Tiga

This document is authorized for use only in GITAM's PG; Business Research Methodology course by Dr. M.
Jayasree from Aug 7, 2023 to Nov 26, 2023.
IIMA/MAR0517
TEGA Industries: Internationalisation Strategy for

Conveyor Products 2011
It was late 2010. Y. S. Imam was the director of global marketing and product management at
TEGA Industries. Imam was reviewing the process and the results of the research report prepared
to assess the opportunity of introducing conveyor components (CCs) in the US. On the basis of
the review, he wanted to design a business strategy for the CC SBU (strategic business unit) in
the US.
From an analysis of the internal accounting information, Imam had learnt that the contribution
margins (before distribution costs) of CC products in the domestic market were substantially
higher than those of products of the other SBUs. He expected CC products to get even higher
margins in the international markets.
TEGA INDUSTRIES LIMITED
TEGA Industries Limited was promoted by Madan Mohanka1 on May 16, 1976, with technical
and financial collaboration from Skega, Sweden. Skega was the world leader in wear-resistant
rubber products. In India, TEGA introduced rubber as a substitute for steel (then used) for lining
the mining equipment to protect them against wear and abrasion. As per the collaboration
agreement, TEGA could market the liners only in India. Since its inception, TEGA has put in
substantial efforts into product innovation. Many new products were incubated at its research
and development (R&D) centre. By the mid-nineties, the company developed and manufactured
a range of specialised wear-resistant liners. In addition to rubber, TEGA also started using
polyurethane, abrasion-resistant steel and ceramics. In India, TEGA pioneered and maintained
its leadership in providing customised, innovative solutions in the field of wear, separation and
conveying for the mineral-processing and material-handling industry.
In 1991, TEGA also entered into a joint venture agreement with HOSCH, Germany, to
manufacture HOSCH scrapers in India. However, as per the agreement, TEGA could market
these scrapers only in India. HOSCH scrapers were also used in conveyors; hence, since 1996,
TEGA had been marketing HOSCH products, along with its conveyor products.
1Madan Mohanka is an engineering graduate from Birla Institute of Technology, Ranchi, and a postgraduate
programme alumnus of the Indian Institute of Management Ahmedabad.
Prepared by Professor Abhinandan K. Jain (Ex-Faculty, Indian Institute of Management Ahmedabad),

Madan Mohanka (Managing Director, Tega Industries Limited) and Professor Jahar Saha (Ex-Faculty,
Indian Institute of Management Ahmedabad).
Cases of the Indian Institute of Management Ahmedabad are prepared as a basis for classroom discussion.
They are not designed to present illustrations of either correct or incorrect handling of administrative
problems.
© 2021 by the Indian Institute of Management Ahmedabad.
This document is authorized for use only in GITAM's PG; Business Research Methodology course by Dr. M. Jayasree from Aug 7, 2023 to Nov 26, 2023.
2 of 22 IIMA/MAR0517
TEGA entered the export market in 1996 when the collaborative agreement with Skega expired.
The arrangement with HOSCH, however, continued the way it was. In 2006, TEGA started its
manufacturing operations in South Africa.
TEGA’s vision was to provide “flawless engineering solutions that enrich the future of mining”.
Hence, it decided to integrate its operations to provide assured total solutions to its clients. TEGA
was awarded the Integrated Management Systems certificate by SGS, a Swedish agency operating
in India. It was certified for three management systems: Quality Management System (ISO
9001:2008), Environment Management System (ISO: 14001:2004) and Occupation Health and
Safety Management System (OHSAS: 18001:2007).
TEGA PRODUCT LINES
Starting with developing and manufacturing specialised wear-resistant rubber mill lining, by
2010, TEGA had expanded its technological base to include polyurethane, abrasion-resistant steel
and ceramic-based lining products through incubation at its R&D centre. The company offered
value-added consultancy services and customised solutions in the areas of mineral beneficiation
and material handling tailored to suit specific customer needs. TEGA had organised its product
line into the following SBUs:
• Mill (ML): It dealt with grinding mill lining used primarily in mineral-processing units.
• Hydro cyclone (HC): It dealt with the CYCLONE systems primarily used in mineral-
processing units.
• Screen (SD): It dealt with vibrating screening media (screen panels) in mineral-processing
and bulk-solid-handling units.
• Wear product (WP): It dealt with wear liners required in transfer chutes and bulk storage
units in bulk-solid-handling units.
• Conveyor components (CCs): They are described in the section “CC Products, Their Uses
and Their Value Proposition in India”.
TEGA ORGANISATION
TEGA was organised into different SBUs. Each SBU was responsible for business development—
identifying the market needs, designing and developing products to meet the need, testing
products and finally launching them in the market. The preorder activities such as offer making,
postorder activities such as internal order generation, and other sales back-office activities were
also under the SBUs. The SBUs, along with the sales department (common to all SBUs), were also
responsible for all postsupply activities, including installation and servicing. Manufacturing was,
however, common for all SBUs, except the manufacturing of HOSCH products, which was under
the CC SBU.
The export organisation in TEGA was geared to export mill items, as the values of these products
were significantly higher than those of the other TEGA products. By 2010, TEGA had established
six to seven overseas branches in the US, Australia, South Africa, Sweden, Canada and Russia.
Because of the high values of mill products, the country heads (branch heads) used to focus on
these products. In the US, the organisation was limited to one sales manager and one sales back-
office person (for office/administrative purposes) catering to the mill lining and screen panel
business. It was located in the Southwest USA (Arizona), catering to the mining industry,
particularly the copper-ore-processing units concentrated in that region.
In Kolkata, to develop exports of wear components, TEGA appointed an export manager. He

focused on the direct marketing of wear components and achieved a significant sales volume of
wear components in about two years. He was effective but not appreciated by some because he
was not very smart looking! He, however, did not stay for long.
FINANCIAL PERFORMANCE, INDUSTRY PRESENCE AND PRODUCT STRENGTH

DEVELOPED UNTIL 2009
In 2009–10, TEGA had achieved a turnover of INR 1,730 million and exports of INR 1,086 million.
See Exhibit 1 for TEGA’s balance sheets as on March 31, 2009, and 2010, and profit and loss
statements for 2009 and 2010, indicating its financial performance during these two years.
TEGA was present in different sectors of the Indian industry, particularly iron and steel, coal,
power, mining, cement and other related sectors. The company was the leader in the product
categories it operated in. See Exhibit 2 for industry-wise sales as a percentage of total TEGA sales
in INR during 2010. See Exhibit 3 for the product-wise sales in INR, and see Exhibit 4 for the
industry-wise sales for each product.
TEGA had strength in terms of percentage sales in industry sectors: coal, alumina, uranium, steel,
zinc, iron ore and ports. The company achieved accelerated growth in the export markets
primarily through one of its major products—mill lining—and with much less emphasis on other
products.
Total, Domestic and Export Sales During 2007–10
See Table 1 for the SBU-wise domestic, export and total sales of the company.
Table 1
SBU-Wise Domestic, Export and Total Sales (INR Million)
2007–08 2008–09 2009–10

2007–08 Total 2008–09 Total 2009–10 Total
SBU DS XP DS XP DS XP
CC 68.95 20.82 89.77 82.97 38.23 121.20 97.81 23.93 121.74
HC 60.07 1.02 61.09 41.73 6.41 48.14 44.67 5.65 50.32
ML 112.13 675.04 787.17 97.00 971.33 1,068.34 134.58 961.44 1,096.03
NB(a) 3.09 28.19 31.28 2.38 11.99 14.37 2.65 15.81 18.46
SD 67.94 26.87 94.81 64.67 42.15 106.83 104.54 66.20 170.73
WC 108.92 7.84 116.76 235.32 7.09 242.41 230.12 13.17 243.29
Total 421.10 759.78 1,180.87 524.09 1,077.20 1,601.29 614.37 1,086.20 1,700.57
Notes: CC: Conveyor components; HC: Hydrocyclone; ML: Mill lining; BI: New business; SD: Screen deck and WC:
Wear components.
Source: Company records
International Focus
By the end of March 2010, TEGA marketed to customers in about 40 to 50 countries and had its
own sales staff in 10 to 12 countries. The experience with and growth of export sales strongly
pointed to a substantial international market opportunity for all its products. It, therefore,
decided to proactively develop a strategy for international markets. On the basis of the potential
and maturity of different markets for acceptance of innovative products, TEGA decided to
develop the North American Market (NAM) and Latin American Market (LATAM), Africa and
Russia on priority. Business development managers were appointed in the US, South Africa,
Australia and Brazil. TEGA decided that the existing distributor in Europe would be supported
from India. At the SBU (separate SBU for international markets) level, an exclusive international
business manager was to be inducted to support the country managers.
Regarding its international focus, Mohanka commented:
In 2009–10, while we were growing in mill, we also found some problems in

meeting our mills’ performance guarantees (e.g., the number of hours a mill would
work before the first breakdown). The mill liners were our highest valued
products and were the most complicated. The execution of mill liners was always
challenging. In 2010, we worked out the contribution, on a variable cost basis, of
various products. One of the highest contributions was from the CCs like Spillex,
impact bars and pulley laggings. The contribution of the HOSCH scraper was also
good. But we could not market it outside India. We decided to initially
internationalise the conveyor component SBU for a year or two. We had an
internal discussion and prepared an action plan. First, we hired a reputed agency
to assess the market size of CCs in the US market, which was the biggest CC
market in the world.
CC Products, Their Uses and Their Value Proposition in India
The CC products were used wherever the bulk solids needed mechanised handling through
conveyors. In India, CCs were used predominantly in integrated steel plants, thermal power
plants, cement plants, ports, and coal and iron ore mines. In overseas markets, the application
industries varied across countries but were predominantly in the hard rock and soft rock mines
and their processing units.
In India, TEGA provided customised total solutions by ensuring that the conveyors were spillage-
free, maintenance-free and power optimised, with improved flow of materials, improved
equipment life and reduced material degradation, thereby helping create a greener and safer
environment to work in.
The TEGA CC SBU products included the following:
• Spillex skirt sealing: It was used at the feed station to seal the skirt area so that no material
spilled out of the conveyor when feeding.
• Impact Bars: These were used at the feed station under the belt, replacing the impact
rollers. This took care of the impact load and prevented the belt from getting damaged. It,
along with skirt sealing, also helped contain spillage.
• Ceramic Pulley Lagging: It was used on the various pulleys to protect them from getting
worn out. It also helped improve the power transmission of the belts when used on the
head pulley.
• Rollers: These were used on conveyors to keep the belt centralised while it was moving.
If the belt was not centralised, it caused spillage sideways from the belt; the belt edges
also got damaged because of their rubbing with the structure.
• HOSCH scraper: It was installed on the belt where it left the head pulley. It was used to
clean the belt of any material sticking to its surface. If the belt was not cleaned, the
materials sticking to the belt fell below the return belt and caused carry-back spillage.
Uses of CC Products
See Figure 1 for the location where the TEGA and HOSCH products were required to be installed
in a typical belt conveyor.
Figure 1
Location of TEGA and HOSCH Products on a Conveyor
In addition to manufacturing and selling different CC products, TEGA also provided the
following services to its clients:
• consultancy services through conveyor audit to ensure spillage-free conveying

• installation support for maximum performance and reliability
• after-sales support for regular feedback on the wear pattern and forecasting spares
required
• training for awareness about new developments and the use of products to get the best
from their equipment
Value Proposition of TEGA Conveyor Solutions
The value proposition of TEGA for CC was as follows:
Eliminating unwanted belt stoppage, thereby maximising operational efficiency and productivity
by improving the uptime of belt conveyor systems and reducing expenses using technologically
advanced equipment and tools that maximise asset management:
• increasing the life of conveyor belts and accessories
• reducing operational costs, maintenance costs and power use in the conveyor system
• reducing material loss and contamination while conveying
• reducing the cost per tonne of material handled
• enabling proactive safety measures: eliminating manual/mechanised cleaning of the

material from the sides of the conveyor and from factory premises
See Exhibit 5 for a case study illustrating how the value proposition was made operational in the
Indian Market.
Research to Assess the Market Potential and Entry Strategy in North America
TEGA selected bulk-solid components—the broad category to which CC products belonged—for

internationalisation. A leading research agency was commissioned to assess (i) the current size
and growth of the market for selected components in North America by product, end use and
region from 2009 to 2013 and (ii) the positioning of competitors.
For conducting the research, the agency (i) classified the products and identified the end-use
application industries and (ii) collected data and information through secondary and primary
research. During the project, the agency did not disclose that this study was being conducted on
behalf of TEGA Industries.
The components were classified into two broad categories: traditional and
nontraditional/innovative. The traditional components included impact rollers, rubber strip skirt
sealing systems, rubber pulley lagging, traditional liners and air cannons. The nontraditional
components were impact bars, segmented rubber skirt sealing system, ceramic pulley lagging
and wear liners.
End-use applications were grouped into three categories: mining (coal, copper, crushed
stone/aggregates, iron ore, oil sand, platinum), processing and production (bauxite/alumina,
cement, steel, thermal power) and others.
The agency’s research methodology included secondary and primary research for the study.
Secondary research was used to prepare estimates on the basis of assumptions needed to prepare
the forecast. The sources used for secondary research were the agency’s current industry studies;
economic forecast based on the consensus of experts; publications of the industry, government
and trade associations; national and local press; and others such as investment analysts’ reports
and company filings.
Primary research was used to gather qualitative insights and refine the quantitative assumptions
and estimates made during the study. Interviews were conducted for primary research with
executives from 50 companies engaged in four different types of key players in the industry:
competitors, distributors/service centres, end users and engineering firms, which provided
consulting help to others. The agency developed discussion guides and used them across
constituent groups.
The research findings were reported in the following sections: executive summary, market
environment, demand and industry structure. The agency report also provided suggestions for
entry into North America.
Market Environment
The demand for many end-use segments was linked closely to construction expenditures and
motor vehicle production. Some end uses—namely, crushed stone, cement and copper, which
were closely tied to the construction industry—accounted for larger demand. Also, the demand
for iron ore, steel and aluminium was related to both the construction and the automotive
industries.
In 2009, the global economy was in a recession, which caused a significant drop in the demand
for many mineral commodities, such as iron ore, copper and aggregates. In North America (the
US and Canada), the recession hit hard; in particular, the auto and construction industries were
hit the most. This caused a sharp decline in the demand for raw materials (e.g., steel, aluminium,
cement) used in both industries. Beginning 2010, the economies of the US and Canada started
growing, leading to an improvement in most major end-use industries. The construction
industry, however, also continued to be weak in 2010. The economic recovery was forecast to
continue up to 2013, with better growth in the latter half of the forecast period. Both construction
expenditures and motor vehicle production were expected to grow strongly during 2009–13,
leading to a recovery from cyclical lows in 2009. In 2010, motor vehicle production began to grow,
but construction expenditures declined further. These would thus result in sharp growth of the
construction industry in the latter part of the period.
Demand for Selected Products in North America
In North America, bulk-solid conveyors were used in mature industries, which rarely invested in
new facilities. Also, in many end-use segments, new operations were rare. Therefore, most
expenditure on the selected products was for maintenance and repair of existing conveyor
systems and was highly dependent on the volume of material handling.
The total demand for select products in North America in 2009 was estimated to be USD 225
million (M) and was expected to grow to USD 290 M at a compounded annual growth rate
(CAGR) of 6.7% during the period. The demand for each selected product was projected from
2009 to 2013. The product-wise forecast was also made for each end-use industry and each
geographic region. An assessment of future prospects for innovative and traditional products
was also presented in the report.
Demand: North America: Select Products
See Table 2 for the demand estimates for selected products. The demand for traditional products
was USD 185 M in 2009 and was expected to grow to USD 240 M in 2013 at a CAGR of 6.7%. The
demand for nontraditional products was much less (USD 39.5 M or 18% of the total) in 2009 and
was expected to grow at a slightly lower CAGR of 6.5%. Among the traditional products,
traditional liners were the most in demand in 2009 (USD 59 M), with a CAGR of 6.6%. The
demand for impact rollers, which had the second highest demand (USD 55 M) in 2009, had a
higher CAGR of 7.6%. Among the nontraditional products, impact bars had the highest demand
of USD 19 M, with a CAGR of 7.3%.
Table 2
North America: Selected Product Demand for 2009–2013 (USD ′000)
Item 2009 2013 CAGR (%)

Demand in North America 225,000 290,000 6.7
Traditional components 185,000 240,000 6.7
Impact rollers 55,000 73,500 7.6
Rubber strip skirts 39,500 50,000 6.1
Rubber lagging 23,500 29,500 5.9
Traditional liners 59,000 76,000 6.6
Air cannon 6,800 8,500 5.7
Nontraditional components 39,500 50,500 6.5
Impact bars 19,000 25,500 7.3
Segmented rubber skirts 4,550 5,900 6.8
Ceramic pulley lagging 2,950 3,550 4.5
Embedded wear liners 13,000 16,000 5.5
Demand: North America: by End Uses
See Table 3 for details of end-use-wise demand in North America from 2009 to 2013. See Exhibit
6 for an end-use-wise forecast for the selected products in the US between 2009 and 2013.
Table 3
North America: Selected Bulk-Solid CC Demand by End Use
(USD ′000) (2009–2013)
End use 2009 2013 CAGR (%)

Crushed stone 92,500 125,000 8.3
Coal mining 37,000 435,000 4.2
Thermal power generation 28,500 35,000 5.2
Copper mining 14,500 16,500 3.6
Port handling 9,450 11,500 5.1
Cement production 5,500 8,000 9.8
All end uses 225,000 290,000 6.7
The crushed stone mining industry had the highest demand in North America (42% of the total
demand) for the components in 2009. With improvement in construction activity in the later part
of 2009–13, higher growth was expected in this segment. Coal mining, the second largest end-use
segment, had a higher share of nontraditional products, particularly segmented rubber skirts,
ceramic pulley laggings and embedded wear liners. Underground mines might be more
interested in purchasing innovative/premium components to safeguard against the higher cost
of failure than surface mining operations. Cement production accounted for only 2.5% of the total
demand in 2009 but was the biggest user of air cannons.
Demand: North America: by Regions of USA
The total demand for the selected bulk-solid CCs in North America was USD 225 M in 2009 and
was projected to reach USD 290 M in 2013 (CAGR: 6.7%). The US accounted for 90% of demand
in 2009 (USD 200 M) and was expected to see fast growth through the forecast period with
improvement in economic activity compared to the recession in the recent past (until 2009).
Canada accounted for only 10% of the total demand in North America and was expanding at a
slower pace in 2013, as many end-use segments experienced only smaller declines during 2009
and were not expected to grow as much as those in the US. Approximately 25% of demand
growth in value terms was attributed to forecasted price rises. See Exhibit 7 for selected product-
wise forecasts for four regions of the US. See Table 4 for a summary of demand for all the selected
bulk solid CC components in different regions of the US.
Table 4
US: Selected Bulk-Solid CC Demand by Region (USD ′000) (2009–2013)
Region 2009 2013 CAGR (%)
Northeast 17,000 23,000 7.6
Midwest 50,500 67,500 7.6
West 72,000 90,500 5.9
South 61,999 80,500 7.1
USA 200,000 260,000 6.8
West
The West US was the largest and most attractive region because of its significant mining
operations. It had some of the nation’s largest coal mines, all of copper and platinum mines, and
other metallic and nonmetallic mines. Growth in the West was estimated to be lower as the coal
and copper mining segments were expected to grow slower than other segments.
• Crushed stone mining accounted for the largest share of component demand.
• Innovative products accounted for a higher share of demand in the West because of the
higher activity of the coal mining industry, which used a higher proportion of innovative
products.
Midwest
Demand for the selected components in the Midwest was estimated at USD 50.5 M in 2009 and
was projected to reach USD 67.5 M in 2013, a CAGR of 7.6%. High growth would be driven by
crushed stone mining, iron ore mining, steel production and cement production segments, which
were expected to recover from cyclically low levels of demand experienced during 2009.
• Nearly 50% of demand arose from crushed stone mining in the Midwest. The Midwest
also had a large number of coal-fired thermal power plants, making thermal power
generation the second largest end-use segment in the region.
• Nearly all the demand in the iron ore segment in the US was from the Midwest, as the
country’s largest iron ore mines were in Minnesota and Michigan.
South
Demand for the selected components in the South was estimated at USD 62 M in 2009 and was
projected to reach USD 80.5 M in 2013, a CAGR of 7.1%.
• The crushed stone industry accounted for about 50% of the demand in the South, mainly
driven by growth in crushed stone mining.
• Around 70% of the demand for bulk CCs in the bauxite/alumina-processing industry in
the US was from operations in the South. However, demand in the segment was less than
1% of regional demand.
• Demand in the port-handling segment was also higher than in other regions, as many dry-
bulk terminals were located in the South.
Northeast
This region accounted for the lowest share among the regions, 8.5% of 2009 demand, because of
limited mining operations. Well over 50% of its demand was from crushed stone mining
operations. Thermal power generation and coal mining, with all coal mining operations being in
Pennsylvania, accounted for notable shares in the region’s demand for CCs.
Demand: North America: Innovative Products
Most research participants believed that innovative products had reached a high level of adoption
in the United States and Canada. Such products had already been adopted in the applications
with significant advantages and had become premium rather than innovative. End-use segments
that might use innovative products in future would be those producing higher value output and
handling heavy or abrasive material for improvement in their performance. Research reported
the barriers to the adoption of innovative products as well as areas where such products had
potential use.
Barriers to the Adoption of Innovative Products
• The primary barrier to innovation for all nontraditional products was the initial cost.
Considerations of lifetime cost savings of systems through the use of innovative
components were favoured by engineering firms; most end users cited cost as the most
important buying factor. The unwillingness of end users was also affected by sharp
declines in demand for their products during the recessionary conditions from 2008 to
2010.
• Suppliers of innovative products cited a lack of knowledge among end users. Proper end-
user education on the benefits of innovative products might promote the additional
adoption of such products.
• Ceramic laggings: There was some reluctance in the industry to use ceramic pulley
laggings.
o Perceived risk to the belting in the event of slippage. Hence, inexpensive

rubber laggings were preferred and posed no risk of damaging the belt, a very
costly item.
o Members of the Conveyor Equipment Manufacturers Association (CEMA)

reportedly generally advised against the use of ceramic laggings.
o An engineering firm noted that ceramic laggings required a more powerful

engine for the conveyor system, limiting system design flexibility and thus
discouraging end users from adopting them.
Potential Opportunities for Adoption
• End users in the coal mining industry were the highest users of innovative products. Any
innovative products that could help protect the belt and keep the operation running to
improve performance were welcome.
• Suppliers and engineering firms frequently cited iron-ore-, copper- and gold-mining
operations as adopters of innovative products.
o Respondents from iron-ore-mining operations reported adopting any

innovative product that could improve system performance.
o Iron ore mines used a higher proportion of segmented rubber skirts as they
offered better performance in high-wear areas.
• Impact bars were used more in applications where heavier materials were being dropped
to protect the belt from damage (e.g., copper, granite and crushed stone mining).
• Other innovative products discovered during the research included
o polyurethane strip skirts and impact saddles
o a new type of impact rollers with shock absorbers, which might compete with
impact bars, to better handle impact and prevent breakage of bearings
Industry Structure
The report provided structure in terms of the overall industry, by product types, profiling of
competitors and distribution systems.
Overall Industry Structure
From the primary research, the agency found 27 suppliers of selected bulk-solid CCs in North
America. Of these, 22 companies supplied at least one of the nine selected bulk-solid CCs. In
addition, another five companies were identified through secondary research. Except for a couple
of companies, most suppliers had wide market coverage. The research also revealed that the
industry was fragmented. No single company dealt with more than seven products. Six of them
dealt in one and another six in two products only. On average, a company supplied just three
products.
The 27 companies could be classified into three groups: (i) those who were leaders in each of the
product categories they offered, (ii) those who were leaders in some of the products they offered
and (iii) others who were not leaders in any category they offered.
Leaders in each product (sub)category: Six companies were identified in this group. One of these
offered only one product category, two offered two product categories each and three companies
offered three product categories each.
Leaders in some product (sub)categories: Five companies were identified in this group. Three of these
led in one out of two, one in three out of four and one in three out of six product
categories/subcategories.
Not leaders in any (sub)categories: A third group of companies offered an above-average number of
selected products, but none of them were leaders in terms of market share in any of the products.
There was the sourcing of all or a portion of lagging offerings by suppliers from outside suppliers.
One supplier of impact bars was also reported to be outsourcing the requirements from others.
There might also be a practice of private labelling in other product categories.
Industry Structure by Selected Product Types
Impact Rollers
Three manufacturers supplied a very high percentage (80%) of sales of impact idlers and rollers:
(i) Continental Conveyor & Equipment Company (approximately 50%), (ii) Precision Pulley and
Idler (PPI) and (iii) FMC Technologies. The other eight companies contributed the rest.
Impact Bars
The supply base for impact beds/bars was relatively fragmented. Multiple respondents identified
the Continental Conveyor & Equipment Company as the market leader, with an estimated market
share of 25%. Many small suppliers existed in this category. Continental Conveyor & Equipment
Company procured its bars from outside suppliers. It reported its major competitors as Martin
Engineering and Metso.
Skirting Systems
The supply base of skirting systems, both traditional and innovative, was also fragmented. Many
respondents reported Martin Engineering as the leading supplier of traditional systems, and it
was considered ubiquitous by an EPC (Engineering, Procurement, and Construction) company.
Nelson Williams Linings was a leading supplier in the innovative rubber skirting category.
Pulley Laggings
The supply base of rubber pulley laggings was relatively fragmented. Key suppliers identified
were bulk-solid CC manufacturers, local rubber suppliers and job shops. PPI and Holz Rubber
were leaders in the bolt-on rubber lagging segment. PPI and Van Gorp were leading suppliers of
ceramic laggings. Laggings could also be private labelled or purchased from other suppliers for
sales.
Wear Liners
As per industry respondents, multiple players including local job shops and firms that imported
from China and India catered to wear liner demand. The traditional ceramic format supply base,
with only a few suppliers, was more concentrated and dominated by Saint Gobain, as reported
by an EPC firm. There were many suppliers in the nontraditional ceramic supplier category.
Industry sources reported that Metso dominated the wear liner market.
Air Cannons
With a 60% share, Martin Engineering dominated the air canon market. Vibco Vibrators and
Global Manufacturing were in second and third place, accounting for another 20% share.
Profiles of Key Competitors
The research agency identified seven competitors for TEGA CC products. We describe them in
order of their sales (USD M) in 2009.
1. Continental Conveyor & Equipment Company (includes Goodman-Hewitt) (sales USD 20–30
M)
The company dealt with impact idlers/rollers and impact beds/bars. In aggregate, the company
sales in 2008–09 had declined by 40%. The Goodman-Hewitt sales declined by 25%. In the mining
sector, however, sales were flat. In the non-US regions, the company sold its products in scope
regions. It sold 90–95% of its products through distributors. The end uses the company served
were aggregates, minerals and coal. It had plants in Australia, England and South Africa.
2. Martin Engineering (sales USD 13–18 M)
The major CC products the company manufactured and sold were impact beds/bars, rubber
skirting, traditional wear liners and air cannons. The air cannon sales declined by 25%. The
company sold its products in some regions directly and in others through distributors. The end-
use segments the company catered to were aggregates, cement, coal mining, coal-fired power
generation, pulp and paper, and cement, which accounted for 40% of air cannon sales in North
America.
3. Metso (includes Stephens-Adamson) (sales USD 13–18 M)
The impact idlers/rollers, impact beds/bars, rubber skirting, rubber laggings, rubber-
faced/steel-enforced wear liners and innovative wear liners (e.g., PU/steel/ceramic/rubber)
were the CC products Metso manufactured and sold. The wear liner sales declined by 20–30%.
All sales were in scope regions. 85% of sales were through distributors, and the rest were sold
direct. The company was global, with a focus on North America.
4. PPI (sales USD 13–18 M)
Among CC products, the company manufactured and sold impact idlers/rollers, rubber and
ceramic laggings. Its sales growth in 2009 was estimated to be 10–25%. The company operated in
scope regions and sold 90–95% of its products through distributors. The company provided
contract manufacturing and operated in many countries. The end-use segments the company
operated in were aggregates, coal, other mining, grain, power, package/unit handling, etc.
5. FMC Technologies (sales USD 7–10 M)
The products were impact idlers/rollers and impact beds/bars. The sales in FMC’s Energy
Processing System Division declined in 2009 by 21%. FMC sales areas were in scope regions. The
channels of distribution were both direct and through distributors. FMC had worldwide
licencing, distributors and representatives. It sold its spare parts direct. The company had
material-handling plants in China, Chile and the US (Utah).
The company had territory managers for Asia/Pacific, Europe, Russia, Africa, the Middle East,
India and Latin America.
6. Nelson Williams Lining (sales USD 3–5 M)
The products were innovative rubber skirting (segmented), traditional wear liners (available in
abrasion-resistant plates, chrome overlay, various hard-cast alloys, ceramic and stainless steel).
The estimated sales growth was in the single digits. The market was all in scope regions. The sales
through distributors were 90%. The end-use segment was heavy mining (e.g., iron ore, gold),
aggregates and coal.
7. Douglas Manufacturing (sales USD 1 M)
The products were impact idlers/rollers, impact beds/bars and rubber and ceramic laggings. Its
sales growth was estimated to be flat. The company’s sales regions were all in scope regions
through a distributor network supported by regional managers in all territories except eastern
Canada. The company had 90% of sales through distributors (Central South America and the
Caribbean).
The end-use segments were aggregates, cement, coal, copper, iron ore, other minerals, coal-fired
power generation, forest products (e.g., pulp and paper mills), grain, package/unit handling,
foundry and ship loading.
Distribution Structure
Most of the suppliers used distributors for marketing about 90% of their sales to end users and
original equipment manufacturers (OEMs). In some cases, sales to some OEMs and some large
end users, such as iron ore mines, were also made directly. The distributors used did not include
master distributors. Large distributors covering all regions of the US and Canada and smaller
bearing, mining and speciality distributors operating in limited geographic areas were used.
Large distributors who accounted for a significant share of the sales of the components were
Applied Industrial Technologies, Kaman Industrial Technologies, Motion Industries and Bearing
Distributors (BDI). Some of the uses of direct sales identified are described below.
A higher proportion of air cannons was sold directly to the end users than through distributors.
Martin Engineering, the leading supplier of air cannons, used the full-time sales staff to sell air
canons directly to end users. However, a large portion of its sales, as well as major sales of the
second largest supplier, Global Manufacturing, was through distributors.
About 20% of sales of Holz Rubber, a major supplier of rubber pulley laggings, were made directly
to pulley OEMs. However, the rest of its sales (80%) was through industrial distributors.
A higher proportion of traditional wear liners was sold directly to end users because some end
users had started installing them on their own. They bought the liners from local suppliers
directly.
A company, Rulmeca (part of a group of companies specialising in rollers/idlers, pulleys and

other components), also used a two-step distribution to sell its products manufactured outside the
US. Its US-based subsidiary acted as a master distributor and sold most products through
industrial distributors.
Respondents with large enough quantities in coal mining, iron ore mining, steel production and
copper mining reported purchasing a portion of their requirements directly from the
manufacturers. They reported dealing directly with Continental Conveyor & Equipment
Company, Martin Engineering, Luff Industries and PPI.
The research report provided a list of companies in target industries as well as end-use customers
in each of the individual product categories. The report also included a list of distributors, end
users and key projects for major companies.
Attractive Points of Entry in the US Market
Impact rollers/bars and traditional/innovative wear liners, representing the largest 2009 North
American demand, were attractive to enter the US. Also, in these categories, innovative products
(i.e., bars and innovative wear liners) had already achieved a high degree of penetration. Impact
rollers/bars were expected to have the fastest growth through 2013.
Adoption of innovative products in the skirt sealing and pulley lagging product categories in
2009 was limited. Segmented rubber skirts were likely to grow faster as they were adopted in
many end-use segments such as coal mining and iron ore mining.
The report highlighted the opportunity for the selected products in the crushed stone/aggregate
industry. This was the largest industry on the continent, with an expenditure of USD 93 M in
2009, growing at an above-average rate of 8.3% until 2013. The industry also provided above-
average challenges at load points in terms of weight and hardness. While the industry preferred
traditional products, impact bars (a nontraditional product) had penetrated the impact roller
market. However, the spending on bars was still about half of that on rollers, thus providing an
opportunity to further penetrate the industry.
The Western US was the most attractive entry point in terms of end-use industries and product
mix. The region’s share of mineral volume was highest at 30%. The region also had a
concentration of coal mines whose operators showed a greater propensity to use innovative and
premium products such as segmented rubber skirting systems, ceramic pulley laggings and
embedded wear liners.
CHALLENGES FACING IMAM
Imam was reviewing the report and wondering how to proceed to decide the entry strategy—
where and how to enter the NAM for CC SBU. To get help in this process, he was wondering
about the need to further analyse the data available and, if necessary, collect some more
information.
Exhibit 1
Balance Sheet of TEGA as of March 31 (INR Million)
2010 2009
Sources of funds
Share capital 44.31 44.31
Reserves and surpluses 863.46 618.45
Total shareholders fund 907.77 662.76
Secured loans 198.04 365.47
Deferred tax liability 17.57 18.25
Total capital 1,123.38 1,046.48
Application of funds
Fixed assets
Gross block 598.47 545.64
Less depreciation 211.03 163.54
Net block 387.44 382.10
Capital work in progress 7.21 –
Total fixed assets 394.65 382.10
Investments 17.16 22.87
Current assets, loans and advances

Inventories 240.10 245.79
Sundry debtors 594.71 644.90
Cash and bank balances 53.71 41.99
Other current assets including loans and advances 159.27 152.48
Total current assets 1,047.79 1,085.16
Less current liabilities and provisions 336.25 443.65
Net current assets 711.54 641.51
Total assets 1,123.35 1,046.48
Profit and Loss Account of TEGA for the Year Ended March (INR Million)
2010 2009
Income
Turnover (less excise duty) 1,730.65 1,634.20
Other income 122.46 119.82
Total income 1,853.11 1,754.02
Expenditure
Materials, stores and spares 738.16 706.99
Manufacturing, administration and selling expenses 576.11 562.73
Interest 24.69 37.80
Depreciation 53.06 39.21
Total expenses 1,392.02 1,346.73
Profit before tax 461.09 407.29
Tax provisions 164.32 146.33
Profit after tax 296.77 260.96
Profit brought from the last year 467.12 284.10
Profit available for appropriation 763.87 545.06
Dividend 51.75 51.84
Transferred to general reserve 29.68 26.10
Balance carried to balance sheet 682.45 467.12
Earnings per share 66.98 58.90
Source: TEGA annual reports
Exhibit 2
Industry Sector and Percentage of TEGA Sales in 2010
Industry sector Percentage of total TEGA sales in INR

Mining 61
Others 21
Iron and steel 16
Cement 1
Power 1
Total 100
Source: Judgement of TEGA executives
Exhibit 3
Product-Wise Sales in 2010 (INR Million)
Product Sales in 2010 (INR million)

Mill 1,146.24
Wear components 243.16
Screen 180.86
Conveyor components 111.98
Hydrocyclone 48.41
Total 1,730.65
Source: TEGA records
Exhibit 4
Products and Sales in Sectors (as a Percentage of Total Sales)
Product Mining Others Iron and steel Cement Power Total
Mill 80 10 9 0 0 100
Wear component 6 64 25 0 5 100
Screen 40 19 36 5 1 100
Conveyor component 8 40 35 11 6 100
Hydrocyclone 69 13 18 1 0 100
Total 61 21 16 1 1 100
Source: Judgement of TEGA executives
Exhibit 5
Case Study of a Conveyor
Solution for a Steel Plant in Karnataka, India
Industry: Steel
Present installation: Conventional skirt sealing and double-lip design skirt sealing
Material: Coke, coal, iron ore, quartz, dolomite
Conveyor capacity: 20,000 tonnes per day
Conveyor detail: Trippling route conveyor 3IBC-I and 3IBC-2
Department: Raw material handling
Objective: To solve the issue of spillage and minimise unscheduled shutdowns
Challenges:
• The two tipper conveyors were at the far end of the plant and thus difficult to attend to.
• High spillage (9,000 kg/day) at the loading station: cleaning cost of INR 20,000 per month.
• Increased maintenance and downtime as the skirt sealing rubber life was one month.
Solution designed by TEGA:

• A 12 m skirt system of Model XL-HDS was installed for one conveyor by replacing the
conventional skirt.
• For another conveyor, a double-lip apron seal was installed, replacing the strip-type skirt.
• In both cases, the spillage around the station was cleaned and the conveyors were kept under
observation.
The study was conducted for 32 days.
Results at the end of the study:

• Total spillage at conveyor 3IBC-I was 14,055 kg, i.e., an average per day of 439.21 kg.
• Total spillage at conveyor 3IBC-2 was 108 kg, i.e., an average per day of 3.37 kg.
Benefits of the TEGA system compared to the double-lip sealing of another make:
• No maintenance was required for the TEGA installation, whereas it was required once in 32 days
for other makes.
• Rubber sealing wear life was found to be five times better for the TEGA-designed sealing.
• Very less spillage: 130 times better with the TEGA-designed sealing.
• Cleaning costs reduced. Savings were INR 20,000 per month with the TEGA sealing and INR
16,000 with the other sealing.
• The downtime was reduced completely with the TEGA sealing.
Source: TEGA documents

Exhibit 6
US: Industry-Wise Selected Bulk-Solid CC Demand (USD ′000) (2009–2013)
Industry Cement production Coal mining Copper mining Iron ore mining Port handling Thermal power
Item 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR
(%) (%) (%) (%) (%) (%)
Selected 4,800 7,100 10.1 34,500 41,000 4.2 9,950 11,000 2.5 3,200 5,250 13.2 8,950 11,000 5.0 2,7500 34,000 5.4
components
Traditional 4,550 6,650 10.1 22,500 26,500 4.0 8,050 8,850 2.5 2,650 4,350 13.1 8,050 9,800 5.0 25,000 31,000 5.4
components
Impact rollers 875 1,350 11.8 6,900 8,350 4.9 2,200 2,500 3.3 1,100 1,900 13.8 2,650 3,300 5.8 6,500 8,300 6.2
Rubber strip 565 835 10.3 4,250 4,850 3.4 1,550 1,700 1.8 340 540 12.3 1,400 1,700 4.3 6,100 7,350 4.7
skirts
Rubber 210 315 10.8 5,550 6,500 3.9 1,450 1,600 2.3 270 1,450 12.8 1,250 1,500 4.8 3,250 4,000 5.2
lagging
Traditional 710 1,050 10.8 4,750 5,550 3.9 2,700 3,000 2.3 900 1,450 12.8 2,650 3,200 4.8 8,850 11,000 5.2
liners
Air cannon 2,200 3,100 8.8 1,050 1,150 1.9 105 105 0.3 33 50 10.8 95 105 2.8 375 460 5.0
Nontraditional 270 420 11.4 12,000 14,500 4.4 1,900 2,150 2.7 545 900 13.5 900 1,100 5.3 2,350 2,950 5.8
components
Impact bars 120 185 11.2 1,950 2,300 4.3 1,050 1,150 2.7 98 160 13.2 380 465 5.2 590 735 5.6
Segmented 60 96 12.3 2,100 2,600 5.4 210 245 3.8 175 300 14.2 95 120 6.3 590 770 6.7
rubber skirts
Ceramic 15 22 10.0 1,250 1,400 3.1 235 250 1.5 44 70 12.1 48 56 4.0 295 350 4.5
pulley lagging
Embedded 76 115 11.3 6,850 8,100 4.4 420 470 2.8 225 370 13.3 380 465 5.3 885 1,100 5.7
wear liners
The end users in the coal mining industry cited the most important reason as belt performance and minimised downtime. The reason for adopting iron ore mining was also to
improve performance. They used a higher proportion of segmented rubber skirts and rarely used impact bars as there was a possibility of causing damage to the belt because
of the dusty and abrasive iron ore. Impact bars were used in applications in which heavier materials were dropped. The bars protected the belt against damage as there were no
moving components that could fail, as is the case with impact rollers. Therefore, those products were adopted in industries handling heavy materials, such as hard rock mining
(e.g., copper, granite) and crushed stone mining.
Source: Report of the consultant
Exhibit 7
US: Region-Wise Selected Bulk-Solid CC Demand (USD ′000) (2009–2013)
Region Northeast US Midwest US Western US Southern US US total

Item 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR 2009 2013 CAGR
(%) (%) (%) (%) (%)
Selected 17,000 23,000 7.6 50,500 67,500 7.6 72,000 90,500 5.9 6,100 80,500 7.1
200,500 261,500 6.9
components
Traditional 14,500 19,500 7.6 43,000 57,500 7.6 57,000 71,500 5.9 5,100 67,000 7.2
165,500 215,500 6.8
components
Impact rollers 4,350 6,000 8.5 13,000 18,000 8.6 17,000 22,000 6.8 15,000 20,500 8.0 49,350 66,500 7.7
Rubber strip 3,250 4,250 7.0 9,350 12,000 6.8 12,000 15,000 5.4 11,000 14,500 6.6
35,600 45,750 6..5
skirts
Rubber lagging 1,550 2,950 6.9 4,950 6,450 6.9 8,450 10,500 5.0 6,100 7,800 6.4 26,300 27,700 01.3
Traditional liners 4,900 6,500 7.5 14,500 19,000 7.5 17,000 21,500 6.0 16,500 21,500 7.1 52,900 68,500 6.7
Air cannon 520 685 7.1 1,300 1,700 6.7 2,450 2,990 4.6 1,850 2,350 6.3 6,120 7,725 6.0
Nontraditional 2,650 3,550 8.4 7,500 10,000 8.3 15,000 19,000 5.6 10,500 13,500 6.9
35,650 46,050 6.6
components
Impact bars 1,650 2,250 8.4 3,900 5,400 8.3 6,250 8,050 6.5 5,350 7,250 8.0 17,150 22,950 7.6
Segmented 210 280 7.5 850 1,200 8.8 2,050 2,550 5.9 1,050 1,350 6.8
4,160 5,380 6.6
rubber skirts
Ceramic pulley 215 260 4.8 540 680 5.8 1,050 1,250 3.7 850 1,000 4.5
2,655 3,190 4.7
lagging
Embedded wear 590 755 6.3 2,200 2,900 6.9 5,900 7,100 4.9 3,150 3,900 5.6
11,840 14,655 5.5
liners
Source: Report of the consultant

Tiga

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tiga

Uploaded by

Copyright:

Available Formats

This document is authorized for use only in GITAM's PG; Business Research Methodology course by Dr. M.

Jayasree from Aug 7, 2023 to Nov 26, 2023.

TEGA Industries: Internationalisation Strategy for

TEGA INDUSTRIES LIMITED

Prepared by Professor Abhinandan K. Jain (Ex-Faculty, Indian Institute of Management Ahmedabad),

TEGA PRODUCT LINES

In Kolkata, to develop exports of wear components, TEGA appointed an export manager. He

FINANCIAL PERFORMANCE, INDUSTRY PRESENCE AND PRODUCT STRENGTH

Total, Domestic and Export Sales During 2007–10

2007–08 2008–09 2009–10

Regarding its international focus, Mohanka commented:

In 2009–10, while we were growing in mill, we also found some problems in

CC Products, Their Uses and Their Value Proposition in India

The TEGA CC SBU products included the following:

Location of TEGA and HOSCH Products on a Conveyor

Source: Company records

• consultancy services through conveyor audit to ensure spillage-free conveying

Value Proposition of TEGA Conveyor Solutions

The value proposition of TEGA for CC was as follows:

• increasing the life of conveyor belts and accessories

• reducing material loss and contamination while conveying

• reducing the cost per tonne of material handled

• enabling proactive safety measures: eliminating manual/mechanised cleaning of the

TEGA selected bulk-solid components—the broad category to which CC products belonged—for

Demand for Selected Products in North America

Demand: North America: Select Products

Item 2009 2013 CAGR (%)

Demand: North America: by End Uses

End use 2009 2013 CAGR (%)

Demand: North America: by Regions of USA

Demand: North America: Innovative Products

Barriers to the Adoption of Innovative Products

o Perceived risk to the belting in the event of slippage. Hence, inexpensive

o Members of the Conveyor Equipment Manufacturers Association (CEMA)

o An engineering firm noted that ceramic laggings required a more powerful

Potential Opportunities for Adoption

o Respondents from iron-ore-mining operations reported adopting any

• Other innovative products discovered during the research included

o polyurethane strip skirts and impact saddles

Overall Industry Structure

Industry Structure by Selected Product Types

Profiles of Key Competitors

2. Martin Engineering (sales USD 13–18 M)

3. Metso (includes Stephens-Adamson) (sales USD 13–18 M)

4. PPI (sales USD 13–18 M)

5. FMC Technologies (sales USD 7–10 M)

6. Nelson Williams Lining (sales USD 3–5 M)

7. Douglas Manufacturing (sales USD 1 M)

A company, Rulmeca (part of a group of companies specialising in rollers/idlers, pulleys and

Attractive Points of Entry in the US Market

CHALLENGES FACING IMAM

Current assets, loans and advances

Industry sector Percentage of total TEGA sales in INR

Product Sales in 2010 (INR million)

Solution for a Steel Plant in Karnataka, India

Objective: To solve the issue of spillage and minimise unscheduled shutdowns

Solution designed by TEGA:

The study was conducted for 32 days.

Results at the end of the study:

Source: TEGA documents

Region Northeast US Midwest US Western US Southern US US total

Source: Report of the consultant