Product Overview

Vardhman Special Steels Limited (VSSL), a Ludhiana based Special Steels manufacturer supplied 98% of its steel to automotive sector. It has recently collaborated with Aichi steel, Japan with the aim of improving the quality of their steel, increasing capacity, and reducing cost. However, COVID 19, a global pandemic, hit their plans as their plant was shut and production dropped to zero. Yet, VSSL used this opportunity to train their workforce to adopt Japanese way of working. As the demand started picking up, VSSL wanted to capitalise on the situation in terms of price and maximize its revenue. Further, with Electric Vehicles (EVs) entering the automotive sector, VSSL had an additional opportunity to increase the prices for its speciality steel. The case revolves around the pricing strategy to be adopted by VSSL to maximize its revenue by increasing wallet share with the current set of customers and adding new customers. The crux is how a Tier 2 firm implements a pricing strategy post alliance with a Japanese firm known for its quality. What should be the price levels given the increase in steel demand and collaboration from Aichi?

Learning Objectives

To get exposed to the Indian Steel Industry and the competitive position of VSSL. a. How has COVID 19 impacted the steel industry and VSSL? b. How would the steel industry get affected with the EVs entering the automobiles sector? To understand the impact of Joint Venture with Aichi on VSSL. a. How did VSSL inculcate Japanese culture in its workforce? b. What was the role of management in creating the Japanese culture at VSSL? c. How does the JV increase productivity and reduce the cost per ton of producing speciality steel? To select a pricing strategy and levels for VSSL with the objective of maximizing revenues. a. What is the current pricing mechanism in this industry? Why? b. How much is the leeway available to VSSL for pricing its products to its customers.