FACTORS AFFECTING BUYING BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN LUDHIANA

A Project Report

Submitted by

GURIQBAL SINGH

Reg. No. 80101317009

In partial fulfillment for the award of the degree

Of

MASTERS OF BUSINESS ADMINISTRATION

IN

MARKETING

At

GURU NANAK DEV ENGINEERING COLLEGE

LUDHIANA

AUGUST 2009

ACKNOWLEDGEMENT

I take this opportunity to express my profound sense of gratitude & respect to all those

who helped me in this Research.

I would like to make special mention of help and encouragement that I received from Mr.

Anil Gupta & Mr. Jagmohan Syal (V.P. Marketing, Hero CRD), my project leader

Mr. Rajesh Vij (A.G.M. Marketing, Hero CRD) and special thanks to Mr. Manish

Kr. Singh (Dy. Marketing Manager, Hero CRD), Mr. Dhirendra Singh & Mrs. Lizu

Jagdish (Marketing Coordinator) which were critical in the development of this

project. I have profited immensely from working with many distinguished thinkers and

doers, who advised me at each step.

I would also like to thank the Marketing Department of Hero Cycles CR Division and

people in the organization for sparing their valuable time and providing useful insight’s

that have made my learning experience very fruitful.

Above all I want to thanks my parents, for their continuous involvement and constant

support.

Finally and most important I would like to thank to Faculty of GNDEC to

provide me with such an opportunity that has enhanced my learning horizon Last

but not least, I thank the almighty, may he stand with all of us.

GURIQBAL SINGH

REG. NO. 8010137009

MBA (2008-10)

PREFACE

I feel delighted to present my project report on “ FACTORS AFFECTING BUYING

BEHAVIOR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN

LUDHIANA” is a matter of honor and pride for me that I got a chance to undergo my

Summer Training in a company like HERO CYCLE Ltd. (CR Division). In this period

of six weeks I got familiar to the real conditions of an organization and especially to the

work culture of such a big and prestigious group which has its name in the manufacturing

of Two Wheelers and many others products as well as Customer services.

The first task for me was to know about the concept on which my project was based.

Then I had to set criteria, on the basis of which the above concept was valued. The data

was collected for each of the parameter found responsible in influencing the purchase

decision of the customers through Marketing Research Program.

Hence, this project had to be completed in the Six weeks of time. As the time was

limited, so there is a possibility that some matters might not have been taken into

consideration, but every effort has been done from my side to include every necessary

parameter and include whole information that I got from the market during surveys as

well as the marketing Research Program.

GURIQBAL SINGH

CERTIFICATION

This is to certify that the research project entitled “FACTORS AFFECTING BUYING

BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN

LUDHIANA” submitted for the partial fulfillment of requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION at GURU NANAK DEV

ENGINEERING COLLEGE, Ludhiana affiliated to PUNJAB TECHNICAL

UNIVERSITY, JALANDHAR is a bonafide research work carried out by Guriqbal

Singh of M.B.A under my supervision and that no part of this has been submitted for any

degree.

The assistance and help received during the course of the investigation have been fully

acknowledged.

Mr. PARAMPAL SINGH

ASSISTANT PROFESSOR

GURU NANAK DEV ENGINEERING COLLEGE

LUDHIANA

DECLARATION

I hereby declare that the project titled “FACTORS AFFECTING BUYING

BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN

LUDHIANA” is an original piece of research work carried out by me.

The information has been collected from genuine & authentic sources. The work has been

submitted in partial fulfillment of the requirement of Master of Business Administration

to Guru Nanak Dev Engineering College Ludhiana affiliated to Punjab technical

university.

Place: Signature:

Date: Guriqbal Singh

M.B.A. (2008-10)

EXECUTIVE SUMMARY

In the age of fast changing Marketing strategies, customer behavior, new market

segments and product opportunities along with sensitivity to changing customer needs,

the Hero group develops and adapts marketing strategy and philosophy. As the Hero

group is known for its completely customer- driven approach. For that very reason Hero

Cycles CRD undergoes this project.

The main aim of the project is to know the purchase criteria / Buying Behavior of

customers of the Cold Rolled Steel Strips/ Sheets provided by the Hero Cycle C.R.

Division and used in various industries (Automobiles, Bicycle etc.) in Ludhiana.

The customer’s perceive Quality as the most important factor while purchasing. More

customers will be attracted towards the products if quality parameters such as surface

finish, peeling off etc. are improved upon by getting continuous feedback on the quality

and other services provided by the company. The second most important factor is

delivery system and price. The price should be competitive with the other suppliers. The

third most important factor is Credit policy of the company. Better credit facility should

be given to the customers and payment norms should be simplified. Quality should be

used to cover the price. Improvement in quality, Services, Delivery and Rate reduction

should be made to further increase the market share and to attract the new customers of

C.R. Steel Strips/ Sheets.

CONTENTS

CHAPTERS

CHAPTER-1

INTRODUCTION OF THE PREOJECT

REVIEW OF LITERATURE

OBJECTIVE OF STUDY

SCOPE OF STUDY

CHAPTER-2

COMPANY PROFILE

CHAPTER-3

RESEARCH METHODOLOGY

UNIVERSE OF STUDY

SAMPLING TECHNIQUES

PERIOD OF STUDY

LIMITATIONS OF STUDY

SCOPE FOR FURTHER STUDY

CHAPTER-4

ANALYSIS OF TOPIC

CONCLUSIONS

INFERENCES

SUGGESTIONS & RECOMMENDATIONS

CHAPTER-5

BIBLIOGRAPHY

QUESTIONNAIRE

CHAPTER-1

INTRODUCTION TO THE PROJECT

The project was given to me to study the “FACTORS AFFECTING BUYING

BEHAVIOR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN

LUDHIANA”. So, the area of operation for me was the MARKETING

DEPARTMENT of the organization. The first task for me was to know about the

concept on which my project was based. Then I had to set criteria, on the basis of which

the above concept was valued. The data was collected for each of the parameter found

responsible in influencing the buying behavior of the customers though Marketing

Research Program.

INTRODUCTION TO CONSUMER BEHAVIOUR

The Business market is comprised of organizations that in some form are involved in the

manufacturing, distribution or support of products or services sold or otherwise provided

to other organizations. The amount of purchasing undertaken in the business market

easily dwarfs the total spending by consumers. Because the business market is so large, it

draws the interest of millions of companies worldwide that market exclusively to

business customers. For these marketers understanding how businesses make purchase

decision is critical to their organization’s marketing efforts. In some ways understanding

the business market is not as complicated as understanding the consumer market. For

example, in certain business market, purchase decision hinge on the outcome of a bidding

process between competitors offering similar products and services. Thus unlike

consumer markets, where building a recognizable brand is very important, for many

purchase situations in the business market this not the case.

However, in many other ways business buying is much more complicated. For instance,

the demand by business for products and services is affected by consumer purchases

(called derived demand) and because so many organizations may have a part in creating

consumer purchases, a small swing in consumer demand can create big changes in

business purchasing. Automobile purchases are a good example. If consumer demand for

cars increases many companies connected with the automobile industry will also see

demand for their product and services increase. Under these condition companies will

ratchet up their operations to ensure demand is met, which invariably will lead to new

purchases by a large number of companies. In fact, it is conceivable that an increase of

just one or two percent for consumer demand can increase business demand for products

and services by five or more percent. Unfortunately, the opposite is true if demand

declines. Trying to predict these swings requires businesses to not only understand their

immediate customers but also the end user, which as we will discuss, may be will down

the supply chain from where the business operates.

WHO MAKES UP THE BUSINESS MARKET?

There are millions of organizations worldwide selling their products and services to other

organizations. They operate in many industries and range in size from huge multinational

companies with thousands of employees to one-person small businesses. With such a

large number of originations and industries contained within the business market, a

marketer can obtain a better picture of who is involved by looking at popular business

classification systems set up by international governments, such as the North American

Industrial Classification system (NAICS), which covers Canada, Mexico and the United

States and the International Standard Industrial Classifications (ISIC), which is widely

used in Europe. These reports provide descriptions of hundreds of industry classification.

Supply Chain Members

The supply chain consists of mostly for-profit companies engaged in activities involving

product creation and delivery. Essentially the chain represents major steps needed to

manufacture a product that will eventually be sold as a final product. Each member of the

supply chain purchases products and services enabling them to carry out its business

objectives.

When making purchase decisions supply chain members may be motivated by such

factors as:

Product cost

Return on investment

Assurance of consistent supply

Reciprocity with supplying firm

An example of purchasing occurring in the supply chain includes:

Manufacturing and Plant equipment

Information Technology

Offices Supplies

Professional Business Services, etc.

Business User Markets

Besides selling final products and services to supply chain companies, several additional

User markets also make purchases either for their own consumption or they buy with the

intention of redistributing to others. In these purchase situations the buyer generally does

not radically change the product from it’s from when it was purchased from a products

manufacture.

BUSINESS MARKET V/S CONSUMER MARKET?

For marketers, the selling environment of business markets present uniquely different

circumstances when compared to selling to consumers. At the beginning of this tutorial

we saw two ways in which consumer and business markets differ:

1) Business markets are more likely to be price driven than brand driven, and

2) Demand in business markets tend to be more volatile than consumer markets.

However, the two markets are dissimilar in other ways requiring marketers to take a

different approach when selling to business customers than to consumers. These

differences include:

How decisions are made.

Existence of experienced purchasers.

Time needed to make buying decision.

Size of purchases.

Number of buyers.

Type of promotional effort needed to reach buyer.

How Decision Are Made

In the consumer market a very large percentage of purchase decisions are made by a

single person. There are situations in which multiple people may be involved in a

consumer purchase decision, such as a child influencing a parent to choose a certain

brand of cereal or a husband and wife deciding together to buy a house, but most of the

time purchases are individual decisions. The business market is significantly different.

While single person purchasing is not unusual, especially within a small company, a

significant percentage of business buying, especially within larger organizations, requires

of many. In the marketing literature those associated with the purchase decision are

known to be part of a Buying Centre, which consists of individuals within an

organization that perform one or more of the following roles:

Buyer – Buyer is responsible for dealing with suppliers and placing orders (e.g.,

purchasing Agent).

Decider – Decider has the power to make the final purchase decision. (e.g.,

C.E.O).

Influencer – has the ability to affect what is ordered such as setting order

specifications (e.g., engineers, researchers, product manager).

User - those who will actually use the product when it is received (e.g., office

staff etc).

Initiator – any buying centre member who is the first to determine that a need

exist.

Gatekeeper – anyone who controls access to other Buying Center members

(e.g., administrative assistant).

Experienced purchasers

As noted in the discussion of the buying center, organizations often employ purchasing

agents or professional buyers whose job is to negotiate the best deals for their company.

Unlike consumers, who often lack information when making purchase decisions,

professional buyers are generally as knowledgeable about the product and industry as the

marketer who is selling to them.

Decision Making Time

Depending on the product, business purchase decisions can drag on for an extensive

period. Unlike consumer markets where impulse purchasing is rampant, the number of

people involved in business purchase decisions results in decisions taking weeks, months,

or even years.

Larger purchases

For products that are regularly used and frequently purchased, businesses will often buy a

larger volume at one time compared to consumer purchases. Because of this business

purchasers often demand price breaks (e.g., discounts) for higher order levels.

Number of Buyers

While there are several million companies worldwide that operate in the overall business

market, within a particular market the number is much smaller. For example, while in the

United States there are 95 million households who may shop at a grocery store, there are

only a few thousands grocery stores with many of these centrally controlled as part of a

chain of stores. Additionally, within some industries buyers are highly concentrated in

certain geographic areas. Consequently, compared to consumer products, marketing

efforts are confined to a smaller targeted group.

Promotional Focus

Companies who primarily target consumers often use mass advertising methods to reach

an often widely dispersed market. For business-to- business marketers the size of

individual orders, along with a smaller number of buyers, makes P2P contact by sales

representatives a more effective means of promotion.

BUSINESS BUYING BEHAVIOR

To cap our discussion of the business market we now look at how purchasing decisions

are made. Business purchasing follows the same five-step buying process faced by

consumers:

1. Need Recognition

2. Search

3. Evaluate Options

4. Purchase

5. After Purchase Evaluation.

OBEJECTIVES OF RESEARCH

Primary Objective:

To study the purchase criteria of the customers and identify the factors that influence the

Customer Buying Behavior in respect of Cold Rolled Steel Strips/Sheets provided by the

Hero Cycles (C.R. Division) used in various industries (Automobiles, Bicycle) in

Ludhiana.

Secondary Objectives:

1. To find the major Specifications and Grades of Cold Rolled Steel Strips/ Sheets

used in various type of industries in Ludhiana.

2. To find out the requirements of various types of industries in Ludhiana in which

cold Rolled (C.R) steel strips/ sheets are used as a raw material.

3. To find out the market share of the Hero Cycle CR Division in Ludhiana Region.

4. To know about the future expansion plans of various organizations & ascertain

their increased buying from Hero Cycles CR Division.

CHAPTER-2

HERO GROUP PROFILE

HERO GROUP - A name synonymous with the two wheelers in India began its journey

around four decades ago. Like every success story, Hero’s saga contains an element of

spirit and enterprise; of achievement through grit and determination, coupled with vision

and meticulous planning.

The Hero Group began with a simple philosophy: “To provide excellent transportation

to the common man, at a price he could easily afford”. It is this spirit which drives

Hero, even today the dream of providing total satisfaction in all its spheres of activities.

The saga of HERO started in 1956. Starting as manufacturer of bicycle components,

Hero has today grown into multi-unit, multi-product, geographically diversified,

manufacturing companies for bicycles, motor cycles, mini motor cycles, mopeds, cold

rolled steels and components. The flagship company of the group HERO CYCLES LTD.

entered into the “GUINNESS BOOK OF WORLD RECORDS” as the largest bicycle

manufacturers of the world in 1986 and continues to hold the envious record ever since

then. Currently it is producing 21500 bicycles per day.

Group Turnover is Rs. 20000 Crore in 2007-2008 of which EXPORT share is more than

15%. The exports are being made to all parts of the world including sophisticated markets

of Europe & US. Today Hero is the largest exporter of two-wheelers in India, besides

being the fastest growing Indian Two-wheeler Company.

One of the group companies, Hero Honda also awarded as Company of the Year by

Economic Times in 2009 as it increased its market share from 54% to 58 %.The main

component of all Hero group companies are CR Steel therefore growth in these

companies means growth in Hero Cycles CR Division.

The group has redefined the concept of ANCILLIARISATION by extending technical

& managerial support to the ancillaries. Consequently, HERO HONDA has managed to

achieve indigenization of over 95% - a Honda record worldwide.

Hero is proud to have a DEALER NETWORK of more than 4000, which has been

cemented with warmth of personal relationship, rapport & fraternity. With a deep sense

of belonging to the Hero fraternity, the Group’s dealers have catalyzed growth and act as

a strong bridge between the customers and the group.

More than 20,000 employees of the group have vividly and continuously demonstrated

that human endeavor can ceaselessly achieve excellence and distinction given a congenial

and conducive environment. This has been amply testified in very low employee turnover

and world-class productivity.

The flag ship company of the group HERO CYCLES LIMITED has been practicing

JUST-IN-TIME (JIT) INVENTORY since the period when the term was not widely

known. The practice is prevalent in all the group companies.

The group Chairman Mr. Brijmohan Lal, is one of the leading business personalities of

the country. He was awarded Businessman of the year award in 1994 by a leading

business journal of India. Mr. Brijmohan Lal is the former President of Association of

Indian Automobile Manufacturers (AIAM) as well as of Confederation of Indian

Industries (CII), the premier Industry Association of India.

On Enterprise Resource Planning, the Group has already started its journey and has

started working on SAP R/3 module in Hero Honda, Hero Cycles Ltd. and Hero

Cycles Ltd. (C. R. Division). With the expertise available in-house the group has

mustered to implement SAP in other Companies on its own.

COMPANY PROFILE

Hero Cycles Limited (Cold Rolling Division) has been promoted under backward

integration plan by Hero Cycles Limited, the world’s largest bicycle manufacturer. The

plant was commissioned in July, 1991 at Ludhiana at a cost of Rs. 320 million with an

installed capacity of 50,000 MT in consultation with MECON, Asia’s largest engineering

consultants which had a technical collaboration with WEAN UNITED, U.S.A.

An additional 6-HI COLD REDUCTION MILL based on a joint Engineering &

design by MECON & Hero Cycle Ltd. along with hydrogen annealing and Electro

cleaning line has been installed for better product quality and capacity enhancement to

1,30,000 TPA with an additional investment of Rs. 700 million.

The plant was commissioned primarily to cater to the group requirements. However the

product was soon accepted by major automotive and White Goods manufacturers and

today has been supplied to other market segment also, e.g. automobile sector, Maruti

Udyog Limited ancillaries/vendors for both formed and drawn components -in D. DD,

EDD, MC-11 and other medium and high carbon grades.

Towards realization of CUSTOMER DELIGHT, the plant has been investing constantly

in up gradation of Technology and Human Resources. Cold Rolling Division is

renowned for its tradition in maintaining high standards in the Product Quality

constantly, Reliability in customer servicing and is also committed to attune to the

changing quality standards through continuous up gradation of Product, Process and

Human Resources.

At the base of all Hero Group’s activities is one basic ingredient - cold rolled steel.

Cognizant of the importance to ensure perfect quality of the basic raw material, the

Group established its own cold rolling mill for steel processing in 1990. With an

installed capacity of 50,000 MT per annum, the mill has state-of-art equipment including

4-HI reversible cold rolling-cum-skin pass mill with rewinding line, C. R. Slitter, and a

modern close annealing facility to maximize the quality of its products.

The mill has several firsts to its credit, including hydraulic auto gauge controls,

computerized pass schedules, automatic slow down and a totally enclosed, semi

continuous pickling line; apart from effective anti-pollution and safety controls which

were incorporated from the very beginning.

The company has also implemented SAP R/3 with the assistance of SIEMENS &

MECON.

Hero Cycles Limited, C. R. Division has also entered into an agreement for technical

assistance to improve operation & maintenance of the plant with the help of technology

& know how from Kawasaki Steel Corporation, Japan. Kawasaki Steel Corporation will

help C. R. Division for improvement of Production Yield, removal of Defects, reduction

of Customer Returns & improvement of Maintenance Operations against certain

predetermined Targets.

Kawasaki Steel possesses expertise based on the wealth & experience and expertise

acquired through development, operation & maintenance of its own Cold Rolling Plant in

Chiba and Mizushima Works, Japan.

Primarily Cold Rolling is done for two purposes:

1) To improve the surface finish of the steel.

2) To improve the gauge accuracy.

THE QUALITY POLICY OF THE COMPANY

TO

MEET

THE CUSTOMER NEEDS,

EXPRESSED AND IMPLIED

BY MAINTAINING

CONSISTENCY IN QUALITY

THROUGH

CONTINUOUS UPGRADATION

OF

TECHNOLOGY AND HUMAN ENDEAVOR

FOR

MAXIMIZING

THE RETURN ON INVESTMENT

TO THE STAKE HOLDERS

SWOT ANALYSIS

STRENGTHS

MANAGEMENT WITH VISION

GOOD CORPORATE IMAGE

LOCATION ADVANTAGE

STRONG BRAND IMAGE

MATERIAL QUALITY SATISFACTORY

GOOD CUSTOMER BASE

CAPTIVE CONSUMPTION

6 HI MILL WITH ADVANCED CAPABILITIES

HYDROGEN ANNEALED FURNACE FOR BETTER FINISH

SAP/ERP IMPLIMENTATION

CAN PRODUCE SPECIAL GRADE MATERIAL

INFRASTRUCTURAL FACILITIES FOR NORTHERN REGION

WEAKNESSES

INABILITY TO ACCOMMODATE CUSTOMERS IN URGENCIES

INTER/ INTRA DEPARMENTAL COMMUNICATIONS NOT EFFECTIVE

RECCURANCE OF SIMILAR PROBLEM

INEFFECTIVE IMPLEMENTATION OF CORRECTIVE MEASURES

DELAY & DAMAGES DURING TRANSPORTATION

NEW DEVELOPMENTS, PERPETUAL DELAY

UNPROFITABLE PRODUCT MIX

NARROW WIDTH LIMITATION IN 760 MM

PERCIEVED HIGH PRICE OF PRODUCT

DELAY IN DELIVERY

LESS CREDIT PERIOD

OPPORTUNITIES

GROWTH IN AUTO/ WHITE GOODS SEGMENTS

GROWTH N ECONOMY WILL PULL THE DEMAND

DIRECT/ INDIRECT EXPORT OPPORTUNITIES TO INCREASE THE

MARKET

FORWARD INTEGRATION IN PRESS MENTAL COMPONENTS/ TUBES/

COATED/ WIDER WIDTH

BACKWARD INTEGRATION LIKE TIE UP WITH SOME HR PRODUCER

QUALITY SHOULD BE USED TO COVER THE PRICE

BY SUPPLYING RIGHT QUANITY AT TIME , SATISFACTION OF THE

CUSTOMER CAN BE INCREASD

THE COMPANY CAN INCRESE ITS MARKET SHARE BY INCRESING ITS

PRODUCTION CAPCITY

INCREASE MARKET SEGMENTS TO CATER AND TO INCREASE

CUSTOMER BASE

THREATS

HUGE IDLE & ADDITIONAL CAPACITY IN EXPANSIONS IN NEW MILL.

SHIFT OF CR MARKET TO HR, HR OILED AND PICKLED MARKET.

EXISTENCE OF COMPETITION WILL CUT DOWN PROFITS

REGIONALISATION DUE TO HIGH TRANSPORTATION COSTS.

DECIMATION OF DD/ EDD GRADES.

USAGE PATTERN CHANGING FROM CR TO GALVANIZED, COLOUR

. COATED STEEL

MAJOR COMPITITORS OF HERO ARE IMPROVING THEIR QUALITY

AND DELIVERY

SMALLER SUPPLIER ARE INCREASING THEIR CREDIT PERIOD

THE POLICIES OF THE COMPETITORS ARE FLEXIBLE AS COMPARED

TO HERO CYCLES CR DIVISON

PROCESS ROUTE

Before the execution of a production orders the details of process route and product

specifications are sent to the shop floor in the form of a small rectangular card. This card

accompanies the coil through out its process life. The different work centers in HERO

CYCLES Ltd. C.R. Division are:

1). HR (Hot Rolled) SLITTER

The HR Coil is first sent to the HR Slitter, where it can be slit in maximum 4 widths. The

widths are decided based on factors like minimization of slit loss, order priority etc. This

activity is being done manually at present by PRODUCTION PLANNING &

CONTROL department, but the optimization package being developed by MECON will

calculate this, and suggest the most optimum-slitting pattern for the HR Coil. A 4 digit

unique code is assigned to the HR Coil, and a suffix of A, B, C and D is added to this

number after the coil is slatted. This identity of slatted coil is maintained till it reaches the

CR slitting stage.

The Pull through HR slitting line cuts the rough edges of the HR coils, slitting it into

narrower widths. The HR Slitter has a production capacity of 20 tonnes/hr.

2). PICKLING

After the HR slitting, the coil goes through the process of pickling that the coil is sent

through various chambers containing acids, which removes the surface impurities. The

pickling line uses three acid tanks and three rinse tanks. After the pickling operation, the

coil is sent for cold rolling. As it was mentioned above, the route, which the coil has to

take, is predetermined, and is displayed, on a card, which accompanies the coil. It offers

the following Advantages:

Removes ferrous scales from the surface of the HR Coils.

Minimum carryover of chloride.

Minimal set–up, hence more adaptable to quick changeovers.

A hot air blower at the end dries off the excess water on the strip.

3). ROLLING

Rolling can be done either in 6Hi mill or in 4Hi mill depending upon the desired

thickness, and available capacity. The rolled coils have to be rewound to decrease the

tension. This can be done either on 2Hi, 4Hi or 6Hi mill. Rolling also leads to increased

hardness, which makes the coils brittle.

The 6-Hi mill has automatic gauge control, pass schedule storage and auto intermediate

slow down. The mills give flat strip shape, minimized edge drops and thinner gauges.

4). ANNEALING

Annealing is a process of Heating, Soaking and Controlled cooling of a Coil in a non-

oxidizing atmosphere. This process renders the strip soft and restores the ductility and

formability.

There are two types of annealing:

HYDROGEN ANNEALING.

NITROGEN ANNEALING.

5). SKIN PASS

After Annealing the coil is sent for skin pass. This Process imparts a surface finish for

e.g. matte, mirror etc. to the coil, depending on the customer requirements. This process

can be carried out on all 3 rolling mills. It offers the following Advantages:

Skin Passing removes stretcher strain or Luder Lines.

It provides desired finishes such as Matt, Bright on the strip surface.

Imparts flatness to the strip.

6). CR(Cold Rolled) SLITTER

After the skin pass the coil is sent to CR slitting machines. The slit coils are again allotted

a new number, and the previous identity is lost after this process. Other considerations

here are the inner and outer diameter and number of coils.

7). CUT TO LENGTH

If the customer requires strips as final goods then the coils are sent to Cut to Length

(CTL) machines which cut the coil in the desired length of the strips.The length can vary

from 400mm to 3500mm.

8). PACKING

The final process is packing of coils and strips, and subsequent dispatch. This is the

complete description of the process route. It is not necessary for the coil to go through all

the processes mentioned. Depending on the type of product and customer’s requirement

some of these processes can be skipped or repeated.

PRODUCT APPLICATIONS

Cold rolled steel strips are manufactured by C.R. Division to meet a variety of uses.

Some of the common applications are detailed below:-

Automobiles & Auto Components.

Bicycle and bicycle components.

Pipes and Tubes.

Refrigerators.

Furniture.

Shutters.

Bearings.

Cable tape.

Transformers and Radiators.

Electric steel (Laminations, TV chassis, picture tube frames, meters, switch gears).

Domestic appliances (Washing machines, fans, stoves, sewing machines, ovens,

toasters, grills etc)

Office automation products (Computer components, typewriters, Photostat machine

components etc)

MAJOR CUSTOMERS OF HERO CR DIVISION

1. MARUTI UDYOG LIMITED

2. ESCORTS LIMITED (MSD)

3. ESCORTS LIMITED (TRACTOR DIVISION)

4. ESCORTS LIMITED (YAMAHA MOTOR CYCLES DIVISION)

5. HERO HONDA MOTORS LIMITED

6. TECHNICO IINDUSTRIES (P) LIMITED

7. GABRIEL INDIA LIMITED

8. GODREJ GE APPLIANCES LIMITED

9. MANDAP INTERNATIONAL LIMITED

10. HERO CYCLES LIMITED

11. LOHIA MACHINES LIMITED

12. MOONLIGHT AUTO (P) LIMITED

13. BHURJEE MACHINE TOOLS

14. SHEET COMPONENTS/PIONEER AUTO (KAY JAY)

15. HAWKINS COOKERS LIMITED

16. RAIL COACH FACTORY, KAPURTHALA

17. INDO ASIAN FUSEGARS LIMITED

18. PGT COMPONENTS LIMITED

19. AGRO ENGINEERING WORKS/ASIAD ENGINEERS

20. HORIZON INDUSTRIES PRODUCTS

21. JAY YUSHIN LIMITED

22. DHANJAL ENGINEERING LIMITED

23. MULTITECH PRODUCTS

24. MITASO APPLIANCES LIMITED

25. PERFECT WHEELS

26. SETHI INDISTRIAL CORPORATION

27. R.R. AUTOMOTIVE COMPONENTS

28. SDL AUTO PVT. LTD. (FOR CAR SEAT COMPONENTS)

29. JBM TOOLS LIMITED

30. SHIVANI LOCKS (P) LIMITED

31. VENUS METALS/VENUS STAMPINGS

32. VICTORA TOOLS

33. OMAX ENGINEERS

34. EMM KAY INDUSTRIES

35. INTERNATIONAL ELECTRONIC DEVICES LIMITED (IEDL)

36. STEEL TUBES OF INDIA LIMITED

37. AUTO TECH

38. AUTO MAX (UNIT OF OMAX AUTO LIMITED)

39. HIMACHAL FASTENERS LIMITED (VENDORS FOR

PUROLATOR)

40. NATIONAL ENGINEERING INDUSTRIES LIMITED

41. BPL (INDIA) LTD.

42. ELECTROLUX INDIA LIMITED

43. TECUMSEH PRODUCTS INDIA LIMITED

44. BAJAJ TEMPO LIMITED

45. BAJAJ AUTO (ANCILLARIES)

46. INDICA (ANCILLARIES)

47. TECH AUTO LIMITED

48. DAEWOO MOTORS LIMITED (ANCILLARIES)

CHAPTER-3

RESEARCH METHODOLOGY

The Research Design is the basic framework, which provides the basic guidelines for the

Research process. It is a blue print according to which research is to be conducted.

For carrying out my research work, I carried out survey and respondents were contacted

at their places. The primary data is collected with the help of Questionnaire.

Survey Method:

The Survey Method was selected to obtain the needed information by asking the

questions to the respondents through the Questionnaire developed, and passed by our

HOD Marketing. As per Marketing Department this method was the suitable for the

project. Surveys are generally conducted both in qualitative and quantitative researches.

After decision about the sampling, the questionnaire was designed and the respondents

were contacted to answer the question. This process of getting answer is known as

interviewing.

Two significant factors affect the effectiveness of survey methods are:

1. Wording of questionnaire (It must be such that it extract desired information

accurately and unbiased.)

2. Ability and willingness of the respondent to give accurate and unbiased information.

Method Used in conducting survey:

Personal Interview:

Personal interview is the process of communication where face to face contact between

the investigator and the respondent is established. It is the conversation arranged for the

purpose of obtaining views of the respondent on the topic of interest to the interviewer.

Under this method the investigator presents the questionnaire in person at office of the

respondent. Being active participant, he establishes a close rapport with the respondent

and motivates him or her to answer all the question satisfactory.

Samples:

Since I have to make a survey of various type of industries in Ludhiana which are using

Cold Rolled (C.R.) Steel Strips/Sheets, thus I have taken a proper sample in proportion of

various industries giving due weight age to number of various type of industries using

C.R.Steel Strips/Sheets in Ludhiana.

NUMBER OF AUTOMOBILE INDUSTRY = 27

NUMBER OF BICYCLE INDUSTRY = 21

NUMBER OF OTHER INDUSTRY = 12

SUGGESTIONS & RECOMMENDATIONS

The customers of CR Steel Strips/Coils perceive quality as the most important factor

while purchasing. More customers will be attracted towards the products if quality

parameters such as surface finish, peeling off etc. are improved upon by getting

continuous feedback on the quality and other services provided by the company.

The second most important factor is delivery system and price. The price should be

competitive with the other suppliers. The third most important factor is Credit policy of

the company. Better credit facility should be given to the customers and payment norms

should be simplified. Quality should be used to cover the price. Improvement in quality,

Services, Delivery and Rate reduction should be made to further increase the market

share and to attract the new customers of C.R. Steel Strips/ Sheets. There are some

Suggestions, which should be considered in the future for better customer satisfaction.

These are: -

Prices should be competitive.

Delivery should be on time as per Quantity scheduled.

Lifting of Material should quickly after the sale for better customer satisfaction

Better credit facility should be given to the customers

In future to attract the new customers Discount should be given.

Communication channels should be improved for providing the maximum

satisfaction.

LIMITATIONS OF STUDY

Presence of Human Error: - Some respondents have not given the proper

answers, they are not aware of the objectives undertaken for research purposes.

Time Constraint: - Time has also affected the research due to less availability of

number of days; survey was conducted in few days.

Technical Complexities: - There was no proper record maintained by the

customers about the consumption of C.R. Steel Strips/ Sheets.

Non Co-operation of some Respondents: - Some Respondents did not properly

co-operated for giving answers, the basic reason was non-availability of time.

Respondent Biasness: - Some companies were very much favor in one company

but they were unable to provide logic behind it.

CHAPTER-3

Ques1. What type of products do you manufacture?

TYPE OF PRODUTS%AGE OF

RESPONDENTS

NO. OF

RESPONDENTS

Automobile parts 45% 27

Bicycle parts 35% 21

Others 20% 12

Automobile parts 45%

Bicycle parts35%

Others20%

INFERENCE

The graph represents that 45% of the industries that use cold rolled steel in Ludhiana are

manufacturing automobile parts, 35% of the industries manufacturing bicycle parts & rest

of them i.e. 20% industries are manufacturing Stampings, Radiators, White Goods etc.

Ques2. What is your status in supply chain?

STATUS IN SUPPLY

CHAIN

%AGE OF

RESPONDENTS

NO. OF

RESPONDENTS

1st tier 50% 30

2nd tier 23.33% 14

3rd tier 26.67% 16

INFERENCE

The major amount of industries using cold rolled steel (50%) in Ludhiana comes in 1 st

tier means they are direct vendors of the industries like Hero cycles, Hero Honda Motors

Limited, Maruti Udyog Limited etc.The 23.33% of industries comes in 2nd tier that are

vendors of 1st tier industries & 26.67 % industries comes in 3rd tier that are vendors of 2nd

tier industries.

STATUS IN

SUPPLY

CHAIN

AUTO

INDUSTRY

BICYCLE

INDUSTRY

OTHER

INDUSTRIES

1st tier 19 8 3

2nd tier 6 5 3

3rd tier 2 8 6

1st TIER 2nd TIER 3rd TIER0

2

4

6

8

10

12

14

16

18

20 19

6

2

8

5

8

3 3

6

AUTOBICYCLEOTHERS

INFERENCE

The graph indicates the distribution of various industries under different levels of supply

chain. This analysis will be further helpful in analyzing the impact of market fluctuations

among various industries.

Ques3. Do fluctuations in market affect your buying behavior?

OPTION%AGE OF

RESPONDENTS

NO. OF

RESPONDENTS

Yes 60% 36

No 40% 24

YES60%

NO40%

INFERENCE

Out of the total number of respondents 40% of the respondents said that market

fluctuations do not affect their buying behavior while remaining 60% industries are

affected by fluctuations in market. This shows that if there are market fluctuations, then

there is a change in buying behavior i.e. while making purchase, the factors normally

kept in mind are ignored & some other factors are considered keeping in view the

prevailing circumstances.

1ST TIER 2ND TIER

AUTO BICYCLE OTHERS0%

10%20%30%40%50%60%70%80%90%

100%

NOYES

AUTO BICYCLE OTHERS0%

10%20%30%40%50%60%70%80%90%

100%

NOYES

3RD TIER

AUTO BICYCLE OTHERS0%

10%20%30%40%50%60%70%80%90%

100%

NOYES

INFERENCE

The above graphs show the effect of fluctuations in market on various industries

classified according to their status in supply chain. Through these we can infer that most

of the industries in 1st tier are not very much affected by market fluctuations while 2nd tier

industries are less affected by the same. 3rd tier industries are the most affected ones when

market fluctuations take place.

Ques4. In which form do you buy steel?

FORM OF CR

STEEL

%AGE OF

RESPONDENTS

NO. OF

RESPONDENTS

CR Coils 25% 15

CR Strips 15% 9

BOTH 60% 36

CR COILS25%

CR STRIP

S15%

BOTH60%

INFERENCE

The graph shows that most of the companies use both CR steel strips as well as coils in

their manufacturing operations. CR strips are purchased by very less number of

companies I.e. most of those which do not have their own CTL (Cut to Length) machines.

So they specify their strip sizes according to their product requirements.

Ques5. Which grade(s) of steel do you purchase?

44

36

15 5

GRADE

DDD/EDDMC-11,12OTHERS

INFERENCE

The percentage share of D (Drawing) Grade steel is much higher because it is the main

material grade used in manufacturing of bicycles & Large amount of D Grade steel is

consumed by the Hero Cycles only. Moreover D grade steel is cheaper than other grades

as it has lesser carbon content. Other higher grade steels like DD, EDD, MC-11, 12, IF

etc are used in manufacturing other components that require more strength like auto parts,

stampings, white goods etc.

Ques7. Which factors do you consider the most while purchasing CR steel?

GRADE PERCENTAGE

D 44

DD/EDD 36

MC-11,12 15

OTHERS 5

(Rank 1 – 5 in order of preference)

ATTRIBUTESAVERAGE RANKING

AUTO INDUSTRY BICYCLE INDU. OTHERS

PRICE 2.33 1.57 3.25

QUALITY 1.89 2.29 3.01

DELIVERY TIME 2.11 2.86 2.99

CREDIT PERIOD 4.44 4.01 2.98

AFTER SALES

SERVICE4.22 4.28 2.77

PRICE QUALITY DELIVERY TIME CREDIT PERIOD AFTER SALES SERVICES

00.5

11.5

22.5

33.5

44.5

5

2.331.89

2.11

4.444.22

AUTO IND.

AUTO IND.

INFERENCE

As the graph represents that most of the customers in Auto industry prefer Quality as the

major factor while making purchase decision. Delivery time is another factor influencing

their buying behavior followed by price and after sales service. It can be seen that in auto

industry credit period allowed by the seller is given the lowest rank. This does not mean

that this factor is not taken under consideration but it suggests that keeping in view the

other factors, this attribute is given the lowest preference.

PRICE QUALITY DELIVERY TIME CREDIT PERIOD

AFTER SALES SERVICES

0

1

2

3

4

5

1.572.29

2.86

4.01 4.28

BICYCLE IND.

BICYCLE IND.

INFERENCE

It can be seen very clearly that in bicycle industry highest preference is given to Price as

an attribute while making purchase. The other factor influencing choice of buyers is

quality followed by delivery time, credit period allowed & least preference is given to

after sales service.

PRICE QUALITY DELIVERY TIME

CREDIT PERIOD

AFTER SALES SERVICES

00.5

11.5

22.5

33.5

44.5

5

3.25 3.01 2.99 2.98 2.77

OTHER IND.

OTHER IND.

INFERENCE

As the graph indicates that in other industries, after sales service & credit period allowed

by sellers are major factors that influence the minds of customers while making purchase

decision. Other factors are also closely held with all these attributes.

Ques8. From which supplier(s) you are buying presently?

45

30

105

10

% AGE MARKET SHARE

HERO CRD

BHUSHAN STEELS

AVON CYCLES

ATLAS STRIPS

OTHERS

INFERENCE

A major chunk of Ludhiana CR steel users purchase CR steel from Hero Cycles CR

Division. As per the graph Bhushan Steels is a major competitor of Hero CRD with

almost 30% of total sales. Followed by Avon Group, Atlas strips, TATA, SAIL, etc.

Ques9. Do you have any expansion plans in near future?

80

20

PERCENTAGE

YESNO

INFERENCE

As we know that bicycle as well as auto industry is expanding rapidly, so most of the

organizations have expansion plans to cater to the increasing future market demand.

80% of the companies said that they have expansion plans in near future i.e. within a

period of 1-2 years. The capacity is expected to increase by approx. 30%. This means that

the future of CR Steel industry is very bright.

Ques11. What are the major quality related problems that you face while

purchasing CR steel?

Quality Related Problems Percentage

Over Width 6

Camber 7

Rusting 19

Thickness 8

Lamination 11

Grain opening 4

Pitted 5

No Problem 40

67

19

8

1145

40

Sales

OVER WIDTH

CAMBER

RUSTING

THICKNESS

LAMINATION

GRAIN OPENING

PITTED

NO PROBLEM

INFERENCE

The above graph shows the major quality related problems as faced by customers. Most

of the customers do not face any kind of quality related problem. If at all, problems like

rusting, steel being pitted, improper lamination, inappropriate thickness etc are faced by

the customers. If encountered frequently, the customer may reduce the amount of

purchasing from that particular seller and may shift to some other source.

Rating of HERO CYCLES LIMITED CR DIVISION IN TERMS OF

FOLLOWING PARAMETERS

a. Company image

b. Delivery

c. Conformance with specifications

d. After sales services

e. Response time

f. Accommodation of urgencies

ATTRIBUTES PERCENTAGE RATING

COMPANY IMAGE 81.66

DELIVERY 52.66

CONFORMANCE WITH

SPECIFICATIONS91.66

AFTER SALES SERVICES 71

RESPONSE TIME 40

ACCOMMODATION OF URGENCIES 65

020406080

100

81.6652.66

91.66 7140

65

PERCENTAGE RATING

PERCENTAGE RAT-ING

INFERENCE

The graph indicates that HERO CRD enjoys a very good image from the

customers’ point of view. More than 80% customers believe that HERO CRD is a

well known and reputed company. This is a major factor considered while major

factor that customers consider while making their purchase decisions.

Delivery does not get much rating essentially due to recession as there has been a

shortage of raw material in the market since couple of months. It was seen that the

customers shifted to other suppliers owing to poor delivery by HERO CRD.

The company gets high rating in conformance with specifications i.e. delivering

the material having exactly same chemical as well as mechanical properties as

specified by the customers.

The company was given average rating in terms of after sales service i.e. it is

neither too good nor too bad.

The company is very poor in giving proper response to customer’s grievances.

This factor may affect the company in a bad way.

As the graph shows, HERO CRD is quite good in accommodating urgencies as

posed by the customers.

QUESTIONNAIRE

Company name: ______________________________________________

Contact person: ______________________________________________

Address : ______________________________________________

______________________________________________

Ques1. What type of products do you manufacture?

a. Automobile parts

b. Bicycle parts

c. Others

Ques2. What is your status in supply chain?

a. 1 tier b. 2 tier c. 3 tier

Ques3. Do fluctuations in market affect your buying behavior?

a. Yes b. No

Ques4. In which form do you buy steel?

a. CR Coil

b. CTL (Cut To Length)

Ques5. Which grade(s) of steel do you purchase?

a. D b. DD c. EDD

d. MC-11 e. MC-12 f. IF

Ques6. What is your monthly requirement of CR steel grade wise?

a. D _____________________________ MT

b. DD/EDD _____________________________ MT

c. MC-11/12 _____________________________ MT

d. Others _____________________________ MT

Ques7. Which factors do you consider the most while purchasing CR steel?

(Rank 1 – 5 in order of preference)

a. Price

b. Quality

c. Lead time

d. Credit facility

e. After sales services

Ques8. From which supplier(s) you are buying presently?

Please specify the quantity also.

a. ___________________________Qty __________ MT

b. ___________________________Qty __________ MT

c. ___________________________Qty __________ MT

Ques9. Do you have any expansion plans in near future & what will be your

increased capacity?

a. Yes b. No

____________________________________MT (approx.)

Ques10. What quantity of your increased capacity of CR steel will you

purchase from HERO CYCLES Ltd (CR Division)?

____________________________________ MT (approx.)

Ques11. What are the problems that you face while purchasing CR steel?

a. ______________________________________________

b. ______________________________________________

Ques12. What are the suggestions that you can give to counter those problems?\

a. ______________________________________________

b. ______________________________________________

Rate HERO CYCLES Ltd (CR Division) in terms of following parameters:

(Give rating from 1-5) 1 = Poor & 5 = Excellent

f. Company image

g. Delivery

h. Conformance with specifications

i. After sales services

j. Response time

k. Accommodation of urgencies

Date: (Signature)