The Business Model of Wadia Group
Brief Profile of Wadia Group
The Wadia Group is one of the earliest business groups of the country. It was established by Sir Neville Wadia, much ahead of India's independence. Sir Neville was espoused to Dina, the sole daughter of Muhammad Ali Jinnah, the founding father of Pakistan. Jinnah and his married woman Ruttee had spaced and parted shortly after the birth of their daughter. Nusli Wadia is Neville Wadia's son and he is presently leading the group. The Wadia group nowadays comprises of three precedential companies that are prominently listed on the Bombay Stock Exchange. These are Bombay Dyeing - the fabric flagship of the country, Britannia Industries - a famous company and the market leader in its segment that produces cookies and different kinds of bites, Go Air - a comparatively young low price air carrier operational from Mumbai. The Wadia Group also deals with the editorial work of the very popular fashion and lifestyle magazine Gladrags and organizes the yearly held Gladrags Megamodel Hunt in Mumbai. Propelled by the accelerated demand of steel in the domestic market, Wadia Group has now forayed into the highly profitable steel industry.
The Business Model of Wadia Group (Steel Business):
Wadia Group (WSIL) is an integrated mini steel plant with the following production facilities at Village - Bijabahal, PS- Biramitrapur, District.- Sundergarh, Orissa.
The Process Flow Chart is given below
Raw Materials:
Iron Ore: The Company procures Iron Ore Lumps at a size of 5 mm to 200 mm from Mines mainly located at Koira, Joda and Barbil which are at a distance of 150 Kms to 200 Kms from the factory site. The Company has long term contracts with mine owners for uninterrupted supply of iron ore. The annual requirement of Iron Ore is about 1 lakh tons. The Iron Ore Lumps are transported by trucks from the mines to the factory. In the factory, the Iron Ore Lumps are crushed by Crusher to make sized ore of 5 mm to 18 mm size.
Dolomite: Dolomite of 5 mm to 10 mm size is taken from the mines of the group company at Champa, Chhatisgarh. The annual requirement of Dolomite is about 2,500 tons. The transportation is made by road through trucks.
Coal: The Company has a coal linkage with Mahanadi Coalfields Limited (MCL). The coal mines are at a distance of 200 Kms to 250 Kms. The Company gates adequate quantity of coal from MCL. The annual requirement of Coal is about 1 lakh tons. The transportation is made by road through trucks.
Pig Iron: Pig Iron is available in the Blast Furnace units in the state like Nilachal Ispat Nigam Limited (NINL), Bhusan Steels, Adhunik Metallics etc. The Company has a long term association with there companies. The annual requirement of Iron Ore is about 5,000 tons. The suppliers are at a distance of 200 Kms to 250 Kms. The Company gates adequate quantity of pig iron from these suppliers. The transportation is made by road through trucks.
M.S. Scrap: M.S. Scrap is locally available from the traders. The annual requirement of Iron Ore is about 15,000 tons. The Traders factory delivery through trucks.
Production:
Direct Reduction Plant: The Direct Reduction Plant is of rotary kiln based on solid redundant. It is comprise of a 50 TPD x 4 nos Rotary kilns with related accessories.
Steel making: The steelmaking shop of the compant is consists of 2 set of 6T induction furnace to produce 43,200 t/yr MS Ingots.
Rolled Products: The company is under the process of installing a Rolling mill of 65,000 t/yr. for making TMT Bars from M.S. Ingots.
Power: WSIL’s existing plant at Bijabahal received power supply of 3400 KVA from WESCO. Provision however, has been made to keep running core plant equipment at the time of suspension of supply from grid, through installation of two nos. of 500 KVA and one no. of 750 KVA DG sets.
Inspection and Quality Control: For inspection and quality control, a central laboratory with adequate facilities and manpower is there for the integrated steel plant.
Market and Company’s Marketing Strategy:
The steel industry forms the backbone of industrial development in any developing country. In India, the steel sector has been growing steadily. It is evident that states like Orissa, Madhya Pradesh, Bihar, Jharkand, Chattisgarh needs huge investments in the infrastructure sector. Steel being the primary material used in infrastructure projects, it will not be improper to say that the Steel Industry will show significant signs of growth in the coming years. Thus, this is the appropriate time to create capacity in order to meet the growth in demand for steel in the future.
TMT Bars have enormous demand in the Market. It is the basic requirement for infrastructure and construction projects. Even now-a-days steel is being used in making road which was a dream few years back. The Company has already in the steel market since last 8 years and has built up a strong customer base.
Since, TMT Bar is a direct consumer product; the company has strategically made its sales plan. Distributors will be appointed in all the cities and town in Orissa, Jharkhand and Chhatishgarh. Dealers and Sub-dealers will be appointed at each corner of these three states with direct supervision of the company’s marketing staff. The company will also go for massive advertisement in Print and electronic media, and Hoardings at important places. Hence the Company will not have any difficulty in selling its Produce in the Market.
Important questions that need to be addressed:
The important questions that need to be addressed include 1-Does the company has retail outlets or branches? 2-Does the client deal with corporate / retail users / middleman? 3-Are the products branded or none branded? 4-Is the company dealing with government? 5-How business is sourced?
1-Does the company has retail outlets or branches? No, Wadia Group does not have any retail outlets or branches however, sales are made through brokers. The company also deals with other companies which have a capacity to consume materials in large quantity.
2-Does the client deal with corporate/retail users/middleman? Presently, the company is supplying sponge iron to the induction furnace unit irrespective of the size of the customer. Usually, the sales (Sauda) is effected through brokers.
The company will deal with corporate having large construction projects to sale TMT Bars. TMT Bars will also be sold through middleman/brokers, whole sellers and retailers of building materials to be appointed prior to starting of commercial production. The company may sale to retail users who will take the materials in bulk quantities.
3-Are the products branded or none branded? Yes, the products of the company are branded. After trial run of TMT Bars, the company will give a brand name to the product and make the necessary registrations.
4-Is the company dealing with government? No, the company does not deal with the government. At present the company makes sales to private entities through brokers. The company also deals with other private companies and body corporates having high demand and the capacity to consume materials in large quantity.
5-How business is sourced? Presently, the company has very strong customer base for supplying sponge iron. Some times the business also through brokers. However, after commencement of commercial production of TMT Bars, about 50% of the sponge iron will go for captive consumption.
The new product of the company is TMT Bars which is used in construction of small residential building to large projects. So, general public, industries, Govt. & Private organizations are the prospective customers of TMT Bars. The Company will sale this products through Dealer & Sub-dealer network mainly in five states i.e. Orissa, Jharkhand, Chhatisgarh, Bihar and West Bengal. Since, the Company the Company has not started the production, the Dealer & Sub-dealer network is in planning stage. However, emphasis will be given to the existing whole-sellers and retailers of building materials in the said five states.
The company will form own skilled marketing team to promote sales. Brokers will also be appointed to source additional business. The TMT Bar is a consumer product and there is a number of competitors in the market. So, the company will go for massive advertisement in print and electronic media. The road side Hoardings will also be placed for advertisement. The company will give more importance on the quality of the product and will offer a very competitive price.
Like it on Facebook, Tweet it or share this article on other bookmarking websites.