1

A

RESEARCH REPORT

ON

“MARKETING OF SECONDARY PRODUCTS”

AT

BHILAI STEEL PLANT

Submitted in Partial Fulfillment for the Award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Of

Chhattisgarh Swami Vivekanand Technical University, Durg(C.G.)

Session 2012-2014

Submitted by

(RAJAT BAGHEL)

MBA II Semester, 2013

Examination Roll No.-5017613091

Enrollment No.AM5376

DEPARTMENT OF MANAGEMENT

BHILAI INSTITUTE OF TECHNOLOGY

(An ISO 9001:2000 Certified Institute)

Bhilai House, G.E. Road, Durg – 491001(C.G.), India

2

DECLARATION

I Rajat Baghel student of M.B.A. II semester in Department of Management, Bhilai Institute

of Technology, Durg (C.G.) hereby declare that the research report work entitled

(“MARKETING OF SECONDARY PRODUCTS” AT BHILAI STEEL PLANT)” is the record of

original work done by me and the matter enclosed has not been submitted for the award of

any other degree or diploma in the university or anywhere.

Date:

Place: (Rajat Baghel)

MBA III Semester, Sec-“A”2014, Examination Roll No- 5017613091

Enrollment No-AM5376

3

CERTIFICATE

This is to certify that the project work entitled “MARKETING OF SECONDARY

PRODUCTS AT BHILAI STEEL PALNT” in bhilai project has been carried out byMBA 3rd SEMESTER during the session 2012-14, Bhilai Institute Of Technology (BIT) Durg(C.G.), has won works and has been prepared under my guidance.

I wish his all the best in his future walk of life.

Project guide MR. ARINDAM

MANAGER (MARKETING & BUSINESS PLANNING)

Bhilai Steel Plant

4

ACKNOWLEDGEMENT

I express my sincere thanks and regards to BHILAI STEEL PLANT,for giving me the

Oppourtnity to study on the topic “marketing of secondary products at Bhilai Steel Plant”

First and foremost I express my heartily thanks to my co-ordinator Mr. Arindam sir

(Manager,M&BP) for his guidance.I also express my sincere thanks to all the heads of

concerned section of marketing department Mrs. Yamini Tamrakar , Mr. Manoj kumar,

Mr.SS Parida, Mr.navneet Sharma,Mr. Kamal R. Sheikh,and Mr. Arindam for their kind

cooperation in this project work.

I am also thankful to all the staff of Bhilai Training Institute & HR department for their kind

cooperation to complete this project work successfully.

(Signature of the student)

Name: Rajat Baghel

Roll.NO: 5017613091

MBA: 3rd Semester 2013

Section – ‘A’

5

INDEX

Sr. No.

Contents Page no.

1. ABOUT BSP

Company profile Organization chart of BSP

Project objective and scope

7-8 9-13

14

2. SECONDARY PRODUCTS

Introduction

Necessity for selling of secondary products Central marketing organization (CMO)

14

15-16 17

3 MARKETING AND BUSINESS PLANNING

Marketing Department 18-23

4. Chapter-4 METAL JUNCTION 24-25

5. Chapter-5 SWOT ANALYSIS 26

6. Chapter-6 Conclusion

Limitation of the study

Bibliography

27-8

29 30

6

COMPANY PROFILE:-

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a

fully integrated iron and steel maker, producing both basic and special steels for domestic

construction, engineering, power, railway, automotive and defence industries and for sale in

export markets.

Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL

manufactures and sells a broad range of steel products, including hot and cold rolled sheets

and coils, galvanised sheets, electrical sheets, structural, railway products, plates, bars and

rods, stainless steel and other alloy steels. SAIL produces iron and steel at four integrated

plants and three special steel plants, located principally in the eastern and central regions of

India and situated close to domestic sources of raw materials, including the Company's iron

ore, limestone and dolomite mines. SAIL's wide range of long and flat steel products are

much in demand in the domestic as well as the international market. This vital responsibility

is carried out by SAIL's own Central Marketing Organisation (CMO) and the International

Trade Division. CMO encompasses a wide network of 37 branch offices and 47 customers

contact office and 25 wherehouse and 47stockyards located in major cities and towns

throughout India.

With technical and managerial expertise and know-how in steel making gained over four

decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and

consultancy to clients world-wide.

SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at

Ranchi which helps to produce quality steel and develop new technologies for the steel

industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET),

Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines

are under the control of the Raw Materials Division in Calcutta. The Environment

Management Division and Growth Division of SAIL operate from their headquarters in

Calcutta. Almost all our plants and major units are ISO Certified.

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Eleven - times winner of Prime Minister's Trophy for best Integrated Steel Plant in the

country, Bhilai Steel Plant (BSP) is India's sole producer of rails and heavy steel plates and

major producer of structural. The plant is the sole supplier of the country's longest rail tracks

of 260 metres. With an annual production capacity of 3.153 MT of saleable steel, the plant

also specializes in other products such as wire rods and merchant products. Since BSP is

accredited with ISO 9001:2008 Quality Management System Standard, all saleable products

of Bhilai Steel Plant come under the ISO umbrella.

At Bhilai IS0:14001 has been awarded for Environment Management System in the Plant,

Township and Dalli Mines. It is the only steel plant to get certification in all these areas. The

Plant is accredited with SA: 8000 certification for social accountability and the OHSAS-

18001 certification for Occupational health and safety. These internationally recognised

certifications add value to Bhilai's products and helps create a place among the best

organisations in the steel industry. Among the long list of national awards it has won, Bhilai

has bagged the CII-ITC Sustainability award for three consecutive years.

Location : Forty kms west of Raipur, the capital city of Chhattisgarh, along the Howrah-

Mumbai railway line and the Great-Eastern highway, stands Bhilai Steel Plant (BSP).

The Bhilai Steel Plant, located in Bhilai, in the Indian state of Chhattisgarh, is India's first and

main producer of steel rails, as well as a major producer of wide steel plates and other steel

products. The plant also produces and markets various chemical by-products from its coke

ovens and coal chemical plant. It was set up with the help of the USSR in 1955.

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ORGANIZATION CHART OF BSP

FLOW CHART

SAIL

B.S.P. R.S.P. B.S.L. D.S.P.

I.S.P.

SPECIAL STEEL

S.S.P.

V.I.S.L

.

A,S.P.

I.I.S.C.

O.

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PRODUCT PROFILE:-

The product range at Bhilai Steel Plant and their end use/consumers is:

Product Type Product End use / consumers

A. FINISHED

PRODUCTS

Rail &

Structural

Mill

Rails in 13m, 26m, 65/78 m length and welded panels of

130m/260m length Indian Railways, Export Heavy

Structurals Construction Crane Rails Cranes Crossing

sleepers Broad gauge sleepers

Merchant

Mill

Light structural engineering and construction, medium rounds

(plain & TMT), heavy rounds (plain)

Wire Rod

Mill

Wire rods - plain construction wire rods - TMT EQ wire rods

electrodes

Plate Mill

Plates boilers, defence, railways, shipbuilding, LPG

cylinders, export

B. SEMIS Billets (from

BBM) Re-rollers

Blooms

(from BBM)

Narrow

width slabs

CC blooms

Killed slabs

C. Pig iron Foundry

D. By products

Coal chemicals, ammonium sulfate (fertiliser), tar and tar

products, (pitch, naphthalene, creosote oil, asphalt,

anthracene oil, dephenolised oil, PCM etc.), Be

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MAJOR UNITS:-

Integrated Steel Plants

Bhilai Steel Plant (BSP) in Chhattisgarh

Durgapur Steel Plant (DSP) in West Bengal

Rourkela Steel Plant (RSP) in Orissa

Bokaro Steel Plant (BSL) in Jharkhand

IISCO Steel Plant (ISP) in W.B.

Special Steel Plants

Alloy Steels Plants (ASP) in West Bengal

Salem Steel Plant (SSP) in Tamil Nadu

Visvesvaraya Iron and Steel Plant (VISL) in Karnataka

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Joint Venture

SAIL has promoted joint ventures in different areas ranging from power plants to e-

commerce.

NTPC SAIL Power Company Pvt. Ltd

Set up in March 2001, this 50:50 joint venture between SAIL and the National Thermal

Power Corporation (NTPC) operates and manages the Captive Power Plants-II of the

Durgapur and Rourkela Steel Plants which have a combined capacity of 240 MW

1. Bokaro Power Supply Company Pvt. Limited

This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in

January 2002 is managing the 302-MW power generation and 1880 tones per hour steam

generation facilities at Bokaro Steel Plant.

2. Bhilai Electric Supply Company Pvt. Limited now NSPCL

Another SAIL-NTPC joint venture on 50:50 basis formed in March 2002 manages the 74

MW Power Plants-II of Bhilai Steel Plant which has additional capacity of producing 150

tones of steam per hour.

3. UEC SAIL Information Technology Limited

This 40:60 joint venture between SAIL and USX Engineers & Consultants, a subsidiary

of the US Steel Corporation, promotes information technology in the steel sector.

4. Metaljunction.com Private Limited

A joint venture between SAIL and Tata Steel on 50:50 basis, this company promotes e-

commerce activities in steel and related areas.

5. SAIL-Bansal Service Center Pvt. Ltd.

SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a

service centre at Bokaro with the objective of adding value to steel.

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6. North Bengal Dolomite Limited

A joint venture between SAIL and West Bengal Mineral Development Corporation ltd on

50:50 basis was formed for development of Jayanti Dolomite Deposit, Jalpaiguri for

supply of Dolomite to DSP and other plants.

7. Romelt-SAIL (India) Ltd

A joint venture between SAIL, National Mineral Development Corporation (NMDC) and

Russian promoters for marketing Romelt Technology developed

by Russia for reducing of iron bearing materials, which is carried out with carbon in

single stage reactor with the use of oxygen.

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PROJECT OBJECTIVE:-

In Bhilai Steel Plant there are various sections of marketing department. Since I have chosen

“marketing of secondary product at B.S.P

My objectives are :-

To know what is secondary products & why is it necessary to sell.

To know the use of secondary products.

Marketing study of secondary products in B.S.P

To study terms & condition on which B.S.P sells its secondary products.

To study & know how to do pricing of secondary products.

Dealing with local customers.

Customers and competitors of the B.S.P.

Scope:-

Bhilai steel plant is an integrated steel plant is an integrated steel plant and one of the

largest steel plant in Asia. With a huge capacity with best technology. Bhilai steel

plant is trying to get maximum revenue out of that not a single unit of material is

being wasted. The scrape material of the Bhilai steel plant having a demand in local

market and also other parts of the country and give a huge revenue for Bhilai steel

plant.

14

SECONDARY PRODUCTS

In BHILAI steel plant, the finished products are categorized into three parts.

PRIME PRODUCTS

These area actual products which are originally produced for Blooms, channels, rounds,

angels, TMT bars, Wire rods, Rails, structure etc.

BY PRODUCTS

These products are not originally produced by Bhilai Steel Plant, but are the outcomes while

producing the prime products.

SECONDARY PRODUCTS

This is defective and rejected materials due to improper mixing of chemicals components or

fail to meet the optimum requirements. Scrap generated inside Bhilai steel plant is termed as

secondary products. The secondary products are ferrous materials generated from various

production units which can be used for remelting to produce iron offered for sale if rendered

surplus in the production process for ex- Defective heavy blooms, Defective rails, Rail

cutting, scrap etc.

Details of Secondary products-

Defective heavy blooms.

Defective Billet

Defective slabs

Plate mill side shearing

Defective rails

Rail cutting

Rod cutting

Plate cutting

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NECESSITY FOR SELLING OF SECONDARY PRODUCTS

The net sales realization from all the secondary products, by products and co-products of

bhilai steel plant is around Rs. 1700 crores which is quite more than any of the big industries.

Reproduction of main products these secondary products requires remelting it again for

required composition of materials as per the designed specification.

By selling it to different mills/processors the plant get around Rs. 4000 crores per tonne of

direct profit than by reproducing it to main product. By using these materials

traders/processors make raw materials for different finished products, which also make huge

profits and plant is not losing anything.

PROCEDURE FOR SALE

By February, the avaialibility for next financial year is estimated.

A list of customers of coal chemicals is prepared and the customers intimate section

about their requirements.

According to requests submitted, the various customers are told the quantities that

will be provided to them.

To buy a product, a security has to be deposited.

The buyer arrange transport.

SECONDARY PRODUCTS AND BBM

Some of the secondary products are slag, defective and refractory bricks, flue dust, scrap rolls

etc. The sale of products is done by floating tenders and forward auction. Due to surplus

capacity of blooms and billets, they are sold in the market as semi-finished products.

16

Sales and Distribution of Secondary products

This involve a direct marketing process. The management of BSP is consultation with the

officials of the market development and customer service department works as groups for

sale of these items. There are two methods of selling these re-roll able defective materials.

By E-auction.

E-Auction is internet based selling method of secondary products. In this method there is

online bidding auction done by company website. Applicants can offer their price money

with particular quantity they want. After closing the date of the auction within 5 working

days the final customer name is declared on the website based on the price money offered by

them. They are invited for further process of purchasing material.

MARKETING SCENEARIO

Without a perfect market goods can neither be purchased nor can it be sold. Marketing is one

of the major and crucial department pillars of the every organization and it can be used with

the case of SAIL.

Customer Satisfaction and Quality Assurance• these are two motives of SAIL for achieving

the goals and establishing the market. SAIL has wide network across the country. IT is

having its CMO for marketing division. It has its headquarters situated in Kolkata.

Bhilai Steel Plant has established its position through the better service. It has several

departments among which marketing division play a key role. Every plant has its own Branch

Sales Office (BSO) who looks upon the orders of CMO. These orders are then sent to the

plant for checking the availability and production for dispatch. All departments are linked

through Management Information System (MIS) from CMO to each and every division of

plant.

For marketing of different type of items policy are adopted by BSP are :-

MOU is an agreement signed between the plant and customer for assured quality and

quantity

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CENTRAL MARKETING ORGANIZATION

Central marketing organization (CMO), one of the largest marketing networks in the

country markets mild steel products from the four integrated plant of SAIL. The CMO

headquarter is at Kolkata and the commercial directorate is at New Delhi. A nationwide

network of regional offices, sale offices and several strategically placed warehouses is

further supplemented by consignment agents and authorized dealers to meet the demands

of the smallest customers in the remotest corners of the country. CMO maintains its

aggressive marketing efforts in order to retain market leadership by meeting customer

requirements and evolving to increase sales. In order to strengthen the marketing

approach and initiate the product and segment specialization, CMO has been reorganized

on the basis of long and flat products. Key account management process has been

implemented in CMO to provide better services, quality.

This being followed by customer satisfaction index (CSI) to increase responsiveness to

the customer needs. Yet another significant development has been re-oriented of the sale

branches and warehouses. This wide range of network of authorized dealers also help

meet customers demand for steel in small quantities.

Regional offices of CMO

North region East region South region West regions

Allahabad Siliguri Bangalore Ahmadabad

Chandigarh Bokaro Chennai Bhilai

Faridabad Jamshedpur Coimbatore Bhopal

New Delhi Patna Hyderabad Mumbai

Kanpur Guwahati Cochin Nagpur

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INTRODUCTION:-

Marketing Department

The marketing of prime products of all the steel plants of SAIL is handled by CMO (Central

Marketing Organization). The marketing department of BSP is entrusted with a job of co-

ordination between the CMO and the plants as well as the marketing of secondary products

and by-products for ease of functioning the market is divided into various functions:

MARKETING AND STRATEGIC PLANNING

Handling of Customer complaints- In case of any complaints by any customer, the complaint

is sent to GM and the particular mill. The CMO has an application engineer for commercial

settlement which inspects the material and if found defective adjustments are made in

payments or material is taken back.

·Customer feedback-Customer feedback is taken by this section on a periodic basis in form of

customer satisfaction feedback reports. A four point feedback is taken for increasing the

market share and for customer retention. There is key accounts manager who handles them.

This is done to provide single window service to customers.

ISO activities- The various documents pertaining to ISO activities are handled and managed

here.

Training- This section also overviews the training of new recruits, summer trainees in

marketing department.

Product development- The management and research group ate CMO studies the market

demand and supplies, feasibility for which is checked at plant and furthered for approval.

Strategic planning- This section deals with the product mix. Quantum of exports. Monthly

tonnage, and for other parameters according to demand.

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EXPORTS

The International Trade division of CMO is main body that handles exports of steel in SAIL.

BSP has been a major exporter in the past. Rails have been exported to over 50 countries. The

procedure of exports is as follows:

The international buyer sends an enquiry to ITD for the availability of goods.

If response is positive then a letter of credit is sent in name of buyer and deal is signed

specifying the terms and conditions.

ITD gives a contract to BSP in form of work order which is processed here and sent to mills

for production.

After production of goods Dispatch advice is sent to production department, after which

goods are verified and tested. The goods are sent to vizag for export.

At the ports the various formalities are completed relating to: Export license

GR form

Marine insurance Bill of loading.

After receipt of goods, Payment is received through bank.

20

MARKETING AND BUSINESS PLANNING DEPARTMENT

OF BHILAI STEEL PLANT

Marketing and business planning department of BSP act an interface between plant and CMO

for co-ordinating marketing activities with CMO for sale of prime products. Apart from this,

it also carries out direct sales of secondary products and by-products generated in plant.

The activities frame work is given below:-

Key activites of M & BP deptt.

Co-ordinating with CMO/ITD for sale of prime products

Sales planning

Order management

Key a/c

Complaint

Direct sale of secondary /by product

Secondary products

Coal chemicals,fertilizers

Granu,slag

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ORGANISATIONAL HIERARCHY

GM

Sectional Incharge

Productin Manager 1

Executives 1

Productin Manager 2

Executives 2

Productin Manager 3

Executives 3

Sectional Incharge

Executives 1

Executives 2

Executives 3

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INTERNATIONAL TRADE DIVISION

International trade division (ITD) of CMO manages exports of mild steels products and

maintain close liaison with buyers abroad. ITD has been successful in making SAIL steel, a

familiar name across the continents. Transport and shipping division (T&S) of CMO

performs the important functions of ensuring proper dispatch of export materials and timely

import of raw materials to keep SAIL plants going.

BRANCH SALES OFFICE

This office is related to the sales of prime products of the Bhilai steel plant, which has been

acting as interface between CMO and BSP. The different issues has been related to the

products and its delivery is dealt with BSP through this department. We can say it coordinates

about the production and dispatch in different steel plants. CMO has got SRM offices in

Bokaro, Durgapur and Bhilai.

Functions of Branch sales office (BSO)

Booking of order from customers on long term and short term basis.

Passing details of booking to concerned sales resident manager office.

The meeting related to the sale of product is done intermittently.

The customer complaints are also handled by plant through this branch sales office

with proper channel of meeting.

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CREDO:

1. We build lasting relationships with customers based on trust and mutual benefit.

2. We uphold highest ethical standards in conduct of our business.

3. We create and nurture a culture that supports flexibility, learning and is proactive to

change.

4. We chart a challenging career for employees with opportunities for advancement

and rewards.

5. We value the opportunity and responsibility to make a meaningful difference in

people’s lives.

24

METAL JUNCTION

mJunction service limited operating at the cutting edge of Information Technology and the

Internet is a 50:50 venture promoted by SAIL and TATA steel. Founded in February 2001, it

is today not only India’s largest ecommerce company (having transacted worth over Rs

1,60000 crores till date) but also run the world’s largest eMarketplace for steel. The steel and

cole supply chain in India has been transformed by junction, which has ushered in Efficiency

,Transparency and convenience to the way steel and coal , is bought and sold . Similar

transformational change is being sought to be made in the automobile industry and in the safe

of branded product with the launche of auto junction and straight –line respectively.

Buiness volume of the company in term s of transaction has scored from Rs 94.35 crores I

FY’02 to Rs 41.134 crore in FY13 , registering a CAGR of 74 %.

mJunction’s growth has not only been in terms of transactional value, revenue and profit. In

the space of just 12 tears, it has established a national footprint with presence in more than

25 location all over the country . Starting out with a term of less then six people at inception ,

today more than 500 people from the company at a scorching pace.

Junction is an ISO 9001:2008,ISO27001 and CMMI Level 5 certified company.

These business units provide stakeholders on the both sides with a level playing field with

the ultimate objective of price discovery. By servicing non-core products in a profitable way,

they also help client focus on their core products and core markets.

mJunction’s sell side community today consists of over 20,000 buyers-buying coal and steel

products ,as well as by products such as coal chemical, obsolete and idlr capital assets.

25

Advantages for the seller :-

Process efficiency through

- Reduce time to market.

- Reduce costs and manpower

- Reduced inventory due to shorter cycle time.

Increase revenues through widre reach.

Better price discovery mechanism.

Advantages for the buyer

Convenience

Transparency

Lower osts due to disintermediation

Faster fulfillment through value-added services like e-payment and inspection

services.

Dedicated support through various stages of auction.

26

SWOT ANALYSIS

Strength:

1. It has country wide network of stockyard and dockyards.

2. Consistency in quality

.

3. Customer perception.

4. SAIL products has international standards.

5. SAIL maintains a better customer relationships approach.

Weakness:

1. Quality of the products are slightly inferior as compared to its competitors who are having

latest technology.

2. Not consistent to meet its market demand with supply.

Opportunities:

1. Due to wide network customers demand can be meet up easily.

2. SAIL can diversify itself in production of various other products according to the market

demand.

Threats:

1. Main threats are competitors like TISCO,ESSAR,JINDAL etc.

2. Obsolence of existing technology.

3. Rigid decision making process .

27

CONCLUSION

BSP has faced large ups and downs in terms of their productivity and profitability. Its

continuous improvement in terms of quality is one of the flagships for sale. Bhilai

contribution in terms of materials, money and men has been commendable.

BSP has faced the problems of coal products in last year but still it has maintained its

productivity as per the plans and schedules. BSP has gained huge margin profit of

2148 crore in year 2009-2010. Thanks to modernization and maintenance that has

changed the fortune of BSP.

With the new challenges, changing market and environment BSP has sufficient

capability to look further for future to gain profits. It is backed up by the chief asset

and has a strong and capable team who has caliber to face any obstacles.

BSP has implemented many steps for strengthening its fundamentals such as cost

reduction, technology improvement, lowering borrowing level, persistent efforts to

bring about a positive attitude towards organizational goals among employees through

planned communication, training, optimum utilization of resources.

Commenting on the cost reduction strategy of organization managing director Mr.

Rajendra Prasad says . As the steel horizon brighten up after a long period of bloom,

Bhilai makes most of it and emerges as leader.

While studding the history of SAIL , BSP is a part of SAIL. I also history about BSP.

It was established on 2nd Februry 1955 with a capital of 1MT, now its production has

increased up to 7MT per year

Majority of the companies buy the steel scrape from BSP and also they buy iron

scrape, melting scrape etc.

Most of the surveyed companies are dealing with BSP since last 10 years and most of

them buy secondary products from BSP only.

28

Customers are also satisfied with the payment and distribution policies of BSP. They

have also felt that there are very instance form delay.

29

LIMITATION OF THE STUDY

1. Some of the data were confidential therefore they were not available for analysis .

2. Time factor – time factor was the chief limitation of the study. Limited time was given

allotted for the study.

3. The research has focused his attention mainly in and around Bhilai.

4. As the major customers of BSP products are not individual persons it was very difficult to

formal feedback from them.

30

BIBLIOGRAPHY

Internet:-

http://www.sail.co.in/plants_bhilai.asp Company profile

http://www.sail.co.in/searchindex1.asp About the SAIL

http://www.fieldtofactory.lse.ac.uk/SteelPlantHistory.htm History of Bhilai Steel Plant http://www.sail.co.in/right- information-act/bhilai-steel-plant-manuals

Others:-

(BSP)SAIL Journals (BSP)SAIL Brouchers

(BSP)SAIL Manuals

31