Generating value by selling Steel: TATA TISCON traverses the liberalization discontinuity (Part B)

Abstract

The case opens in June, 2002 with Tata Steel’s commercial department facing recurrent problems in its steel rebar business, even after a complete overhaul of its distribution network (partners and practices of distribution) followed by the launch of its carefully designed branding initiative that catered to the Individual House Builder (IHB) segment. The company found that the situation had not improved much as the newly appointed distributors ended up placing a significant proportion of their material with large wholesalers, who had traditionally played a significant role in the steel trade moving material along with credit in the vast network. Unable to ring-fence its own distribution channel from the continued presence of large volume players in the general trade network, Tata Steel had to entertain demands for price discounts, trade schemes etc. to help liquidate the channel stocks from time to time, causing uncertainty and chaos in its channel. With its objective of achieving stability of price realization and material movement not getting fulfilled, Tata steel pondered over its next step.