STRATEGIC PLANNING

TCIL - a case study

Food industry and Safety

2 July, 2009 : New Delhi

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 Value Chain
Assess your role in the industry supply chain
• Incorporated in 1920 Hot Rolled Coils from
Tata Steel’s Hot Strip Mill
• Single product co.

Tin Mill Black Plate Coils

produced at the Cold Rolling Mill The
• End Uses of tinplate: Tinplate
Company
• Edible Oil cans Tinplate / TFS Sheets produced
of India
at the Electrolytic Tinning Line
Limited
• Proc. Food cans
Solution Centre: Print & Lacquering
• Beverage cans First Step Towards
“Metal Packaging Solution Provider”
• Aerosols
• Paints & Pesticides Can fabricators/ Closure Makers
cans
• Crowns & Closures Food Processors / Fillers

• …….
Retailers / Consumers 2
 Tinplate belongs to packaging industry
Identify the industry where you compete

Available Alternatives Criteria of Choice

•Product Protection
• Tinplate
•Shelf Presentation
•Glass
•Usage Convenience
• Bag in Box
•Cost
• PVC / HDPE / PET
•Design Flexibility
• Tetra pack / laminates
•Eco-friendliness
• Aluminium
• Shape-ability

3
 Hard facts….
Know your strengths

• Ultra violet protection

• Barrier properties / Inertness
• High shelf life
• Eco-friendly and WTO compliant
• Tamper proof / Impermeability /
Rigidity
• Excellent printability

Tinplate has held its niche position in

food packaging over the last 200 years

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Packaging is at heart of Marketing Strategy
Assess where you fit into your customer’s business

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 Global Perspectives
Define / stretch the boundaries of your business
STRUCTURE CONDUCT PERFORMANCE

• Demand driven • Steel research

by food & • Light with can-maker
beverage weighting;
• Cost
• Research in • Shapeablity competitiveness
Steel
• Environmental
• Strong and hygiene
Regulatory concerns
Mechanism

3.2mtÈ 4.2mt È 1.0mtÇ

3.3mtÇ
Implications for
an Indian player
1.0mtÇ
There is growth / consolidation 1.4mtÇ
1.4mtÇ
Become World Class 6
World: 15.5 mtÇ
 India – interesting consumer trends
Are there opportunities / threats in the external environment?

India - Interesting Consumer Trends too

Working women
‘Green’ consumers Healthy food
Changing eating habits

ng Value - for - Money

i
r ow ods Shopping Ambience
g
s df o
i
g se
i i n
l es Service
e a
t oc
R pr Choice
in
Hygiene
Traditional Value Self Single Small Organized Hyper
added Service Organized Retail 7 &
Malls
Kirana departmental
Kirana Kirana store Retail Markets
 Strategic Planning involves…

Running the Business

ess
sin
o bu
e d
y w
wa
the
in g
n g
ha
C

8
We have used different tools over the years…..
 Strategy Map / BSC

•Link long-term plan or • Four perspectives of BSC:

– How do we appear to
competitive strategy with
shareholders? (Investor-
operational activities friendly)
– How do customers see us?
(Customer Perception)
•Enables to consider
– What must we excel at?
cause-and-effect
(Strategic focus)
relationships between
– Can we continue to
different key performance improve and create value?
indicators (KPIs) of a BSC (Business Sustainability)
• Helps with a picture of where
the company stands-and
where it's headed. 9
10
Strategic Planning Process

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 Envisioning
Evolved over the years:
8 Downstream steel processing unit
9Provide cost effective metal packaging solutions for processed edibles

Vision: We shall offer world class tin mill products at competitive terms and
strive for exceeding customer expectations by delivering added advantages

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 Strategy Alignment Process

Vision Strategic Key Success Strategic Core

Element Challenges Factors Advantages Competency
Knowledge base of Indian markets
Competition from Processing costs
Tinplate HRC from Tata Steel Value added and cost
manufacturers. Cost Competitiveness. Pan India presence effective
. Consistently exporting 25-30%.
Value
creation Increasing Expectations Largest Manufacturing facility in Asia. Value added and cost
Scale of Operations
of shareholders effective

Volatility in raw Strategic Sourcing Sourcing HRC & physical proximity to

materials Tata Steel

Threat from Substitutes Product range Full product range manufacturer in India. Reliable and cost effective
Servicing
customer retention and Downstream presence.
packaging Business development.
needs

Acquiring and Sense of belongingness, allegiance and

retaining talent Creation of World class team work.
Value added
workforce & retaining talent Tata Brand.
Infrastructure (Town, Hospital etc)
Green future
Meet community 89 year old relationship with neighboring
Partnering with community and
expectations and community.
Climate change initiatives . Value added
changing Environmental Heading Tinplate promotion council and
Interface with Govt Agencies 13
requirements. ITRI
 Strategy Alignment Process

VISION STRATEGIC STRATEGIC MEASURES

GOALS OBJECTIVES
•Increase scale of operations • Capacity / Production / Sales
Value Growth & •Become cost competitive • Market share(%)

Creation Competitiveness •Enhanced shareholder value •

•
Processing Cost(Rs./MT)
ROIC & EVA
•Develop enhanced value proposition • Downstream Sales %
Service Supplier of •Increase engagement across industry • CSI

packaging choice •Build international markets with a strategic intent • Exports as a % of Operations

•Role Model in Corporate Sustainability • Corporate Sustainability Index

Greener Exemplar in • MBE Score

future Corporate
sustainability
•Develop engaged workforce • Frequency rate, Severity rate,
Exciting & safe •Attain zero reportable accidents Severity Index, Near Miss
workplace •
•
ESI
Training Satisfaction Index

Strategic Challenges
Strategic Objectives
Re

C a ig n m
al
vi e

sc e
Corporate BSC
ws

ad nt
Functional BSC

e
/
KRA
14
KPI
 Corporate BSC
U Actual Target
Strategic Type of Lag/ Benchmarks/ Result
Stakeholder Strategic Objectives O Strategic Action plan
Measures Measure Lead 08-09 09-10 10-11 11-12 Comparisons Ref.
M

Increase engagement
across domestic industry
(A1)

Build international markets

Customer (A) with a strategic intent (A2)

Develop enhanced value

proposition and build
consumer mindshare
towards tinplate (A3)

Ensure raw material

Supplier (B) availability for sustainability
of operations (B1)

Develop engaged workforce

Employee (C)
(C2)

Government,
Role model in Corporate
Community &
Citizenship (D1)
Society (D)

Shareholder/ Lender/ Enhance shareholder value

Promoter (E) (E1)
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 Benchmarking

• Annual Reports/Published literature

• Group companies
• Suppliers/Customer interactions

Level of
Area Activity KPM / Processes affected Source / Mode Used
Comparison
Industry Increase in speed of DR at Temper Mill CRM / ETP Process cost Unique
Industry Optimization of consumption of chemicals at ETP ETL Store-Stock Cost CORUS
Operation
Development of DR-9 for specific Lug Cap New Product / Application
Industry Imports at Oriental Cans, Mumbai
applications developed
Marketing Competition Develop 5&3 Liter edible-oil consumer pack No. of Packaging Solutions Market Research / Survey
Group
HR Leadership assessment and Development Plan Leadership System Comparison with Tata Steel
Companies
Group Reduction in procurement rates of A class items Best practices council of Materials
CS Suppliers Management
companies to be cost competitive management for TIS Group companies
Finance Group Cos. Reduction in cycle time for accounts closing Shareholders & promoters Comparison with TIS group companies
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 Building robust operational processes around
world class practices
To ramp to
400000 Daily Work Management 379,000 MT

350000 180000

300000 WIN (world class workforce)

Total Productive Maintenance (TPM)

250000
De-bottlenecking (Goldratt) & 140000

200000 Growth Plan (Arcelor / Nippon)

150000 TOP (McKinsey’s)

100000
100000 90000 Capacity

ISO movement,
50000
Suggestion Box

0 60000
97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 ' Act 17
08-09
People, Sustainability, Controls have been built

Workers’ business skills

Risk Management process
Succession Planning
Inclusiveness
Affirmative Actions

Excellence Assessors
BaaN ERP and Lotus Notes
Balanced Score Cards
Environment Systems

Cadre of Business Managers

Financial Restructuring
Community Development
Executive Information Systems
1999 2001 2005 2009
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 Customer and Market focus built on Industry
and Company level strategies
Marketing refocus
Consumer
Mind Space

Industry TINPLATE PROMOTION COUNCIL

Level (↑ per capita consumption) Solutions focus

Long term
Company Key Account Business
position on
Level Management
exports
development Business Development
(McKinsey’s)
Customer intimacy

Tinplate Promotion
Council: International
seminars and Award Nites

Key Account Management (McKinsey’s)

2000 2001 2002 2003 2004 2007

….changing mindsets to industry development and19
international competition
 Sales Orientation to Marketing focus
Alliance with major can makers

Food
Steel Tinplate Can
Processor /
Maker Supplier Fabricator
Filler

Industry level marketing initiatives to increase consumption

levels on the lines of APEAL (European Mills)

TPC Awards Nite each

year..… a landmark in
this industry…. To
promote innovation and
convenience 20
 Reaching down the value chain
Capabilities: Solution Center
Solution Center for differentiated
value proposition
- started with printing / lacquering
facilities
-next step: convenience features
for tin cans or service center
capabilities
- partnerships with fabricators
for improved visibility Consumer research
to understand consumer
mindshare on packaging

TATA Can Food Retailer /

TCIL 21
STEEL Fabrication Processing Consumer
 The transformation…

1997-98 2008-09

Operations 60000 MT +185000 MT

Employees 5000 ~1700

Market Share 16-18% ~35%

Exports (% of total sales) NIL 25%

EVA -ve +ve

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Rewards & Recognitions

JRDQV
Award in
2007

CII-EXIM
Prize in
2008

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Tinplate and Food Safety

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 Understanding food safety

¾Tinplate product:
-- The Substrate (Steel base on which tin coating is done)
--Tinplate on account of Tin migration in packed food
--Lacquered sheets
¾Future Regulatory Challenges

Inputs to Strategic Planning

-- Abide by National and International Standards

-- Facilitate creation / alignment of national / international standards with BIS / ITRI

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 Lacquered
Steel Substrate Tinplate Tinplate

Standards are defined

for allowable level of tin
Different grades in food on account of tin
(chemistry) of steel are migration TCIL abides by US
used depending on end FDA Code Federal
Test are done at CFTRI
applications (either Regulation Section
to ensure tin migration
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highly corrosive foods or within allowable range -
as per ATSDR Use of proper grade
not so aggressive foods)
standards (Agency for of Lacquers is based
¾Type L Toxic Substances and on requirement spelt
Disease Registry USA), out by filler who
¾Type MR COT (Committee on advises grade that is
Toxicity of Chemicals in compatible with their
¾Type D Food UK) food product
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 Addressing future Regulatory challenges

REACH (Registration , Evaluation and Authorisation of Hazardous

chemicals) comes into enforcement in 2011 in Europe:

TCIL is partnering ITRI UK to develop an alternate Passivation system

to will help omit Chromium passivation without impacting fitness for use

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Indian Food Processing Industry:
Challenges and Food Safety

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 India has potential to be Food Factory to the
World
Milk Cattle / buffaloes
• 2nd largest arable land & Largest Producer Largest in the world
283 million
Goat & Sheep
182 million
91 Mn T
divers agro climatic zones
• Largest livestock population F&V
#2 in the world
129 Mn T (FAO)
• Largest producer of milk, tea, 150 Mn T (NHB)

pulses Fisheries
Marine: 2.7 Mn T
Inland : 3.1 Mn T
• 2nd largest food producer
Food Grains
•2nd largest producer of fruits #2 in the world
(218 Mn T)
TEA
Largest Producer
& vegetables, rice, sugarcane Sugarcane
# 2 in the world
(0.85 Mn T)

(245 Mn T)
• 5th largest producer of eggs,
wheat
• 6th largest producer of fish
India produces 41% of world’s mango, 23% of Banana, 24 %
of cashew nut, 10% of onion, 30% of cauliflower, 36% of
Green Peas. India has 53% of world’s buffalo and 17% of
goat, 8000 km of coastline 29
Source: FAO / NHB / Department of Animal Husbandry
 Though the industry is large in size, it is still
at a nascent stage
Despite strong raw material base, dismal quantities
are processed -
– 2 % of the fruits & vegetables
– 35% of milk
– 26% of marine
– 6% of poultry
– 20% of buffalo meat

Less than 1.5% share in international food trade

– main reason is the rejection of food products in the
developed countries on ground of environmental &
safety standards.
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 Food processing sector – a valuable link
between Agriculture & Industry
15000

14000 13,500
Government’s commitment 13000

Market Potential (INR bn)

to Food Processing in its 12000

11000

10000

9000
8,200

Vision 2015: 8000

7000

Action Plan for Food 6000

5000 4,600

Processing Industries in India - 4000

3000

to triple market size (CAGR 2000

1000

10.6%) 0

2003-04 2009-10 2014-15

Food Safety and

Standards Act, 2006 Future growth of the
unified 15 different food food processing sector
related laws.
depends on adherence
to safety and quality
standards!!! 31
 Food processing industry – various
stakeholders

Producers of
additives / Government Financial
ingredients & institutions institutions

Farmers /
Food Fillers / Storage
Producers /
processors Packers operators
feed producers

Food service
Consumers outlets & Wholesalers
caterers / Retailers

Suppliers of Producers of
equipment, cleaning pesticides, fertilizers
& sanitization agents & veterinary drugs
Academic
& research transporters 32
institutions
 Standard Setting & Benchmarking
WTO Rules for Standard setting by member countries
(Multilateral – public – mandatory for member countries)

Technical Barriers Sanitary & Phyto- Trade Related Intellectual

We
to trade (TBT) sanitary (SPS) Property Rights (TRIPS)

WTO Recognized standards United Nations

(Multilateral – public – reference (Multilateral – public – mandatory

need
standards for member countries) for signatory countries)
Codex Alimentarius Commission (CAC) - Internal Plant Protection
Convention; World Organization for Animal Health (OIE)

to
International Organization for Standardization (ISO)

upgrade
Collective standards (Sub sector networks, company networks & alike)
Global Food Safety Initiatives (GFSI) – Organic
recognized standards: HACCP, GAP, GHP, GMP, etc farming

Corporate standards (individual company codes / specifications) -

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Corporate Social Responsibility (CSR)
 Stakeholders’ Strategic challenges
towards Food Safety & Quality
Stakeholders Strategic Challenges

Responsibility lies across the Food Chain

Producers / farmers •Skills / awareness (Quality Stds / Good Practices)
•Quality inputs (seeds / feed / fertilizers)
Food Processors •Eliminate wastages
•Skill development
•Quality of raw materials
Packaging Industry •Regulations
•Skills / awareness (Quality Stds / Good Practices)
Transporters •Connectivity (rail / road / air)
•Cold chain infrastructure
Wholesalers /Retailers •Food Inspection
•Traceability
Consumers •Safe & nutritious food
•Quality sensitivity & awareness
Govt & institutions •Compliance to regulations
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•Traceability
 Thank You

visit us @ www.tatatinplate.com 35