comprehensive study on the indian steel industry_ report
TRANSCRIPT
A Project Report on
“COMPREHENSIVE STUDY
OF THE INDIAN STEEL
INDUSTRY”
Submitted in partial fulfillment of the requirements
for the award of
Degree of BBM [e-Banking & Finance]
By
RAHUL R. FOFALIA (071204047)
SURABHI MAHARISHI (071204046)
NEHA GOEL (071204067)
UNDER THE GUIDANCE OF
Ms. Khyati Shetty and Mr. Aunali Rupani
May- July 2009
Department of Commerce,Manipal University, Manipal-576 104
1
DECLARATION
We, the students of BBM [e-Banking & Finance], Department of Commerce,
Manipal University, declare that the Project Report entitled
“COMPREHENSIVE STUDY OF INDIAN STEEL INDUSTRY”, being
submitted to the Department of Commerce, Manipal University, in partial
fulfillment of the requirements for the award of Degree of BBM [e-Banking &
Finance], is our original work and the same is / was not earlier submitted to
any other Degree, Diploma, Fellowship or any other similar title or prizes
RAHUL R. FOFALIA (071204047)
SURABHI MAHARISHI (071204046)
NEHA GOEL (071204067)
Date:
2
CERTIFICATE
This is to certify that the Project entitled “COMPREHENSIVE STUDY OF
INDIAN STEEL INDUSTRY”, is submitted to Department of Commerce,
Manipal University, in partial fulfillment of the requirements for the award of
Degree of BBM [e-Banking & Finance].
RAHUL R. FOFALIA (071204047), SURABHI MAHARISHI (071204046)
and NEHA GOEL (071204067) have worked under my supervision and
guidance and that no part of this Report has been earlier submitted for the
award of any other Degree, Diploma, Fellowship or any other similar title or
prizes and that the work has not been published in any journal or magazine.
Ms. Khyati Shetty
Faculty, Department Of Commerce
Manipal University
Date:
3
ACKNOWLEDGEMENT
With regard to the Project, we would like to thank each and every one who
offered help, guideline and support whenever required.
First and foremost, we would like to express our deepest gratitude to Mr.
Aunali Rupani, Director of ARM Research Pvt. Ltd. for his valuable time and
advice in the making of this project. Without his support and guidance, the
completion of this project would not have been possible. The faculty members
of Department of Commerce, especially, our project guide, Ms. Khyati Shetty,
who extended her guidance and support in the successful completion of this
summer internship.
We thank our institute, Department of Commerce, for providing us a platform
and supporting us towards the successful completion of this project. We also
want to thank our batch mates who have helped me in getting acquainted with
various aspects during the project. Finally, not forgetting the staff of ARM
Research Pvt. Ltd, I want to thank them all, for providing me with all the
information required and co-operating in every possible way that they could.
RAHUL R. FOFALIA (071204047)
SURABHI MAHARISHI (071204046)
NEHA GOEL (07120
4
INDEX
TABLE OF CONTENTS
PARTICULARS PAGE NO:
Chapter I: Introduction to the title with industry overview 1-2
Chapter-II: Research Design 3
2.1: Objectives 4
2.2: Research Methodology 5
2.3. Limitations 5
Chapter-III: Literature review 6-10
Chapter IV: Profile of the Company 11
4.1. Company Profile 12
4.2. Vision 12
4.3. Methodology of research 13
Chapter V: Steel: Introduction 14
5.1. Introduction 15
5.2. Properties 15-16
5.3. History of steel 16-18
5.4 Conclusion 19
5
Chapter VI: Cost of Production 20
6.1. Components of the cost of production 21
6.1.1.Raw materials 21-24
6.1.2.Power costs 24-25
6.1.3.Interest payments 25
6.1.4.Taxes & duties 25
6.1.5.Other expenses 26
6.2. Conclusion 26
Chapter VII: Process of Steel Making 27
7.1. Basic Oxygen Steel-making 28-29
7.2. Electric Arc Steel-Making 30-31
7.3. Induction Furnace 31-32
7.4. CONARK Steel-making 33
7.5. Conclusion 34
Chapter VIII: Types of Steel 35
8.1.Based on chemical composition 37
8.1.1.Carbon steel 37
8.1.2.Alloy steel 37-38
8.2.Based on application 38
8.2.1. High strength low alloy steel 38
8.2.2. Free machining steel 38
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8.2.3. Wear resistant steel 38
8.2.4. Bearing steel 39
8.2.5. Stainless steel 39
8.2.6. Electric steel 39
8.2.7. Tool steel 39-40
8.3.Based on Shape and Surface 40
8.3.1.Flat products 40-41
8.3.2Long products 41-42
8.4. Conclusion 42
Chapter IX: Indian Steel Industry Overview 43
9.1. Characteristics 44-46
9.2. Structure 46-48
9.3. SWOT Analysis 49-57
9.4. Major players 58-71
9.5. Enterprise Value 71-77
9.6. Consolidations in the Steel industry 77-81
9.7. Conclusion 82
Chapter X: Demand and Supply 83
10.1. Overview 84-85
10.2. Production & Consumption 85-89
10.3. Imports & Exports 90-91
10.4. Conclusion 92
7
Chapter XI: Government Policies and Regulations 93 11.1. Ministry of steel 94-95
11.2. Reform measures and policy initiatives 95-96
11.3. National Steel Policy, 2005 97-99
11.4. Conclusion 99
Chapter XII: Challenges Faced by the Indian Steel Industry 100-103
Chapter XIII: Conclusion 104-106
Chapter XIV: Suggestions 107-109
Chapter XV: Annexure 110
Chapter XVI: Bibliography 111
8
LIST OF TABLES :
Chapter VTable 5.1. Timeline of Steel
Chapter VIII
Table 8.2. Types of carbon steel
Chapter IX
Table 9.1. Classification of steel producers based on products
Table 9.2. Classification of steel producers based on the route of production
Table 9.3. SAIL
Table9. 4. TATA Steel Ltd.
Table 9.5. JSW ltd.
Table 9.6. Comparison among SAIL, TATA Steel, & JSW Steel
Table 9.7.Calculation of EV/Tonne for SAIL
Table 9.8.Calculation of EV/Tonne for TATA Steel
Table 9.9.Calculation of EV/Tonne for JSW
Table 9.10 Merger of Arcelor & Mittal
Chapter X
Table 10.1. Infrastructural activities to boost steel demand
9
LIST OF FIGURES:
Chapter VI
Figure 6.1. Components of Cost of production of steel
Figure 6.2. Prices of Iron ore and Coking coal
Chapter VII
Figure 7.1. Basic oxygen steel-making
Figure 7.2. Electric Arc Steel making
Figure 7.3. Induction Furnace Steel making
Figure 7.4. CONARK Steel making
Chapter VIII
Figure 8.1. Types of steel
Chapter IX
Figure 9.1. Strengths of Indian Steel Industry
Figure 9.2. Weaknesses of Indian Steel Industry
Figure 9.3. Opportunities in Indian Steel Industry
Figure 9.4. Threats faced by Indian Steel Industry
Figure 9.5. SAIL’s Company Structure
Figure 9.6. SAIL Plants
Figure 9.7. Capacity, Production & Planned increase : SAIL
Figure 9.8. Shareholding Pattern : TATA Steel
Figure 9.9. Production Capacity Break-up
Figure 9.10. Shareholding Pattern : JSW Steel
Figure 9.11. Company Structure: JSW Steel
Figure 9.12. Comparison of Cost of production
10
Chapter X
Figure 10.1. Indian Steel Production & Consumption
Figure 10.2. Steel Emand break-up
Figure 10.3 Per Capita steel consumption of various countries & position of
India
Figure 10.4. Export- Import of Indian steel
11
EXECUTIVE SUMMARY
Steel has been the key material with which the world has reached to a
developed position. All the engineering machines, mechanical tools and most
importantly building and construction structures like bars, rods, channels,
wires, angles etc are made of steel for its feature being hard and adaptable.
Steel is crucial to the development of any modern economy and is considered
to be the backbone of the human civilization. The level of per capita
consumption of steel is treated as one of the important indicators of socio-
economic development and living standard of the people in any country. It is a
product of a large and technologically complex industry having strong forward
and backward linkages in terms of material flow and income generation.
Steel is a highly capital intensive industry and cyclic in nature. Its growth is
intertwined with the growth of the economy at large, and in particular the steel
consuming industries such as manufacturing, housing and infrastructure. As
India moves ahead in the new millennium, the steel industry will play a critical
role in transforming India into an economic superpower.
12
This Project gave us a great learning experience and at the same time it gave us
enough scope to implement our analytical ability. The findings and analysis
presented in this Project Report is based on primary as well as secondary
research. This Report will help to know about the future of the Indian steel
industry and also the demand & supply of steel in India in the coming years.
The report starts with the very basics of steel covering different aspects like
steel manufacturing, types of steel available in Indian cement market etc. The
report then goes on to cover industry analysis which includes the present
scenario, history, leading market players, demand & supply situation,
government policies with regards to the Indian steel sector etc.
The primary data was collected by interviewing the Chief Financial Officer;
Ispat industries that helped us in understanding the steel sector in a better
manner by providing some new insights into the project topic. The data
collected has been well organized and presented. We hope the research
findings and conclusion will be of use.
13
CHAPTER 1.0
INTRODUCTION TO THE TITLE WITH
INDUSTRY OVERVIEW
14
Concept & Significance of the study
Steel is crucial to the development of any modern economy and is considered
to be the backbone of the human civilization. Today, Steel (the carbon alloy of
Iron) finds application in every imaginable facet of our life. The global steel
industry has been witnessing many interesting events that have influenced
market dynamics in the last ten years. It’s because of these reasons it was
decided to study the Indian steel sector.
Scope of the study
The scope of the study lies in getting familiar with the problem and challenges
faced by the Indian steel manufacturers. Only the top three steel companies
have been studied as a part of this project to get a glimpse of the Indian steel
sector.
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CHAPTER 2.0
RESEARCH DESIGN
16
2.1. Objectives of the study
To study the structure and performance of the Indian Steel Industry.
To analyze the fundamentals of a company so as to acquire deep
knowledge about the Indian steel companies.
To study the demand and supply position of steel in India.
To examine the factors influencing the demand for steel in India.
To evaluate the competitiveness of the Indian steel Industry.
To study the government rules and policies with regards to the Indian
Steel Sector.
To understand the role of raw materials and energy in the steel
manufacturing process.
To study the overall consumption of steel in the world.
To study the importance of fundamental analysis of a company & its
importance in the investment decision.
17
To study the challenges faced by the Indian steel manufacturers.
2.2.. Research Methodology
Primary data was collected by:
1) Discussing with our Project Guide, Mr. Aunali Rupani, Director & Mentor,
ARM Research Ltd.
2) Discussing with Mr. J.P. Agarwal, CFO, Ispat Industries Ltd.
Secondary data was collected by:
1) Reading the Annual Reports of various steel producing companies.
2) Reading various articles and books on steel.
3) Visiting various websites.
2.3. Limitations of the study
The project was undertaken just for a span of one and a half month, and
studying the market keenly in to the depth, in such a short span was not
possible. The study is limited to the Indian context only.
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CHAPTER 3.0
LITERATURE REVIEW
19
National Mineral Policy ( Huda Committee Report)
Planning Commision, Government of India, December 2006
The Huda Comitte Report aims at encouraging the flow of private investments
and Introduction of state-of-the-art technology in exploration and mining .
It also aims at giving suggestions to the planning comisiion, Government of
India to develop better Infrastructure Support for Minerals like, Ferro-Chrome,
Silica, Iron-ore, etc.
Indian Steel Sector Research
Prakash Patil, Swati Rajde, Manoj Mohta CRISIL , March 09.
This report deals with detail and minute analysis of the Indian Steel Sector’s
production Components , their costing , availability, Scope and threats to
resources,It also analyses raw material supply and logistic management of top
Indian Steel Players.
The major companies are profiled in this report. For each company, business
description is given followed by financial highlights and recent developments.
The analyst opinion and projections help us in evaluating the future of the
industry. It gives an insight into the investment opportunities present in the
sector.
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Steel Sector Watch
Pankaj Pandey, Goutam Chakraborty, Abhisar Jain , icicidirect.com, May
2009.
This report brings forth the importance of maintaining steel demand-supply
balance globally. It also emphasizes on Margin improvement after raw material
contract renegotiation
Furthe analyzing Product price correction , stability expected at current levels.
ts projections clearly state expectations of India to log domestic demand
growth despite slowdown. It also gives us Recommendation and prefer
domestic plays with strong balance sheets.
Indian Steel Industry - PEST Framework Analysis
Aruvian Research, March 2009
Aruvian Research analyzes the Indian Steel Industry in a PEST Framework
Analysis. A PEST analysis is concerned with the environmental influences on
a business. The acronym stands for the Political, Economic, Social and
Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarizing the external
environment in which a business operates.
21
Indian Steel Industry 2009
Credit Analysis & Research Limited, March 2009
- This report on the Indian Steel Industry contains comprehensive data and
analysis of the sector apart from giving outlook on the sector. With our
established network of primary and secondary sources, we have captured
exhaustive data on the various parameters of the industry. We have also
forecasted the future sector-wise demand of finished steel. In addition, monthly
updates included with the subscription to this report will help the user to keep
abreast of the latest developments
Indian Steel Sector : Sector Report
By Daedal Research, August 2009
- In this report the Structure of the industry, market size, and growth rates have
been analyzed.The Value chain analysis categorizes the value-adding activities
to develop low-cost differentiation strategies. There is inclusion of Trend
analysis detects historical patterns that could help in forecasting future demand
periods.Critical issues are also reviewed that may become a threat to the
industry PEST analysis uses a framework of external factors for macro-
environmental scanning of the industry to help in taking advantage of
22
opportunities and making contingency plans for threats
The report also gives a picture of Competitive positioning of the industry
leaders has been evaluated in terms of sales, profitability, stock trend and other
performance indicators
Indian Steel Industry Outlook to 2012
RNCOS, Aug 2009
- The report gives a detailed analysis of the forces which have shaped the
Indian steel industry over the past years. The report also includes detailed
analysis and future outlook of various industries related to the steel industry,
including automotive, consumer durables, aerospace and marine, power,
telecom, railways, and housing industries.
The report classifies the finished steel product market into two categories -
alloy and non-alloy. It also covers the information on industry-wise steel
demand, overall steel consumption, production and trading market. Apart from
this, it also provides industry forecast (FY 2010 to FY 2012).
23
CHAPTER 4.0
INTRODUCTION TO THE
COMPANY
4.1. Company Profile
4.2. Vision
4.3. Methodology of research
24
ARM RESEARCH PRIVATE LTD.
4.1 Company Profile
ARM Research Private Ltd. was established on by Mr. Aunali Rupani, who is
serving as the Director of the company. He is a Self Educated professional
with 14 years of market exposure and strong values and vision, and believes
that there is no replacement for knowledge and true mantra for success lies in
implementing it. The Registered office of the Company is at Andheri. It’s
basically an equity research and portfolio management company. It is also a
brokerage firm, where it is acting as a franchisee of Motilal Oswal Securities
Ltd.
The number of employees in the company is 18, who are working in a team of
4. The average age of employee in the research team is 30 years.
4.2 Vision
Introduce innovative and path breaking methods in field of Research and Asset
management and empower investors to make investing simple.
25
4.3 Methodology of research
Conduct extensive Sectoral research with the vision and the ability to
foresee its growth prospects in years ahead.
Monitor changes in Domestic and World economy & impact of
changes in the Government policies on the sectors.
Focus on event based activities that can bring a turnaround/trigger in
the Company/Sector performance.
Focus on the Small & Midcap stocks in sunrise sectors with the
potential to join the Multi bagger league
26
CHAPTER 5.0
STEEL: INTRODUCTION
5.1. Introduction
5.2. Properties
5.3. History of steel
5.4 Conclusion
27
5.1. Introduction
Steel is crucial to the development of any modern economy and is considered
to be the backbone of the human civilization. The level of per capita
consumption of steel is treated as one of the important indicators of socio-
economic development and living standard of the people in any country. It is a
product of a large and technologically complex industry having strong forward
and backward linkages in terms of material flow and income generation.
Steel is an alloy consisting mostly of iron, with carbon content between 0.2%
and 2.14% by weight depending on grade. Carbon is the most cost-effective
alloying material for iron, but various other alloying elements are used such as
manganese, chromium, vanadium, and tungsten. Carbon and other elements act
as a hardening agent.
5.2. Properties
The amount of alloying elements and their presence in the steel controls
qualities such as hardness, ductility, and tensile strength of the resulting steel.
28
1) Hardness refers to various properties of matter in the solid phase that
gives it high resistance to various kinds of shape change when force is
applied.
2) Ductility is a mechanical property used to describe the extent to which
materials can be deformed plastically without fracture.
3) Tensile strength measures the force required to pull something such as
rope, wire, or a structural beam to the point where it breaks. Steel with
increased carbon content can be made harder and stronger than iron,
but is also more brittle.
5.3. History of steel: A Timeline
The earliest recorded metal employed by humans appears to be gold which can
be found free or "native". Small amounts of natural gold have been found in
Spanish caves used during the late Paleolithic period, 40,000 BC. The first
invention of steel was in 13th century BC when iron and charcoal were
combined properly.
29
History of the Steel Industry dates back to the ancient times in Armenia which
is approximately around 3500 B.C. The earliest known production of steel is a
piece of ironware excavated from an archaeological site in Anatolia and is
about 4,000 years old. Other ancient steel comes from East Africa, dating back
to 1400 BC.
In the 4th century BC, steel weapons like the Falcata were produced in the
IberianPeninsula, while Noric steel was used by the Roman military. Wootz
steel was produced in India and Sri Lanka from around 300 BC.
The mass-production of steel only became possible after the introduction
of the Bessemer process, named after its brilliant inventor, the British
metallurgist Sir Henry Bessemer (1813-1898).
30
Year Event
3 rd millennium BC Copper metallurgy is invented and copper is used for
ornamentation.
2 nd millennium BC Bronze is used for weapons and armour.
1 st millennium BC Pewter beginning to be used in China and
Egypt
16th century BC The Hittites develop crude iron metallurgy.
13th century BCInvention of steel when iron and charcoal were
combined properly.
400 BCIron pillar of Delhi is the oldest surviving example of
corrosion-resistant steel
326 BC
Alexander was presented 30 pound of Indian steel other precious things in 326 BC in northwestern India as a
tribute.
300 BCWhootz steel making, a high quality steel making technique
believed to have originated in India in 300 BC.
200 BCSteel making widely used in Han Dynasty
China.
1000 AD
The whootz, crucible and stainless steels were invented in India, and were widely exported, resulting in "Damascus
steel" by the year 1000.
1448 Johann Gutenberg develops type metal alloy.
31
1740 Benjamin Huntsman developed the crucible steel technique.
1855Bessemer process for mass production of steel patented.
1912 Harry Brearley invents stainless steel.
1980Development of duplex stainless steels which resist oxidation
in chlorides.
Table 5.1. Timeline of Steel
5.4.Conclusion
“Wootz was the first high-quality steel made anywhere in the world.
According to reports of travelers to the East, the Damascus swords were made
by forging small cakes of steel that were manufactured in Southern India. This
steel was called wootz steel. It was more than a thousand years before steel as
good was made in the West.”
- J. D. Verhoeven and A. Pendray, Muse, 1998
1) Today, steel is the most commonly used material in the world. It has a
wide range of usage from shipbuilding, pipeline transport to office
equipments and household appliances.
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2) The property of finished steel depends upon the percentage of alloying
elements present in it.
3) The first metal being used by human beings was gold and then copper
followed by bronze. It was only in 13th century that STEEL was
invented. The mass production of steel was possible only after
Bessemer invented the Bessemer process in 1855.
CHAPTER 6.0
COST OF PRODUCTON
6.1. Components of the cost of production
6.1.1.Raw materials
6.1.2.Power costs
6.1.3.Interest payments
6.1.4.Taxes & duties
33
6.1.5.Other expenses
6.2. Conclusion
6.1. Components of cost of production
Figure 6.1. Components of Cost of production of steel
34
Any sustained rise in input prices usually lead to an increase in product prices
through the cascading effect. The major components of the costs of production
of finished steel are:
6.1.1.Raw materials - Raw material costs forms roughly about 62% of the
total cost of production. This only emphasizes on how important sharp
movements in raw material prices mean for the steel industry. The basic raw
materials that are used in producing steel are :
6.1.1.1.Iron ores:
Iron ores are rocks and minerals from which metallic iron can be
economically extracted. 98% of the mined iron ore is used to make
steel. The best kind of iron ore meant for steel manufacturing contains
67% iron. For production of steel, pure iron ore can be processed into
the following forms, namely sponge iron & pig iron. Sponge iron is
the generic name of metallic product produced through direct reduction
of iron, iron ore pellets in the solid state.
Sponge iron is divided into two types namely Direct Reduced Iron
(DRI) and Hot Briquetted Iron (HBI). DRI is produced through the
coal based route in the form of lumps or pellet of about 4 by 44 mm. It
35
has a disadvantage of lower yield and rusting easily and thus they are
converted into HBI through a gas based route. HBI are produced in the
form of briquettes (small cubes) and have the advantage of higher
yields and easier storage and transportability. DRI involves low
investment and can be produced by small capacity plants unlike the
HBI.
Pig iron is an intermediate product of smelting iron with coke and
fluxes like limestone. It contains approximately 92% iron and about 3.5
– 4.5 % carbon. The balance is largely silicon and manganese with a
small percentage of phosphorus, sulphur and other impurities.
6.1.1.2. Ferrochrome:
Ferrochrome (FeCr) is an alloy of chromium and iron containing 50% -
70% chromium. It is produced by electric arc melting of chromite, an
iron magnesium chromium oxide and the most important chromium
ore. Most of the world's ferrochrome is produced in South Africa,
Kazakhstan and India.
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6.1.1.3. Ferrosilicon:
Ferrosilicon, or ferrosilicium, is a ferroalloy an alloy of iron and silicon
with between 15% and 90% silicon. It is used in steelmaking and
foundries as a source of silicon in production of carbon steels, stainless
steels, to prevent loss of carbon from the molten steel.
6.1.1.4.Coking coal:
Hard coking coal, an important input for steel making, is basically
bituminous coal, which is “coked” to remove volatile components..
Yearly, over 400 mn tonnes of coke is produced worldwide.
37
Figure 6.2. Prices of Iron ore and Coking coal
6.1.2. Power costs
The steel industry is an energy intensive industry with power and fuel
contributing as much as 10.1% of total production costs. It has been
estimated that the global steel industry account for nearly 4% of the
total energy consumption in the world. Most steel majors like SAIL,
TSL and JSW have captive power plants but smaller players have to
depend on outside supply.
6.1.3. Interest payments
38
Steel is a capital-intensive industry and as such many companies resort
to outside borrowings, mostly in form of long term loans. Interest
payments always used to form on average between 7 – 9% of the total
costs but have recently come down to as low as 3.2%. Interest coverage
ratio has also shot up to nearly 10 after hovering above the zero levels
for a number of years.
6.1.4. Taxes and duties
Excise duties, sales tax, other direct and indirect taxes further push up
costs in the steel sector. Total taxes contribute more than 16% of total
costs. Here, the government can play an active role and provide
structured concessions for new and old capacities.
6.1.5. Other expenses
Wage bills, depreciation costs and distribution expenses are among the
other major cost components.
6.2. CONCLUSION
39
1) Coking coal, iron ore and scrap shortage are responsible for the increased
cost of production, coupled with low average prices of Rs.17,000 - 18,000
TPA in the past. Integrated players with their own captive mines for iron ore
and coal will find it an advantage as they will be shielded from the
fluctuating prices of raw materials.
2) The financial cost, cost of power, and some other materials are high. All
these account for about 35 - 40% of the cost of steel production in India,
whereas it is about 28% in the developed countries. All these make the pre-
tax cost of steelmaking in India higher than that of South Korea, Australia,
Mexico, and CIS countries
CHAPTER 7.0
40
PROCESS OF STEEL MAKING
7.1. Basic Oxygen Steel-making
7.2. Electric Arc Steel-Making
7.3. Induction Furnace
7.4. CONARK Steel-making
7.5. Conclusion
7.1. Basic Oxygen Steel-making:
Basic oxygen steelmaking (BOS, BOF, Linz-Donawitz-Verfahren, LD-
converter) is a method of primary steelmaking in which carbon-rich molten pig
iron is made into steel. Blowing oxygen through molten pig iron lowers the
41
carbon content of the alloy and changes it into low-carbon steel. The vast
majority of steel manufactured in the world is produced using the basic oxygen
furnace. Modern furnaces will take a charge of iron of up to 350 tons and
convert it into steel in less than 40 minutes.
42
Figure 7.1. Basic oxygen steel-making
43
7.2. Electric Arc Steel-Making:
About one-quarter of the world’s steel is produced by the electric-arc method,
which uses high-current electric arcs to melt steel scrap and convert it into
liquid steel of a specified chemical composition and temperature. External arc
heating permits better thermal control than does the basic oxygen process, in
which heating is accomplished by the exothermic oxidation of elements
contained in the charge. This allows larger alloy additions to be made than are
possible in basic oxygen steelmaking.
The electric-arc furnace (EAF) is a squat, cylindrical vessel made of heavy
steel plates. It has a dish-shaped refractory hearth and three vertical electrodes
that reach down through a dome-shaped, removable roof. The shell sits on a
hydraulically operated rocker that tilts the furnace forward for tapping and
backward for slag removal.
44
Figure 7.2. Electric Arc Steel making
7.3. Induction Furnace:
An induction furnace is an electrical furnace in which the heat is applied
by induction heating of iron ore in a crucible placed in a water-
cooled alternating current solenoid coil. The various types of Induction
Furnaces used for Steel making are Medium frequency and High frequency.
Raw materials used are Steel melting Scrap and Direct Reduced Iron. Alloying
45
elements are added as per requirement. Mild steel, Stainless Steel and low and
high alloy Steel can be made from these furnaces An Induction furnace today,
has a capacity up to a maximum of 16-tonne/charge.
Figure 7.3. Induction Furnace Steel making
46
7.4. CONARC Steel-making:
CONARC (CONverter process with electric ARC steelmaking) process
combines electrode arc melting with the oxygen blowing process. This process
gainfully utilizes the process advantages of both (BOF & EAF). The CONARC
design concept combines the conventional BOF process with electric steel
making in a single production unit which consists of two identical vessels. The
steelmaking process in a CONARC unit is consequently split up into two main
phases:
Converter process to decarbonizes the liquid hot metal by top lance
injection of oxygen and
The electric arc furnace process to melt down all cold charge materials,
using electrical energy, and to superheat them up to tapping
temperature.
Figure 7.4. CONARK Steel making
47
7.7. Conclusion
1) Steel making process is going considerable changes; new processes are
being developed to use various types of Iron ores, coal and gas.
2) Iron ore fines are used for making Pig Iron. It is to be seen whether new
processes are economically viable comparing to old systems.
3) All these processes trim to make cheaper steel and conversation of energy.
Duplexing and Tripplexing process may become necessary to make steel in
future.
48
CHAPTER 8.0
TYPES OF STEEL
8.1. Based on chemical composition8.1.1.Carbon steel
8.1.2.Alloy steel
8.2. Based on application
8.2.1. High strength low alloy steel
8.2.2. Free machining steel
8.2.3. Wear resistant steel
8.2.4. Bearing steel
8.2.5. Stainless steel
8.2.6. Electric steel
8.2.7. Tool steel
8.3. Based on Shape and Surface
6.3.1 Flat products
6.3.2 Long products
8.4.Conclusion
49
Steel can be classified based on three parameters namely-
TYPES OF STEEL
Figure 8.1. Types of steel
50
Based on Chemical
Composition
Based on Application
Based on Shape & surface
Carbon SteelCarbon Steel
Alloy SteelAlloy Steel
High Strength Low alloy steelHigh Strength
Low alloy steel
Free Machining Steel
Free Machining Steel
Wear Resistant Steel
Wear Resistant Steel
Bearing SteelBearing Steel
Stainless SteelStainless Steel
Electric SteelElectric Steel
Tool SteelTool Steel
Flat productsFlat products
Long ProductsLong Products
8.1. BASED ON CHEMICAL COMPOSITION
8.1.1. Carbon steel (≤2.1% carbon; low alloy)
Carbon steels are most produced and used, accounting for about 90 % of
the world’s steel production. Carbon steel, also called plain carbon steel,
is steel where the main alloying constituent is carbon.
Types of Carbon Steel Carbon Content (%) Uses
Low carbon steel 0.05–0.15Structural steel, Sheets,
Wires, Pipes
Mild carbon steel 0.16–0.29 Rails, Boilers, Plates, Axles
Medium carbon steel 0.30–0.59Large equipments, Forging,
Automotive components
High carbon steel 0.6–0.99Springs & High strength
wires.
Ultra-high carbon steel 1.0–2.0% Non industrial purpose
Figure 8.2. Types of carbon steel
8.1.2.Low-alloy Steels:
Low-alloy steels constitute a category of ferrous materials that exhibit
mechanical properties as a result of additions of alloying elements Total alloy
content can range from 2.07% up to levels just below that of stainless steels,
51
which contain a minimum of 10% Cr. Low-alloy steels can be classified
according to Chemical composition & Heat treatment.
8.2. BASED ON APPLICATION
8.2.1. High-Strength Low-Alloy Steels (HSLA)
High-strength low-alloy (HSLA) steels, or microalloyed steels, provide better
mechanical properties and/or greater resistance to atmospheric corrosion. The
HSLA steels have low carbon contents (0.05-0.25% C) in order to produce
adequate formability and weldability, and they have manganese contents up to
2.0%.
8.2.2. Free machining steel
This group, developed for good machinability and fabricated into bolts, screws,
and nuts, contains up to 0.35 % sulfur and 0.35 % lead.
8.2.3. Wear-resistant steels
Wear-resistant steels, made into wear plates for rock-processing machinery,
crushers, and power shovels. Manganese steels are often called Hadfield steels,
after their inventor, Robert Hadfield. A special case, piano wire.
52
8.2.4.Bearing steels
These steels often contain 1% carbon, 1.2 % chromium, 0.25 % nickel, and
0.25% molybdenum and are very hard after heat treatment. They are used for
roller and ball bearings.
8.2.5. Stainless steel
Stainless Steel" is a type of alloy steels, that are "stain-less" or resistant to
corrosion or staining. It is also called corrosion-resistant steel or CRES.
Stainless steel is 100% recyclable. In fact, an average stainless steel object is
composed of about 60% recycled material, 25% originating from end-of-life
products and 35% coming from manufacturing processes.
8.2.6. Electrical steels
An important group of steels, necessary for the generation (in generators) and
transmission of electrical power (in transformer), is the high-silicon electrical
steels (upto 6.5%). Also called lamination steel, silicon steel or transformer
steel.
8.2.7. Tool Steel
Tool steels are produced in small quantities, and contain carbide formers such
as tungsten, molybdenum, vanadium, and chromium and cobalt or nickel to
53
improve high-temperature performance and carbon content between 0.7% and
1.4%, the manganese content is often kept low to minimize the possibility of
cracking during water quenching. Tool steels are used for special applications
like injection molding.
8.3. BASED ON SHAPE AND SURFACE:
8.3.1. Flat products
Flat products include plates, hot-rolled strip and sheets, and cold-rolled strip
and sheets. They are rolled from slabs or ingots which are semi finished
product.
a) Plates are hot-rolled either from slabs or directly from ingots. Plates
are usually made in small quantities and to a customer’s specification,
with different dimensions. They are used in boilers and industrial
machinery.
b) Hot-rolled strip is often shipped directly from the hot-strip mill in a
large coil. It is used in construction, automobile ship building etc.
c) Cold-rolled strip is produced from hot-rolled strip. Cold-rolled
products are available with a specific roughness, electrolytically
54
cleaned, chemically treated, oiled, or coated with metals such as zinc,
tin, chromium, and aluminum or with organic substances. They are
used in office equipments, white goods etc.
8.3.2. Long products
Long products are made of either blooms or billets, which are, like slabs,
considered a semi finished product and are cast by a continuous caster or rolled
at a blooming mill.
Long products include:
a) Bars are long products with square, rectangular, flat, round, hexagonal,
or octagonal cross sections. A special group of rounds are the
reinforcing bars; they provide tensile strength to concrete sections
subjected to a bending load.
b) Hot-rolled wire rods are produced in diameters between 5.5 and 12.5
mm. The use of wire is extremely wide, ranging from cords for belted
tires to cables for suspension bridges.
c) Tubular steels are broadly grouped into welded and seamless products.
Longitudinally welded tubes are normally produced up to 500 mm in
55
diameter and 10 mm in wall thickness. Seamless tubes are subjected to
more demanding service; they are often rolled in diameters ranging
from 120 to 400 mm and in wall thicknesses up to 15 mm.
8.4. Conclusion
1) Steel is classified on different parameters namely Chemical Composition,
Application, Shapes & Surfaces and Standards.
2) Carbon steel contributes to 90% of the steel production and it is most
widely used.
3) Stainless steel is the most corrosion resistance steel.
4) 25% of old scraps (end-of-life product like tanks or industrial equipment)
is used in the production of stainless steel as it is 100% recyclable.
56
CHAPTER 9.0
INDIAN STEEL INDUSTRY
OVERVIEW
9.1. Characteristics
9.2. Structure
9.3. SWOT Analysis
9.4. Major players
9.5. Enterprise Value
9.6. Consolidations in the Steel industry
9.7. Conclusion
57
9.1. Characteristics of the Indian Steel Industry
1) Cyclicality:
Steel is a cyclical industry, strongly co-related to economic cycles, since its
key users viz. automobiles, construction and consumer durables are heavily
dependent on the state of the economy. Apart from the cyclicality of the end-
user industries, heavy capital investment and a gestation of period of 2-3 years
for a new plant also contribute to the cyclicality of steel prices.
2) Continuous production process:
Steady supply of raw materials is important to the steel industry since steel
manufacture is a continuous process. Most steel manufacturers tend to ink
long-term agreements with their local suppliers where possible. Most Indian
manufacturers are also currently trying to gain control over mines to ensure
steady supply at stable prices.
3) Working capital intensiveness:
The long working-capital cycle is primarily due to high inventory maintained
by manufacturers both in terms of raw material and finished goods, owing to
the continuous nature of the production process, the standardized nature of the
58
finished products and the limited and geographically disparate supply of raw
materials. Additionally, in a scenario where demand exceeds supply, rising
prices of inventory - both raw material and finished goods as well as increased
stocking of raw materials by steel manufacturers who do not have control over
their raw material supply or prices, results in increased working capital
requirements.
4) Ability to pass on input costs to customers:
Manufacturers of steel are invariably able to pass on the increase in cost of raw
material to consumers in a normal market scenario due to the importance of
steel to many economic activities like construction, infrastructure sector, and
manufacture of consumer durables and modes of transportation.
5) Entry barriers:
The capital-intensive nature of the steel industry coupled with the long
gestation period (2-3 years) acts as an entry barrier to small entrants. However,
in India, to circumvent this problem, a number of players have set up induction
furnaces which need less investment. However, these induction furnaces
produce lower quality and quantity of steel.
6) Availability of finance:
The steel industry is both fixed capital and working capital intensive. Thus,
availability of finance for both, expansion as well as running day to day
59
operations in terms of inventory acquisition and holding and payment to
creditors is critical. The raw material suppliers tend to dictate the payment
terms as there is heavy dependence on the supply of raw materials.
9.2. Structure of the Indian Steel Industry
The steel industry in India is concentrated in the east, south and west of the
country. The integrated foundries are located in the east, while electric steel is
produced predominantly in the south and west. In the future the east will see
rapid expansion asore integrated capacities are being built in Orissa and other
eastern states due to its raw materials. Although India is now one of the worlds
top ten steel producers, its domestic output is insufficient to meet the demand
in all segments.
60
The industry classification based on product categories (and the major
producers) can be divided into the following:
Name of the
product
Major producers
Iron ore
National Mineral Development Corporation (NMDC), Kudremukh
Iron Ore Co (KIOCL) and Sesa Goa (Sesa) are the major merchant
producers of iron ore. SAIL and Tata Steel have their captive iron
ore mines.
Pig IronKIOCL, Sesa Goa and Usha Ispat., Mini Blast Furnace (MBF) pig
iron producers and even integrated steel plants like SAIL and RINL.
Sponge IronEssar Steel, Ispat Industries, Vikram Ispat (a division of Grasim) are
the major producers of gas based sponge iron.
Flat steel
products
SAIL, Tata Steel, Essar Steel, Ispat Industries and Jindal Vijaynagar
(JVSL) are the major producers of hot rolled coils (HRC). SAIL,
Tata Steel, Ispat Industries, Jindal group of companies, Uttam Steel
and Bhushan Steel are the big producers of cold rolled coils/ sheets
(CRC) and galvanized sheets (GP/ GC).
Long steel
products
RINL, SAIL and Tata Steel
Alloy Steel Mukand, Mahindra Ugine (Musco) and Kalyani Carpenter
Table 9.1. Classification of steel producers based on product
Based on the routes of production, the industry (and major producers)
can be classified into the following categories:
61
S.No. Route of
Production
Major Producers
1. Integrated SAIL, RINL, Tata Steel and JVSL are the
largest primary steel producers.
2. Secondary Essar Steel, Ispat Industries and Lloyds
steel are the largest producers of steel
through the secondary route.
Table 9.2. Classification of steel producers based on the route of
production
9.3.SWOT ANALYSIS
62
9.3.1.Strengths
Figure 9.1. Strengths of Indian Steel Industry
1) Availability of iron ore
India has rich mineral resources. It has abundance of iron ore, coal and many
other raw materials required for iron and steel making. It has the fourth largest
iron ore reserves (10.3 billion tonnes) after Russia, Brazil, and Australia.
Therefore, many raw materials are available at comparatively lower costs.
2) Availability of labor at low wage rates
63
India has the third largest pool of technical manpower, next to United States
and the erstwhile USSR, capable of understanding and assimilating new
technologies. Considering quality of workforce, Indian steel industry has low
unit labor cost, commensurate with skill. This gets reflected in the lower
production cost of steel in India compared to many advanced countries.
9.3.2.Weaknesses
Figure 9.2. Weaknesses of Indian Steel Industry
64
1) Endemic Deficiencies
These are inherent in the quality and availability of some of the essential raw
materials available in India, e.g., high ash content in indigenous coking coal
adversely affecting the productive efficiency of iron-making and are generally
imported.
2) Systemic Deficiencies
However, most of the weaknesses of the Indian steel industry can be classified
as systemic deficiencies. Some of these are described here.
a) High Cost of Capital
Steel is a capital intensive industry; steel companies in India are charged an
interest rate of around 14% on capital as compared to 2.4% in Japan and 6.4%
in USA.
b) Low Labor Productivity
In India the advantage of low cost labor gets offset by low labor productivity;
e.g., at comparable capacities labor productivity of SAIL and TISCO is 75
t/man year and 100 t/man year, for POSCO, Korea and NIPPON, Japan the
values are 1345 t/man year and 980 t/man year.
65
c) High Cost of Basic Inputs and Services
High administered price of essential inputs like electricity puts Indian steel
industry at a disadvantage; about 45% of the input costs can be attributed to the
administered costs of coal, fuel and electricity, e.g., cost of electricity is 3 cents
in the USA as compared to 10 cents in India; and freight cost from Jamshedpur
to Mumbai is $50/tone compared to only $34 from Rotterdam to Mumbai.
Added to this are poor quality and ever increasing prices of coking and non-
coking coal. Other systemic deficiencies include:
Poor quality of basic infrastructure like road, port etc.
Lack of expenditure in research and development.
Delay in absorption in technology by existing units.
Low quality of steel and steel products.
Lack of facilities to produce various shapes and qualities of finished
steel on-demand such as steel for automobile sector, parallel flange
light weight beams, coated sheets etc.
Limited access of domestic producers to good quality iron ores which
are normally earmarked for exports, and High level taxation. Besides
these, Indian steel makers also lack in international competitiveness on
determinants like product quality, product design, on-time delivery,
66
post sales service, distribution network, managerial initiatives, research
and development, information technology and labor productivity etc.
9.3.3.Opportunities
Figure 9.3. Opportunities in Indian Steel Industry
67
1.Increasing consumption of steel
The biggest opportunity before Indian steel sector is that there is enormous
scope for increasing consumption of steel in almost all sectors in India. There
is untapped potential of increasing steel consumption in India.
2.Unexplored Rural Market
The Indian rural sector remains fairly unexposed to the multi-faceted use of
steel. Enhancing applications in rural areas assumes a much greater
significance now for increasing per capital consumption of steel. The usage of
steel in cost effective manner is possible in the area of housing, fencing,
structures and other possible applications where steel can substitute other
materials which not only could bring about advantages to users but is also
desirable for conservation of forest resources.
3.Other Sectors
Excellent potential exists for enhancing steel consumption in other sectors such
as automobiles, packaging, engineering industries, irrigation and water supply
in India. New steel products developed to improve performance simplify
manufacturing/installation and reliability is needed to enhance steel
68
consumption in these sectors. For example, pre-coated sheets can be used in
manufacture of appliances, furnishings, electric goods and public transport
vehicles. Production and supply of superior grades of steel in desired shapes
and sizes will definitely increase the steel consumption as this will reduce
fabrication need; thereby reduce cost of using steel.
4.Export Market Penetration
It is estimated that world steel consumption will double in next 25 years. This
poses as a huge opportunity to the steel industry.
69
9.3.4.Threats
Figure 9.4. Threats faced by Indian Steel Industry
1) Slow Industry Growth
The linkage between the economic growth of a country and the growth of its
steel industry is strong. The Indian steel industry is no exception. The growth
of the domestic steel industry between 1970 and 1990 was similar to the
growth of the economy, which as a whole was sluggish. This sluggish growth
in the steel industry has resulted in enhanced rivalry among existing firms. As
the industry is not growing the only other way to grow is by increasing one’s
70
THREATSTHREATS
market share. Consequently, the Indian steel industry has witnessed spurts of
price wars and heavy trade discounts, which has done Indian steel industry no
good as a whole.
2) Technological Change
Technological changes often force the industry structure to change. For a
developing country like India where capital itself is costly, technological
obsolescence is a major threat.
3) Price Sensitivity and Demand Volatility
The demand for steel is a derived demand and the purchase quantity depends
on the end-user requirements. The traders tend to exhibit price sensitivity and
buy when there are discounts. This volatility of demand often affects the
integrated steel manufacturers because of their inability to tune their
production in line with the market demand fluctuations. Some other threats are:
Ever decreasing import duty on steel.
Dumping of steel by developed countries.
High quality products from developed countries available for import at
very competitive prices.
Non-availability of capital from financial institutions for iron and steel
sector.
71
9.4. Major players in the Indian steel industry:
9.4.1. STEEL AUTHORITY OF INDIA LTD.
Registered Office New Delhi
Incorporated On 24th January, 1973
Chairman S.K. Roongta
Table 9.3. SAIL
SAIL, the Navratna PSU, is the largest steel making company in India with
strong backward and forward integration. The company produces both basic
and special steel products for sectors like construction engineering, railways,
automobile and defense.
The company has five main integrated steel plants in addition to three special
steel plants and boasts of a four decade history of technical, managerial and
other know-how in steel making. SAIL manufactures and sells a broad range of
steel products in both flats and longs category. The company has the
distinction of being India’s largest producer of iron ore after NMDC and
owning the country’s second largest mines network. This gives SAIL a
competitive edge in terms of captive availability of iron ore, limestone and
72
dolomite, which are key inputs for steel making. It has 9 Iron ore mines, 5
limestone mines, 2 dolomite mines, and 3 collieries.
Figure 9.5. SAIL’s Company Structure
73
Figure 9.6. SAIL Plants
In order to achieve long term sales volume growth, SAIL is currently
implementing a modernization and expansion plan through the Brownfield
route to expand its capacity of saleable steel to over 23 MT from the base level
of around 13 MT by 2011-12.
74
Figure 9.7. Capacity, Production & Planned increase : SAIL
75
9.4.2.TATA STEEL LTD.
Registered Office Bombay House, Mumbai
Incorporated On 1907
Chairman Ratan Tata
Table9. 4. TATA Steel Ltd.
Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) was
established in 1907. It represents the country's single largest, integrated steel
plant in the private sector. The company has a wide product portfolio, which
includes flat and long steel, tubes, bearings, ferro-alloys and minerals as well
as cargo handling services. While in terms of size, Tata Steel ranks 34th in the
world; it was ranked first (for the second time) among 23 world class steel
companies by World Steel Dynamics in June 2005. With its plant located in
Jamshedpur (Jharkhand) and captive iron ore mines and collieries in the
vicinity, Tata Steel enjoys a distinct competitive advantage. The main plant at
Jamshedpur manufactures 6.8 MTPA of flat and long products.
76
Shareholding pattern
Figure 9.8. Shareholding Pattern : TATA Steel
The company has proposed three greenfield steel projects in Jharkhand, Orissa
and Chhattisgarh with additional capacity of 23 MTPA. Through investments
in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel
Holdings, Singapore, Tata Steel has created a manufacturing and marketing
network in Europe, South East Asia and the Pacific-rim countries.
77
Production Capacity break-up (MT)
Figure 9.9. Production Capacity Break-up
Tata Steel India is one of the most operationally sound companies in India and
has always maintained high EBITDA margins due to strong backward and
forward linkages, good supply contracts in domestic markets and special
branded products.
Tata Steel India has achieved a balanced portfolio with 50:50 mix in flats and
longs post expansion, which was earlier skewed towards flat products. With
flat product sales having declined lately and long product demand remaining
robust, Tata Steel has been successful in altering its product mix to align with
the industry demand.
78
9.4.3.JSW STEEL LTD.
Registered Office Hisar, Haryaa
Incorporated On 1982
Chairman Savitri Jindal
Table 9.5. JSW ltd.
JSW Steel Ltd, the flagship company of the JSW group, is a fully integrated
steel maker and is ranked second in India in terms of volume. With the
commissioning of India’s largest blast furnace (2.8 MT capacity) in February,
2009 JSW Steel became the largest private steel producer in India with a total
capacity of 7.8 MT on a standalone basis. JSW Steel is the only company in
India to use corex as well as blast furnace technology for steel production. The
company’s upstream steel-making facility is located in Vijaynagar, Karnataka,
and downstream in Maharashtra. JSW Steel acquired an integrated steel plant
in Salem, Tamil Nadu in November, 2004, which primarily produces long
category of steel.
79
Shareholding pattern
Figure 9.10. Shareholding Pattern : JSW Steel
80
Company structure
Figure 9.11. Company Structure: JSW Steel
The company has a presence in the overseas market also mainly with Houston
plate and pipe mill in the US, iron ore mine in Chile and coking coal mine in
Mozambique. The company’s products range from MS slabs, hot rolled coils to
value-added products like galvanized coils/sheets and cold rolled coils/sheets
to long products, for example, bars and wire rods. The company is on the verge
81
of further major expansion plan of adding 3.2 million tonnes (MT) to its
current capacity of 7.8 MT in India by March 2011, which would take the total
capacity to 11 MT.
Jindal Steel is amongst the largest corporate groups in India. Jindal Group is
presently a US $5 billion conglomerate and ranks fourth amongst the top
Indian Business Houses in terms of assets. Jindal Steel is one of the largest
steel producers in India with 12 plants in India and 2 in USA.
A Comparison
Major steel makers in India include SAIL, Tata Steel and JSW Steel who
together control close to 45% of steel making capacity in the country. All these
players fall into the category of main steel producers. Among them, SAIL and
Tata Steel have both backward and forward integration to a large extent and
are low cost manufacturers of steel. Also, all the main producers have
aggressive expansion plans through the brownfield and greenfield route lined
up for the next five to 10 years to increase capacity and meet demand.
82
2006-07 2007-08 2008-09
SAIL
Net Sales 35026.21 40214.16 44023.08
Net Profit 6202.29 7536.78 6188.41
EPS 15.02 18.25 14.98
TATA STEEL
Net Sales 25213.31 131535.88 145686.32
Net Profit 4165.61 12321.76 4849.24
EPS 73.06 177.18 66.07
JSW STEEL
Net Sales 8594.44 12456.65 15934.84
Net Profit 1303.89 1658.47 242.73
EPS 80.86 90.30 12.88
Table 9.6. Comparison among SAIL, TATA Steel, & JSW Steel
Sales for TATA steel is more than double than that of SAIL but if we compare
their net profits then SAIL is ahead of TATA steel, JSW ranks 3 rd . EPS for
TATA Steel is much higher than SAIL & JSW.
Production cost analysis
83
Indian steel players enjoy a competitive advantage over their global peers in
terms of cost of production due to availability of captive resources like iron ore
and thermal coal. The only laggard is the unavailability of good quality coking
coal because of which the current production cost is relatively higher. Tata
Steel is the lowest cost producer of steel in India (with 100% captive iron ore
access and 60% captive coking coal) followed by SAIL (100% captive iron
ore, but only 30% coking coal).
Figure 9.12. Comparison of Cost of production
The difference between costs of production for various players would be
reduced after contract prices for raw materials like iron ore and coking coal are
renegotiated at a significantly lower prices. The biggest beneficiaries would be
84
SAIL and JSW Steel and it would bring their cost of production close to Tata
Steel and also provide strong headroom for making decent margins even at HR
sales realisations of US $ 450-500/tonne.
9.5. Enterprise value [EV] – a tool for assessing the
efficiency of the enterprise:
A measure of a company's value, often used as an alternative to
straightforward market capitalization. EV is calculated as market cap plus debt,
minority interest and preferred shares, minus total cash and cash equivalents.
9.5.1 Calculation of Enterprise Value:
Enterprise value is calculated by adding a corporation’s market capitalization,
preferred stock, and outstanding debt together and then subtracting out the cash
and cash equivalents found on the balance sheet. (In other
words, enterprise value is what it would cost one to buy every single share of a
company’s common stock, preferred stock, and outstanding debt. The reason
85
EV= Mkt Cap + Debt – Cash - Cash Equivalents
the cash is subtracted is simple: once we have acquired complete ownership of
the company, the cash becomes ours).
9.5.2 The components of enterprise value:
Market Capitalization: Frequently called “market cap”, market capitalization
is calculated by taking the number of outstanding shares of common stock
multiplied by the current price-per-share.
Example, A Company had 1 million shares of stock outstanding and the
current stock price was $50 per share, the company’s market capitalization
would be $50 million (1 million shares x $50 per share = $50 million market
cap).
Preferred Stock: Although it is technically equity, preferred stock can actually
act as either equity or debt, depending upon the nature of the individual issue.
A preferred issue that must be redeemed at a certain date at a certain price is,
for all intents and purposes, debt. In other cases, preferred stock may have the
right to receive a fixed dividend plus share in a portion of the profits (this type
is known as “participating”). Regardless, the existence represents a claim on
the business that must be factored into enterprise value.
86
Why Is Enterprise Value Important?
Some investors, particularly those that follow a value philosophy will look for
companies that are generating a lot of cash flow in relation to enterprise value.
Businesses that tend to fall into this category are more likely to require little
additional reinvestment; instead, the owners can take the profit out of the
business and spend it or put it into other investments.
9.5.2. EV- Top 3 players:
STEEL AUTHORITY OF INDIA Ltd.:
87
Total no of shares as on March 2009 413,04,00,545
Market Price as on 1st July 2009 153.65
Rs in Cores
Market Capitalization 63,463.60
Debt Rs in Cores
Secured loans 1,473.60
Unsecured loans 6,065.19
Total Debt 7,538.79
Rs in Cores
Cash 4,469.09
Steel production installed capacity (in MT) 24EV/Tone (Rs) 27,722.08
Table 9.7. Calculation of EV/Tonne for SAIL
TATA STEEL:
Total no of shares as on March 2009 48,25,22,747
88
EV= Mkt Cap + Debt – Cash - Cash Equivalents 66,533.30
Market Price as on 1st July 2009 395
Rs in Cores
Market Capitalization 19,059.64
Debt Rs in Cores
Secured loans 3,913.05
Unsecured loans 23,033.13
Total Debt 26946.18
Rs in Cores
Cash 1,590.60
Steel production installed capacity (in MT) 14EV/Tone (Rs) 31,725.15
Table 9.8. Calculation of EV/Tonne for TATA Steel
JSW STEEL Ltd.:
Total no of shares as on March 2009 18,70,48,682
89
EV= Mkt Cap + Debt – Cash - Cash Equivalents 44,415.22
Market Price as on 1st July 2009 621.95
Rs in Cores
Market Capitalization 11,633.49
Debt Rs in Cores
Secured loans 8,214.61
Unsecured loans 3,058.02
Total Debt 11,272.63
Rs in Cores
Cash 419.96
Steel production installed capacity (in MT) 7.8EV/Tone (Rs) 28,828.14
Table 9.9. Calculation of EV/Tonne for JSW
Conclusion:
90
EV= Mkt Cap + Debt – Cash - Cash Equivalents 22,486.16
TATA Steel Ltd. Has the highest EV/Tonne at compared to that of SAIL at and
JSW Steel Ltd. at . This shows that TATA Steel has the highest operational
and production efficiency and stands higher in its enterprise value per tone
when compared to its competitors. Hence at Rs. 395.00 CMP, TATA Steel is a
good scrip for investment in the Indian Steel Sector.
9.6. Consolidations in the Steel Industry:
9.6.1. Arcelor- Mittal Merger:
91
Founded in 1989 2001
Key people L.N.Mittal Guy Dolle
Headquarte
rNetherland Luxembourg
Company
It was formed when Ispat
International acquired LNM
Holdings
The company was created by a
merger of the former companies
Aceralia (Spain), Usinor (France)
and Arbed (Luxembourg)
Capacity(MT) 63.0 46.7
Revenues
(US$ bn)28.1
39.1
Employees 224,000 110,000
Table 9.10. Merger of Arcelor & Mittal
The original bid:
In January 2006, Mittal Steel launched a $22.7 billion offer to Arcelor’s
shareholders. The deal was split between Mittal Shares (75 percent) and cash (25
percent). Under the Offer, Arcelor shareholders would have received 4 Mittal
Steel shares and 35 euros for every 5 Arcelor shares they held. (Ultimately the
power to buy or sell the shares rests with the shareholder and the company
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management can at best advice its shareholders whether to accept or reject the
bid)
The Controversy
Arcelor Management:
The management believed that Arcelor itself would have been doing the
acquisitions and not the other way around. The management was extremely hostile
to Mittal Steel’s bid from the beginning. Arcelor repeatedly played the patriotic
card in order for shareholders to reject the bid. The CEO of Arcelor dismissed
Mittal Steel as a “company of Indians” and unworthy of taking over a European
company. (all this despite the fact that most industry analysts and investment
banks pointing out that the deal was in Arcelor‘s best interests)
European Government:
The French government (despite not being a shareholder) was against the deal
because of worries over its 28000 Arcelor employees. Despite repeated assurances
from Mittal that the deal would not lead to layoffs the government of France was
never convinced. The government of Luxembourg (a stakeholder) was against the
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deal as well for a variety of reasons. The European Union approved of the Mittal-
Arcelor deal.
Moves by Arcelor to counter the bid by Mittal:
Declaration of Dividend:
On February 16, Arcelor declared a dividend of 1.2 Euros, which was 85 percent
higher than the previous dividend in 2004. This was seen as an attempt by the
company to convince shareholders that the situation under the current
management was extremely positive. Many analysts accused the company of
“creative” accounting.
The Russian Angle:
In an attempt to thwart the offer from Mittal Steel, Arcelor released a 13 billion
Euro merger plan with Severstal, a Russian company. This merger would have
made the new Severstal-Arcelor entity too big for Mittal Steel to buy. Despite the
merger plan being fraught with loopholes, the Arcelor management tried to
convince shareholders that this was the best deal for them. The shareholders
however rejected the merger with not one shareholder voting in favour of them.
9.5.2.Tata Steel - Corus
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Tata Steel on April 2, 2007 completed its £6.2 billion (US$12 billion)
acquisition of Corus Group at a price of 608 pence per ordinary share in cash.
The enlarged company has a pro forma crude steel production of 27 million
tonnes in 2007 and is the world's fifth largest steel producer with 84,000
employees across four continents.
Background (before the deal)
TATA Steel:
Tata Steel, formerly known as TISCO (Tata Iron and Steel Company Limited),
is a steel company based in Mumbai, India. It is part of Tata Group of
companies. Its main plant is located in Jamshedpur, Jharkhand, though with its
recent acquisitions, the company has become a multinational with operations in
various countries.
CORUS:
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Corus Group plc, normally referred to simply as Corus, is one of the world's
largest producers of steel, headquartered in London. It was formed from the
merger of Koninklijke Hoogovens N.V. with British Steel Plc on 6 October
1999.
The Takeover
As per the agreement, 75 per cent of Corus shareholders tendered their shares
for the acquisition to be complete.
The combined entity of Tata Steel-Corus would have a capacity of 40 million
tonne by 2011-12.The combined entity will have a turnover of $32 billion by
2011-12 with an EBIDTA margin of 25%.
9.7.CONCLUSION
1) Tata Steel India has lowest cost of production.
2) SAIL has a strong Balance Sheet to support the huge capex plan that it is
goin to undertake in the coming years.
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3) JSW Steel is the only company in India to use corex as well as blast furnace
technology for steel production.
4) Steel is a highly cyclical industry. It’s a very capital intensive industry &
there is a huge gestation period of around 2-3 years.
5) There is an opportunity for India to increase it’s per capita consumption
which is, at present, 47 kgs. Steel hasn’t touched the lives of people in rural
areas.
6) Although India is now one of the worlds top ten steel producers, its
domestic output is insufficient to meet the demand in all segments.
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CHAPTER 10.0
DEMAND AND SUPPLY DYNAMICS
10.1. Overview
10.2. Production & Consumption
10.3. Imports & Exports
10.4. Conclusion
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10.1. Overview
The 90s were a very tumultuous time for the Indian economy 1992 saw India
takes its first step towards economic liberalization. Along with the opening up
of the economy, Indian Steel also saw the entry of a number of domestic
players. Private investment flowed into the industry adding fresh capacities.
The major growth came after economic liberalization in 1992. Steel production
and consumption, which were earlier controlled by government, were
liberalized. This encouraged the growth of private enterprises that were further
responsible for the growth of the industry, especially during 1990-2005. In
1990, the Indian steel Industry had a production capacity of 23 MT, the last
decade saw the Indian steel industry integrating with the global economy and
evolving considerably to adopt world-class production technology to produce
high quality steel.
The years between 1997 and 2001 once again saw a downturn in the global
steel industry.
Some of the significant characteristics of this period were:
Demand supply mismatch
Unremunerative prices
Erosion of bottom line
Crude steel production grew at more than 10 % annually from 34.71 MT in
2002-03 to 50.82 MT in 2006-07. This growth was driven by both capacity
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expansion (from 40.41 MT in 2002-03 to 56.84 MT in 2006-07) and improved
capacity utilization (from 86% in 2002-03 to 89% in 2006-07). During 2006,
India emerged as the 5th largest crude steel producing country in the world as
against 8th position three years back.
10.2. Production and consumption
Traditionally, Indian steel industry was classified into Main Producers (SAIL
plants, Tata Steel and Vizag Steel/ RINL) and Secondary Producers. However,
with the coming up of larger capacity Steel making units, of different process
routes, the classification has been characterized as Main Producers & Other
Producers.
The graph below shows the crude steel production & apparent consumption in
India from FY05 to FY09. There has been a considerable increase in the
production & consumption from FY05 to FY08 but due to the global financial
crisis, the domestic steel production and consumption remained flat in FY09.
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Figure 10.1. Indian Steel Production & Consumption
Demand driven by construction and automobile
Steel demand in India depends mainly on the construction sector, which
consumes close to 60% of the total steel consumed in the country with
automobile contributing 11%. The construction and auto sector have shown
phenomenal growth over the last few years and were on an upswing till mid
2008 before the global liquidity crunch showed its effects and led to a massive
slowdown in these two sectors causing steel demand to slacken. The recent
pick up in both these sectors has helped steel demand to bounce back sharply.
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Figure 10.2. Steel Demand break-up
Infrastructure spend to boost construction activities
There has been a pick up in steel demand from both the auto and construction
sectors in recent months. The situation seems to be stabilising. Steel demand is
expected to remain robust and show 5% growth in FY10 on the back of falling
interest rates, cooling inflation, return of consumer confidence with
infrastructure spend in the Eleventh Plan giving a boost to the construction
sector. We expect 7 MT of incremental steel demand per annum from the
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planned infrastructure spending programmed of the government during the
Eleventh Plan.
11th Five year Plan Roads/
Railways
Urban Irrigation Airport Telecom Power Bridges
Investment
expected from
11th Plan (Rs. Bn)
3142 2618 1829 2533 1190 2548 6665
Assuming that
70% will be spent
2199 1833 1280 1773 833 1784 4666
Civil Construction
(%)
100 40 60 50 40 15 25
Steel Component
(%)
14 25 18 15 25 20 15
Total Steel
(Rs. Bn)
308 183 138 133 83 54 175
Steel Prices Rs/T 32000 32000 32000 32000 32000 32000 32000
Total steel
required (MT)
10 6 4 4 3 2 5
Total steel for
11th Five year
Plan
34
Average annual
steel ccnsumption
(MT)
7
Table 10.1. Infrastructural activities to boost steel demand
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India’ per capita steel consumption is a dismal 47 kg at present. It ranks bottom
among all developing nations with rural per capita steel consumption as low as
3 kg. India compares poorly with world average per capita steel consumption
of 180 kg and other developing countries like China (310 kg) and Brazil (120
kg). With huge infrastructure spending committed by the government in the
Eleventh Plan, falling interest rates and steel use being promoted increasingly,
demand is expected to pick up after the recent slowdown and remain robust,
going forward. This would help India improve its per capita steel consumption.
Figure 10.3 Per Capita steel consumption of various countries & position
of India
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10.3. IMPORTS AND EXPORTS
Imports are mostly on price considerations and, in some cases, to supplement
domestic production. The observed growth in imports is mainly in hot rolled
coils, cold rolled coils, semis and steel scrap. Increased emphasis on import
substitution has emerged as a key trend in the domestic industry.
India has already registered its presence in the global market in the recent
years. While India started steel production in the year, 1911, steel exports from
India started only in 1964. However, steel exports have been sporadic. From
1964 to 1968 India exported a large quantity of steel mainly due to recession in
the domestic iron and steel market. Subsequently, exports declined with revival
of the domestic demand.
Figure 10.4. Export- Import of Indian steel
105
The graph above shows the expot and import patten of steel in India. The
imports have seen a robust growth since 2005 to 2008 due to the increase in
demand of steel from the aoutomobiles and construction sector.
Waning demand for steel is evident in a dip in imports, which cumulatively till
August-08 had grown by a robust 28%. Then during September, October
import fell sharply. As a result aggregate imports decline by 8.6% during
April-October 2008. Inventory levels have also piled up, with the same
indicating a whopping 128% rise Y-O-Y at the end of October 2008.
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10.4.CONCLUSION
1. Steel demand in India is mostly dependant on demand from the
Construction & automobile sector, of which construction accounts for
close to 60% of total steel demand.
2. There has been a considerable increase in the production & consumption
of steel from FY05 to FY08 but due to the decrease in demand from
automobile & construction sectors, domestic steel production and
consumption remained flat in FY09.
3. India’ per capita steel consumption is a dismal 47 kg at present . Robust
infrastructure spending in Eleventh Plan to boost construction activities
which will in turn increase the demand for steel.
4. The increase in overall imports of steel is mainly in hot rolled coils, cold
rolled coils, semis and steel scrap.
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CHAPTER 11.0
GOVERNMENT POLICIES AND
REGULATIONS
11.1. Ministry of steel
11.2. Reform measures and policy initiatives
11.3. National Steel Policy, 2005
11.4. Conclusion
108
11.1. Ministry of steel
The Ministry of Steel is responsible for the planning and development of the
iron & steel industry, which interalia includes development of essential inputs
such as iron ore, limestone, dolomite, manganese ore, chromite, Ferro alloys,
sponge iron, refractories etc. and other related functions.
The main functions of the government are:
(a) Formulation of policies in respect of production, distribution, prices,
imports and exports of Iron and Steel and Ferro Alloys;
(b) Planning, development and facilitation for setting up of iron and steel
production facilities;
(c) Development of iron ore mines in the public sector and other ore mines
used in the iron and steel industry; and
(d) Overseeing the performance of Steel Authority of India Limited (SAIL)
and its subsidiaries and of other Public Sector Undertakings/Government
managed companies functioning in the iron and steel sector.
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Liberalization of the Indian steel sector
The Indian steel sector was the first core sector to be completely freed from the
licensing regime and pricing and distribution controls. This was done primarily
because of the inherent strengths and capabilities demonstrated by the Indian
iron and steel industry. The economic reforms and the consequent
liberalization of the iron and steel sector which started in the early 1990s
resulted in substantial growth in the steel industry and green field steel plants
were set up in the private sector.
11.2. REFORM MEASURES AND POLICY INITIATIVES
The important policy measures which have been taken over the years for the
growth and development of the Indian iron and steel sector are as under:-
1) In the Industrial policy announced in July 1991, iron and steel industry was
removed from the list of industries reserved for the public sector and also
exempted from the provisions of compulsory licensing under the Industries
(Development and Regulation) Act, 1951.
2) With effect from 24th May 1992, iron and steel industry was included in the list
of ‘high priority’ industries for automatic approval for foreign equity investment
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up to 51%. This limit has since been increased to 100%.
3) Pricing and distribution of steel was deregulated from January, 1992.
4) The import regime for iron and steel has undergone major liberalization
moving gradually from a controlled import by way of import licensing, foreign
exchange release, canalization and high import tariffs to total freeing of iron and
steel imports. Export of iron and steel items has also been freely allowed.
5) Duties on raw materials for steel production were reduced. These measures
reduced the capital costs and production costs of steel plants.
6) Levy on account of Steel Development Fund was discontinued from April,
1994 thereby providing greater flexibility to main producers to respond to market
forces.
7) In pursuance of the decision taken in the Steel Consumer’s Council meeting
held on 30.6.2006 under the Chairmanship of Honorable Steel Minister, Ministry
of Steel has constituted a Steel Pricing Monitoring Committee (SPMC). The aim
of the SPMC is to monitor price rationalization, analyze price fluctuations and
advise all concerned regarding any irrational price behavior of steel commodity.
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11.3. NATIONAL STEEL POLICY, 2005
With a view to accelerating the growth of the steel sector and attaining the vision
of India becoming a developed economy by 2020, the Ministry of Steel
formulated a National Steel Policy (NSP) in 2005. The following are the salient
features of the NSP:-
1) The NSP sets out a broad roadmap for the Indian Steel Industry in its journey
towards reform, restructuring and globalization.
2) The long-term goal of the NSP is that India should have a modern and efficient
steel industry of world standards, catering to diversified steel demand. The
focus of the policy is to achieve global competitiveness not only in terms of
cost, quality and product-mix but also in terms of global benchmarks of
efficiency and productivity.
3) In order to achieve the goal of 110 million tones of steel production by 2019-
20, the NSP seeks to remove the supply-side constraints to the growth of this
industry in an open, globally integrated and competitive environment.
4) The NSP seeks to adopt a multi-pronged strategy to move towards the long-
term policy goal. On the demand side, the strategy would be to create
incremental demand through promotional efforts, creation of awareness and
strengthening the delivery chain, particularly in rural areas. On the supply side,
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the strategy would be to facilitate creation of additional capacity, remove
procedural and policy bottlenecks in the availability of inputs such as iron ore
and coal, make higher investments in R&D and encourage the creation of
infrastructure such as roads, railways and ports.
5) The NSP acknowledges the low per capita consumption of steel in the country,
especially in the rural areas and the need to boost steel consumption to improve
quality of life and help in meeting the growing aspirations of masses.
6) In order to achieve the strategic goal of 110 MT of steel production by 2019-
20, the industry would need additional capital. In order to mobilize such vast
resources NSP seeks to encourage FDI and to make the fiscal incentives,
available to infrastructure projects, accessible to the steel industry.
7) The NSP seeks to support developing of risk-hedging instruments like futures
and derivatives to contain price volatility in the steel market.
8) The NSP seeks to mount aggressive R&D efforts to create manufacturing
capability for special types of steel, substitute coking coal, use iron ore fines,
develop new products suited to rural needs, enhance material and energy
efficiency, utilize waste, and arrest environmental degradation.
9) The NSP acknowledges the important role played by the secondary steel sector
in providing employment, meeting local demand of steel in rural and semi-
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urban areas. The NSP envisages institution of mechanisms for import
surveillance, and monitoring export subsidies in other countries.
11.4.CONCLUSION
1) Increased infrastructure spending by the Government of India and development
of roads could generate significant savings in freight and transportation cost,
making Indian steel companies and other industries globally competitive.
2) There was expansion of the steel sector after the economic reforms. The new
entrants as well as the existing manufacturers went for technical tie-ups with
leading steel producers of the world.
3) The government has a favorable policy for steel manufacturers. However, there
are certain discrepancies involved in allocation of iron ore mines and land
acquisitions. Furthermore, the regulatory clearances and other issues are some
of the major problems for the new entrants.
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CHAPTER 12.0
CHALLENGES FACED BY THE
INDIAN STEEL INDUSTRY
Disparities in steel consumption
Thrust on infrastructure related activities
Raw Materials
Government intervention
Land requirements
Untapped export potential
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CHALLENGES BEFORE THE INDIAN STEEL INDUSTRY
1) Disparities in steel consumption
The real challenge lies in addressing disparities in steel consumption across
different states and regions and also between urban and rural areas. The per
capita consumption of steel in India is just 47 kg and has to go a long way to
reach consumption levels of around 627 kg in developed countries like Japan
and 358 kg in USA.
2) Thrust on infrastructure related activities
There is a need to continue the current thrust on infrastructure related activities
and extend them to rural India. Rural Indian today presents a challenge for
development of the country and the opportunity to increase usage of steel in
these areas through projects such as rural housing etc.
3) Raw materials
Current shortage of inputs has pushed up the costs for the steel industry.
Government should ensure that quality raw material such iron-ore and coke are
available to the industry. With Ministry of Steel targeting an output of 100 MT
of steel by 2020 there is an urgent need to develop raw material resources for
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inputs like iron-ore and coal within or outside the country. Countries like Japan
have already taken similar steps to safeguard their industries.
4) Government intervention
Government should not regulate prices and free market forces should prevail.
Intervention by the Government is only a short-term solution to the issue of
steel prices in the country. Once left alone, market dynamics will automatically
ensure price corrections and determine the optimum price of steel.
5) Land Requirements:
Choice of location will be governed by various considerations, such as, likely
sourcing of raw materials, target markets for finished products, envisage
capacity in this case of operation, infrastructure facilities etc. In case of
existing plants undergoing expansion/up gradation, the choice of location does
not arise but for new capacities which will heavily depend on export of
finished products, the coastal location could be advantageous. Any Greenfield
project will require land. In India, land is available in remote villages and
demographically in backward states like Orissa etc. Numerous problems are
there in acquiring lands.
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6) Untapped export potential
India’s share in world trade steel is a miniscule 2%. Given the capabilities of
the Indian steel industry there is tremendous scope to increase this share
further. While the steel industry will continue servicing the domestic demand
there is a lot of untapped export potential with the industry.
Un-interrupted supply of raw material is to be ensured before commissioning
or thinking about new projects. The sources of raw materials are limited.
Though India has good reserves of iron ore but at the same time lack of
matching and adequate reserves of coking coal and non-availability of good
quality lime-stone for steel making have also to be technology bypass these
primary requirements.
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CHAPTER 13.0
CONCLUSION
119
Conclusion
1) The liberalization of industrial policy and other initiatives taken by the
Government have given a definite impetus for entry, participation and
growth of the private sector in the steel industry. While the existing units
are being modernized/expanded, a large number of new/Greenfield steel
plants have also come up in different parts of the Country based on modern,
cost effective, state-of-the-art technologies.
2) Indian steel players, now, concentrate on the global market as they know the
trend of world steel market. The recent movement of Tata steel is also a big
evidence for the development of Indian steel industry.
3) Efforts to make this sector more eco-friendly will meet success only if
competent
authorities take up the developmental jobs in proper spirit.
4) The global steel industry has been notoriously cyclical and although internal
demand is likely to remain high in India for the foreseeable future,
overcapacity in the global market place remains a real threat in the next decade.
Overcapacity would bring about increased competition.
5) Although the Indian steel industry is growing and its share of global steel
production is rising, the industry is still being constrained by major deficiencies
120
in fundamental areas. Financing problems mean that although major
infrastructure programmes are taking place the amount remains well below
Government targets, therefore slowing steel demand.
6) The steel industry demonstrates a high degree of variability, both in terms of
earnings and production. The factors attributable for driving this variability are
global economic conditions with a particular sensitivity to the performance of
the automotive, construction, capital goods and other industrial products
industries.
7) There is a need to continue the current thrust on infrastructure related activities and
extend them to rural India. Rural Indian today presents a challenge for
development of the country and the opportunity to increase usage of steel in these
areas through various projects.
8) Adequate enabling infrastructure such as power, ports, roads, rail transport is pre-
requisite for the Indian steel industry to remain competitive.
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CHAPTER 14.0
SUGGESTIONS
122
Suggestions
The following suggestions are given to rejuvenate the Indian steel industry:
1) Technology policy is to be so designed by the government that it will
generate the thrust to update the technology by the steel producers.
2) Further liberalization towards tariff structure, full convertibility of Indian
currency, more equity participation by foreign partners, rationalization of
tax structure etc. will be required.
3) Steel companies must assess their core competency and realign their
strategy to cope with the internal and global competition.
4) R&D focus is to be increased substantially. Expenditure on R&D by steel
plants should be increased. With a strong R&D base, organizations will be
able to assimilate the technology faster.
5) Organizational adjustments must be made while adopting newer
technologies. Effective human resource policy will help speedier
technology adoption. Socio-economic aspects should be dovetailed while
selecting a technology.
123
6) Training and re-training with updated inputs should be a continuous process
in steel plants. Training programmers should be designed for people from
different hierarchy including top level management.
7) As economy is becoming more and more market driven, steel sector should
also tune to it.
8) Technology transfer plans are to be worked out more carefully. Indian firms
must select appropriate technology with proper scope of adoption.
9) Firms must do technological forecasting, which is not common in Indian
steel industry, to take better decisions on product mix and investment
proposals.
10) Resource utilization must be more effective to improve on the productivity.
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CHAPTER 15.0
ANNEXURES
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Of
1.SAIL
2.TATA Steel Ltd.
3.JSW Steel Ltd.
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CHAPTER 16.0
BIBLIOGRAPHY
126
BIBLIOGRAPHY
1) CMIE Journal
2) Annual Report of Ministry of Steel
3) CRISIL Report
4) www.sail.com
5) www.worldsteel .org
6) www.steel.nic.in
7) www.steelworld.com
8) www.mysteel.com
9) www.moneycontrol.com
10) www.tatasteel.com
11) www.armresearch.in
12) www.icicidirect.com
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