM continues to be a dominant player in the market and market share remains above 35%.
The experience of preparing the project is a lifetime experience for us. Through this we got to learn the real business scenario. We have learned how a company like BSRM manages its supply chain to achieve the company goal.
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Summary Observations and Recommendations
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According to the above observations we like to enclose the following recommendation for the improvement:
Expansion of forward and backward linkage through long term planning.
As the new competitors are entering market with improved capacity BSRM should be concern about capacity expansion.
Should minimize the dependency on imported raw material.
Maintain collaborative network for raw materials import thus use effectiveness in purchase strategy.
Arrange a utility management team as early as possible for continues operation.
Huge market exposure is required to penetrate the market to limiting the fixed cost burden.
Always keep eye on development of innovative technology.
References
Biswas, Dibakar. Assistant Manager, Business Development. BSRM.
Rahman,Anwar. Manager S&D. BSRM
Chopra & SMeindl.(2002) Supply Chain Management, 3rd Ed. New Delhi: Pearson Edu. inc.
Cravens. David. W & Piercy. Nigel F. (2003) Strategic Marketing, 7th Ed. Mcgraw Hill Higher Education
Dwyer.F,Robert & Tanner Jr. Jone F. (2002) Business Marketing, 2nd Ed. Mcgraw Hill Higher Education
Kotler, Philip. (2003) Marketing Management, 11th Ed. Pearson Edu. inc
Laaksonen.Toni, Pajunen. Kalle and others(1998) Co-evolution of trust and dependence in customer–supplier relationships
Sheu.Jiuh-Biing & Hu.Tung-Lai (2009) Channel power, commitment and performance toward sustainable channel relationship
Siu & Walsh (August 2008), Country Report: Bangladesh, UK, Economist Intelligence Unit.
Bibliography
Standard/index.shtml
.bd/updating_bnbc.php
cse/download/Prospectus_BSRMS.pdf
bsrm-steels-ltd.-com-555572092.html
thefinancialexpress-
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Executive Summary
Background
GROUP PROFILE
History
Milestone & Achievement
Industrial Analysis
Market Scenario of the Steel Industry
Porter’s Five- Factor Theory
Financial Projection
Product Line and Price
Standard & Quality
Competitive Advantage
Planning Process
Business Development Branches
Demand Planning
Sales & Operational Planning (S&OP)
Production plan
Raw Material Planning
Indirect Material Planning
Commercial Planning
Final Production Planning
COMPANY ANALYSIS
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