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BACKGROUND

The Steel Plant of India (SPI) is a public sector integrated steel plant under the Government of India. It is located in the eastern part of the country where basic raw materials like iron ore, water, coal and abundant limestone deposits are available. There are three other major steel plants in its vicinity, all located within a range of 250 km. of each other. The products of the plant are essentially steel plates, hot rolled coils and hot rolled sheets. The plant has been operational for the last 35 years and, traditionally, there has been a major market for these products in India as well as abroad. SPI's annual turnover from these products has hovered around Rs. 30 billion for the last three years, a significant part of which is from exports. As regards the other plants located in close proximity, either they did not produce these items or could not match the quality of SPI's finished goods which, as a result, were easier to sell, and demand has never really been a problem.

Since SPI is an integrated steel plant, there are a few by-products and selling them posed a different set of challenges. The standard by-products are coal chemicals like light creosote oil and anthracene oil, naphthalene, blast furnace slag (which occupies a lot of space and is difficult to store) and fertilizers. There were also 2 to 5 per cent of defective finished goods which could not be sold to the regular customers of finished goods at the standard price.


  

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