TERM PAPERBUSINESS ENVIRONMENT

“PESTEL ANALYSIS OF STEEL INDUSTRY IN INDIA”

SUBMITTED TO SUBMITTED BY

MR. AJAY CHANDEL NAVNEET BHARDWAJ

SEC.- R1001

ROLL NO.-A17

REG. NO.-11006438

AKNOWLEDGEMENT

The most precious moments are those when we get an opportunity to remember and thank everyone who has in some way or the other motivated and facilitated us to achieve our goals.

First of all I thank God almighty for giving me his blessings. I thank to my entire teaching community and all friends for being as motivating force behind me all the time I needed them.

I also thank my family and dear ones who stood behind me to support me and giving me their precious time and attention.

Thank you very much.

Navneet Bhardwaj

CONTENTS

Introduction History of steel Industry, growth and future perspective Steel industries in India What is PESTLE analysis?? PESTLE analysis of steel industryLiterature reviews and their conclusionReferences Ending

INTRODUCTION TO STEEL INDUSTRY

Steel is an important indicator to analyze the economic development of a country. The steel industry is highly scientific and technology oriented. Technological advancement is very important for the overall health of the steel industry.

Indian Steel Industry

During Ancient Period

The history of iron and steel making in India goes back by several centuries. It dates to 480 BC when archers in India used arrows tipped with steel. The iron pillar of Dhar near Indore in Madhya Pradesh dates back to about 321 AD, the iron pillar of Kutab Minar near Delhi dates back to about 400 AD and the iron beams of Sun temple of Konark in Orissa dates back to 13th century. These pillars are a testimony to ancient India's expertise in the making of steel.

Before Independence

The roots of the Indian Steel industry in modern times can be traced to the year 1874, when a company called Bengal Iron works at Kulti near Asansol in West Bengal produced iron. One of the most important landmarks in the history of Indian steel industry was the commencement of the Tata Iron and Steel Company at Jamshedpur in the state of Bihar in 1907.The other prominent steel manufacturers before independence were Indian Iron and Steel Company (1922),Mysore Iron and Steel Works(1923) and Steel Corporation of Bengal (1937).

After Independence

India found it difficult to sustain development in steel sector after independence on its own due to the lack of technological development. The high cost of developing technology in this sector proved to be a major hindrance. That's when the government decided to go for synergy with other countries for technology transfer. Some of the prominent steel plant set up then was in Rourkela in collaboration with West Germany and in Bokaro in collaboration with Russia. These steel plants came under the purview of public sector enterprises.

Post Liberalization

The post liberalization scenario in the Indian Steel industry has witnessed a monumental shift. Some of the salient features are:

• The need for license for increasing capacity has been abolished.

• Steel industry has been removed from the list of Industries under the control of state sector.

• Foreign equity investment in steel has gone up to 74%.

• In January 1992 the price and distribution controls were removed.

• Policies like convertibility of rupee on trade account, freedom to mobilize resources from overseas financial markets and restructuring of existing tax structure have immensely benefited the industry.

Milestone

The Indian steel industry has come a long way since its humble beginnings. The takeover of the British steel giant Corus steel by Tata Steel and the acquisition of Arcelor by Mittal Steel herald a new beginning for the Indian steel industry. These events signify the fact that the Indian steel industry has acquired a global identity and is today extremely competitive globally.

Some of the prominent steel producers today are Posco, Tata Steel, Essar, Ispat, Sail and Rinl.

Future trends

• It has to be said that the global recession has affected the Indian steel industry especially stainless steel, but the steel industry is trying to offset the negative effect of the recession by focusing on transportation and construction projects which are usually funded by the government.

• India is the only country globally to record a positive overall growth in crude steel production at 1.01 per cent for the period January -March 2009.

• It is estimated that India's steel consumption will grow at nearly 16% annually till 2012.

• The National Steel Policy has forecasted the demand for steel would reach 110 million tons by 2019-2020.

AN OVERVIEW OF STEEL INDUSTRY

There have been almost revolutionary changes in the global steel scene with fierce competitive pressures on performance, productivity, price reduction and customer satisfaction. National boundaries have melted to encompass an ever increasing world market. Trade in steel products has been on the upswing with the production facilities of both the developed and the developing countries complementing each other in the making of steel of different grades and specialty for the world market. Technological innovations have provided the competitive edge to the technologically strong companies. Smooth and quick transfer of technology has, however, meant an increasingly competitive pressure on the companies to be ahead of the others in the race for technological superiority to maintain and, if possible, to strengthen the bottom lines.

Sagging prices in the backdrop of economic slowdown have spelt turmoil in the industry the world over. As in the case of oil and natural gas, there is a felt need for the steel producing countries to come together and evolve an understanding on production and pricing of steel products. Some effort in this direction is being taken, but, it is yet to take firmer roots. The future is uncertain, but challenging, and holds great promise if the right steps are taken because of the inherent qualities of steel.

The Indian steel industry comprises of the producers of finished steel, semi-finished steel, stainless steel and pig iron. Indian steel industry, having participation from both public sector and private sector enterprises, is one of the fastest growing markets for steel and is also increasingly looking towards exports as driving the growth of the industry.

India’s economic growth is contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be an indicator of economic development. While steel continues to have a stronghold in traditional sectors such as construction, housing and ground transportation, special steels are increasingly used in engineering industries such as power generation, petrochemicals and fertilisers. India occupies a central position on the global steel map, with the establishment of new state-of-the-art steel mills, acquisition of global scale capacities by players, continuous modernisation and up gradation of older plants, improving energy efficiency and backward integration into global raw material sources.

Steel production in India has increased by a compounded annual growth rate (CAGR) of 8 percent over the period 2002-03 to 2006-07. Going forward, growth in India is projected to be higher than the world average, as the per capita consumption of steel in India, at around 46 kg, is well below the world average (150 kg) and that of developed countries (400 kg). Indian demand is projected to rise to 200 million tonnes by 2015. Given the strong demand scenario, most global steel players are into a massive capacity expansion mode, either through Brownfield or Greenfield route. By 2012, the steel production capacity in India is expected to touch 124 million tonnes and 275 million tonnes by 2020. While Greenfield projects are slated to add 28.7 million tonnes, Brownfield expansions are estimated to add 40.5 million tonnes to the existing capacity of 55 million tonnes. Steel is manufactured as a globally tradable product with no major trade barriers across national boundaries to be seen currently. There is also no inherent resource related constraints which may significantly affect

production of the same or its capacity creation to respond to demand increases in the global market. Even the government policy restrictions have been negligible worldwide and even if there are any the same to respond to specific conditions in the market and have always been temporary. Therefore, the industry in general and at a global level is unlikely to throw up substantive competition issues in any national policy framework. Further, there are no natural monopoly characteristics in steel. Therefore, one may not expect complex competition issues as those witnessed in industries like telecom, electricity, natural gas, oil, etc.

This, however, does not mean that there is no relevant or serious competition issue in the steel industry. The growing consolidation in the steel industry worldwide through mergers and acquisitions has already thrown up several significant concerns. The fact that internationally steel has always been an oligopolistic industry, sometimes has raised concerns about the anticompetitive behaviour of large firms that dominate this industry. On the other hand the set of large firms that characterize the industry has been changing over time. Trade and other government policies have significant bearing on competition issues. Matters of subsidies, non-tariff barriers to trade, discriminatory customs duty (on exports and imports) etc. may bring in significant distortions in the domestic market and in the process alter the competitive positioning of individual players in the market. The specific role of the state in creating market distortion and thereby the competitive conditions in the market is a well-known issue in this country.

STEEL PLANTS IN INDIA

1. Arcelor Mittal Dhamm Processing Pvt. Ltd

2. Bhushan Steel

3. Bokaro Steel Plant

4. Bramhani Industries

5. IISCO

6. Ispat industries Ltd

7. JSL Limited

8. Jai Balaji group

9. Jindal South West

10. Jindal Steel and Power Limited

11. POSCO India

12. Steel Authority of India Limited

13. Tata Steel

14. Tayo Rolls

15. The Ferro Alloys Corporation Limited

16. Uttam Galva Steels Ltd

17. VISA Steel

18. Visvesvaraya Iron and Steel Limited

19. Vizag

Arcelor Mittal Dhamm Processing Pvt Ltd

It was incorporated in 2007 as joint venture between the world's largest steel producer Arcelor Mittal and Dhamm Steel Services Private Limited, its erstwhile representative in India. The company is headquartered in Mumbai, India. Its main plant is located in a strategic location in Ranipet, which is 115 KM from Chennai and 230 KM from Bangalore. This plant started its production in January 2009. The company is planning for two more plants at Baroda and Nasik by 2011.

Bhushan Steel

It is the largest manufacturer of auto-grade steel in India and is spending Rs. 260 billion to expand its capacity to 12 million tonnes annually, from the present installed capacity of around one million tonnes.

Financials and management

Gross sales of Bhushan Steel grew from Rs. 500 crore in 2001 to Rs. 4000 crore in 2007. It earned net profits of Rs. 313 crore in 2007 and exported goods worth Rs. 1,257 crore. Its exports include steel for both the automotive and white goods industry and the list of countries it is exporting to includes several developed countries.

Brij Bhushan Singhal is chairman of board of directors of Bhushan Steel. Neeraj Singhal is the Vice Chairman and Managing Director.

Existing plants

The khopoli plant in Maharashtra was commissioned in 2004 and has been producing colour coated sheets, high tensile steel strappings, hardened and tempered strips and precision tubes. In addition to these, the Khopoli plant has recently launched the Galume value added steel (aluminium and zinc coated sheet) for the first time in India.

At its Sahibabad plant in Ghaziabad, Uttar Pradesh, it has a 1700 mm mill, which produces the widest sheets in India for the automotive industry. It has highly automated systems.

At its Meramandali,dhenkenal plant in Orissa, Bhusan Steel produces hot rolled coils and has mills for hot rolling. Construction of the first phase is being carried out.

Bhushan Power and Steel Limited has seven plants at four locations – Chandigarh, Derabassi in Punjab, Bangihatti, near Dankuni in West Bengal, and Thelkoloi in Orissa.

Bokaro steel plant

Bokaro Steel Plant is located in the Bokaro district of Jharkhand. It is the fourth integrated public sector steel plant in India built withSoviet help. It was incorporated as a limited company in the year 1964. It was later merged with the state owned Steel Authority of India Limited (SAIL).

About the Plant

Formerly it was known as Bokaro Steel Limited (BSL). Bokaro Steel Plant is hailed as India's first swadeshi steel plant. Its first blast furnace was started on 2nd October 1972. At present it houses five blast furnaces with total capacity to produce 4.5 MT of liquid steel. The plant is undergoing a mass modernisation drive after which its output capacity is expected to cross 10 MT. The first shop of Bokaro Steel Plant got the ISO 9001 certification way back in 1994, and its SAIL JYOTI branded products enjoy a loyal market. Plant's yearly profit stood at 1,120 crores Indian rupee (INR) for the financial year 2003-04 and has increased every year since then reaching to 8,426 crores INR in the financial year 2007-08.

Bramhani steels

Bramhani Industries Limited also known as Brahmani Steels and Bramhani Steels is an Indian iron and steel company promoted by Obulapuram Mining Company and G. Janardhana Reddy . The company is building a 1.7MTPA steel plant in Kadapa district of Andhra Pradesh . The company has announced plans to source state of the art steel equipment from China . The company has also proposed to build a 6 million metric ton steel plant in Bellary . JSW steel is said to be in talks for partial ownership of OMC. Bramhani steels andObulapuram are linked to illegal mining of Iron ore in Karnataka.

Iisco steel plant

IISCO Steel Plant of Steel Authority of India Limited (SAIL) is located at Burnpur, near Asansol. The turbulent history of the plant, starting from its pioneering days, has found it a place in industrial history.

It was the second integrated steel plant, after Tata Iron and Steel Co. Ltd. (TISCO) at Jamshedpur, to come up in India and for many years, these two were the only steel plants in the country. It has rich history that goes back to the days when James Erskine pioneered the production of iron in this country at nearby Kulti. Modern metallurgy was introduced to India at Kulti with the setting up of the first blast furnace using coal instead of charcoal.

Ispat industries limited

Ispat Industries Limited (IIL) (BSE: 500305), set up as Nippon Denro Ispat Limited in May 1984 by founding chairman Mr M L Mittal, is one of the leading integrated steel makers. It has steadily grown into a Rs 9,400-crore company having operations in iron, steel, mining, energy and infrastructure. It has two integrated steel plants, located at Dolvi and Kalmeshwar in the state of Maharashtra. The 1,200 acres (4.9 km) Dolvi complex houses the 3 million tonne per annum hot rolled coils plant., that combines the latest technologies - the Conarc process for steel making and the compact strip process (CSP) - introduced for the first time in Asia. The company is listed on Bombay Stock Exchange and National Stock Exchange of India. It is headquartered at Mumbai and employs about 3000 people. Ispat Industries was ranked 5th among major next to Tata steel and JSW steel companies in India for the year 2008 by Business World.

Jindal steels

Formerly Jindal Stainless Limited , JSL Limited is India’s largest integrated producer of Stainless Steel [2] in 300, 200, 400 and Duplex grades.

Established in 1970, JSL Limited (formerly Jindal Stainless Limited), is the largest Stainless Steel conglomerate in India and the flagship company of the OP Jindal Group. An OHSAS 18001, ISO 9001, ISO 14001, ISO 18001, AD W0, PED certified company, JSL is the leading producer of Stainless Steel fl at products in Austenitic, Ferritic, Martensitic and Duplex grades and global leader in Chrome Manganese (Cr-Mn) 200 Series Stainless Steel grades. The company has strong export market and has presence in over 50 countries including US, Europe, China, Middle-East and South Asian countries. JSL, while leading the Indian Stainless steel industry is also among the top 15 Stainless Steel producers worldwide.

A part of OP Jindal Group, JSL is India’s largest and only integrated Stainless Steel manufacturer. With a turnover of Rs. 5000 cr., it has 35% of the domestic market share and a strong global presence in 30 countries worldwide. Its manufacturing plants are located in Hisar (Haryana), Jajpur (Orissa), Vizag and Indonesia for manufacture of stainless steel flat products in Austenitic, Ferritic and Martenistic grades.

The Company was incorporated on 1 July 1999 as Jai Balaji Sponge Pvt. Ltd. Its flagship company is now known as Jai Balaji Sponge Ltd. Other companies in the group are Chandi Steel Industries Ltd., Jai Salasar Balaji Industries Pvt. Ltd., Jai Balaji Jyoti Steels Limited, K.D Jajodia Steel Industries Pvt Ltd., and Balaji Ispat Udyog.

Plants

It has a sponge iron manufacturing unit with a capacity of 1,05,000 tonnes per annum at Mangalpur Industrial Estate, near Raniganj. The Mangalpur Industrial Estate complex also has a mild steel ingot manufacturing unit with an installed capacity of 16,600 tonnes per annum.

At Durgapur, West Bengal, it has a mild steel ingot manufacturing unit having an installed capacity of 78,720 tonnes per annum with four furnaces of a capacity of 6 tonnes each, and the re-rolling mill uses the Thermex technology from Germany for manufacturing of TMT bars. The group has set up two mini blast furnaces with an installed capacity of 80,500 tonnes per annum.

The group has a presence at Raniganj, Liluah and Rourkela. Jai Balaji Industries has acquired sponge iron manufacturer Nilachal Iron & Power Ltd (NIPL), with a sponge iron plant located at Saraikela in Jharkhand,

Jindal Steel and Power Limited (JSPL) (BSE: 532286) is the most valuable private steel producer in India, with an annual turnover of over US $2.1 billion (Rs. 10,000 crore), Jindal Steel & Power Limited (JSPL) forms a part of the US $12 billion (over Rs. 60,000 crore) Jindal Group. JSPL is a leading player in Steel, Power, Mining, Oil & Gas and Infrastructure. Mr. Naveen Jindal, the youngest son of the legendary late Shri. O P Jindal, drives JSPL and its group companies Jindal Power Ltd, Jindal Petroleum Ltd., Jindal Cement Ltd. and Jindal Steel Bolivia with a belief in the concept of self-sufficiency. The company produces economical and efficient steel and power through backward integration from its own captive coal and iron-ore mines and passes on the benefits to its customers.

However, in terms tonnage, it is the third largest steel producer in India. The company manufactures and sells sponge iron, mild steel slabs, ferro chrome, iron ore, mild steel, structural, hot rolled plates and coils and coal based sponge iron plant. The company is also involved inpower generation.

Jindal Steel and Power is a part of the Jindal Group, founded by O. P. Jindal (1930–2005). In 1969, he started Pipe Unit Jindal India Limited, one of the earlier incarnations of his business

empire. After Jindal's death in 2005, much of his assets were transferred to his wife, Savitri Jindal. Jindal Group's management was then split among his four sons with Naveen Jindal as the Managing Director of Jindal Steel and Power Limited. His elder brother, Sajjan Jindal, is currently the head of ASSOCHAM, an influential body of the chambers of commerce, and the head of JSW Group, part of O.P. Jindal Group.

On June 3, 2006, Bolivia granted development rights for one of the world's largest iron ore reserves in the El Mutún region to Jindal Steel. With an initial investment of US$ 1.5 billion, the company plans to invest an additional US$ 2.1 billion over the next eight years in the South American country.

Savitri Jindal, the widow of O. P. Jindal, is ranked as the 19th richest Indian person according to Forbes.

The Jindal family established Vidya Devi Jindal School, a residential school for girls in Hisar, India, in 1984. Although not marketed as such, it is widely known to cater to the wealthy through its private location and remarkable array of activities. The school's student body comprises girls from affluent business and political families of India.

Posco

POSCO-India Private Limited is a subsidiary of POSCO, the world’s fourth largest steel producer and one of the most competitive steel companies. POSCO signed a Memorandum of Understanding (MoU) with the Government of Orissa in June 2005, to set up a 12 MTPA green field steel plant near Paradip, Jagatsinghpur District, Orissa, with an estimated investment of USD 12 billion. The company will build a 4 million-tons per annum capacity steel plant in Orissa, durinCorporate Overviewg the first phase of its project , and expand the final production volume to 12 million tons per annum. POSCO-India Pvt. Ltd. was incorporated on 25th August 2005.

POSCO, the parent company operates two of the world’s premier steelworks at Pohang and Gwangyang, having a combined production capacity of 31 million tons per annum (MTPA). The Pohang steelworks produces 13.5 million tons of crude steel and specializes in the production of small lots in a broad range of products, including hot-rolled coil and cold-rolled sheets, plates, wire rods, electrical steel and stainless steel. The Gwangyang works focuses on mass production of limited high-demand products such as hot and cold rolled sheets, and produces 17.5 million tons of crude steel. POSCO’s products are shipped to over 60 countries around the globe, satisfying some of the world’s most quality-sensitive customers.

Sail

Steel Authority of India Limited (SAIL) is one of the largest state-owned steel makers in India. With a turnover of 48,681 crore (US$10.95 billion), the company is among the top five highest profit earning corporates of the country. It is a public sector undertaking which trades publicly in the market is wholly owned by Government of India and acts like an operating company. Incorporated on January 24, 1973, SAIL has more than 131,910 employees. The company's current chairman is C.S Verma. With an annual production of 13.5 million metric tons, SAIL is the 16th largest steel producer in the world.

Major plants owned by SAIL are located at Bhilai, Bokaro, Durgapur, Rourkela, Burnpur (near Asansol) and Salem. SAIL is a public sector company, owned and operated by the Government of India. According to a recent survey, SAIL is one of India's fastest growingPublic Sector Units.

Tata steel

Tata Steel (BSE: 500470), formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's seventh largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the largest private sector steel company in India in terms of domestic production. Ranked 258th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable company in private sector with consolidated revenues of 132,110 crore (US$29.72 billion) and net profit of over 12,350 crore (US$2.78 billion) during the year ended March 31, 2008.

Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions, the company has become a multinational with operations in various countries. The Jamshedpur plant contains the DCS supplied by Honeywell.The registered office of Tata Steel is in Mumbai. The company was also recognized as the world's best steel producer by World Steel Dynamics in 2005. The company is listed on Bombay Stock Exchange and National Stock Exchange of India, and employs about 82,700 people (as of 2007).

Tayo Rolls

Tayo Rolls (formerly Tata Yodogawa) is a subsidiary of Tata Steel involved in the manufacture of cast rolls, forged rolls, special castings & pig iron. It is a joint venture between Tata Steel of India & Yodogawa Steels of Japan with its head office in Jamshedpur , Jharkhand state of India.

It is listed on the Bombay Stock Exchange with code no.504961

Tayo enjoys a wide customer base in India. It has also been exporting rolls to Australia, Austria, Bangladesh, Belgium, Canada, Egypt, Germany, Indonesia, Kazakhstan, Nepal,

Norway, New Zealand, Oman, Qatar, Saudi Arabia, Sweden, Singapore , South Africa, Trinidad, Taiwan, UAE, Romania, Czech Republic and USA

The Ferro Alloys Corporation Limited was floated in 1955 by the house of Sarafs and Mors and became the first major producers of Ferro Manganese in India. The founder father was Seth Shriman Durgaprasadji Saraf (1911-1988).

In the year 1956, marked the beginning of the Ferro Alloys Corporation Limited at Sriramnagar, Garividi, Vizianagaram district, Andhra Pradesh. The registered office is at Tumsar,Bhandara district, Maharashtra.

The Ferro Alloys are used as deoxidizers and alloy additives in the Steel manufacturing process.

Ferro Manganese Plant started the production in 1957 equipped with three furnaces for production of High Carbon Ferro Manganese and Ferro Silicon. In 1969, reduction furnace and slag furnace were commissioned for production of Ferro Chrome. The company has set up a 16 MVA furnace in 1981, using its own technical know-how, indigenous machinery and equipment.

FACOR has acquired a small steel plant at Nagpur in Maharashtra.

In 1979, FACOR developed the technology to produce charge chrome in their own R and D wing. They have established a charge chrome plant at D.P.Nagar, Randia in Bhadrak districtof Orissa in 1983. It is a 100% Export Oriented Project with a production capacity of 50,000 tons per annum. FACOR signed an agreement with Marc Rich and Co. AG Switzerland, as their sole selling agents of their entire charge chrome for 10 years.

The plants at Sriramnagar have facilities for raw material handling, metal and slag casting, crushing, sizing and other ancillaries apart from furnaces for smelting of ferro alloys. The raw materials are manganese ore, chromite and quartzite ores with principal elements of manganese, chromium and silicon respectively. They are obtained from the Andhra Pradesh, Orissa,Madhya Pradesh and Bihar states. The Ferro Alloys produced are High Carbon Ferro Chrome, Low Carbon Ferro Chrome, Silico Chrome, Silico Manganese and Magnesium Ferro Silicon, Ferro Manganese etc., These alloys are tapped from electric arc furnaces in molten state. They are prepared to the required size from 25 mm to 150 mm and transported to the various steel companies. The furnaces are connected to Two-stage venturi scrubber systems to maintain a clean environment in and around the industry.

FACOR has been accredited under ISO 9001 standard to maintain its worldwide status as the best producer of quality products.

The existing manpower at Sriramnagar is about 784 regular employees with 107 supervisory personnel, besides 1070 contract workmen.

In 2003, the charge chrome division along with the mining division in Orissa has been demerged as FACOR STEELS Ltd and the Ferro Alloys division at Garividi as FACOR ALLOYS Ltd.

Uttam galva steels

Uttam Galva Steels Ltd (BSE: 513216NSE: UTTAMSTL) is one of the largest manufacturers of cold rolled steel and galvanized steel in Western India. The company business of procuring hot rolled steel and processing it into CR and further into GP and Colour Coated Coils.

Visa steel

VISA Steel Limited is a mineral and metals company situated in the Kalinganagar industrial complex of Jajpur Orissa, India with a 1.5 million ton integrated special and stainless steel manufacturing plant. The company was founded by Vishambar Saran, a mining engineer from BHU, varanasi and former director of raw materials at Tata Steel.

Visvesvaraya iron and steel

Visvesvaraya Iron and Steel Plant (VISL) , A unit of Steel Authority of India Limited, is a company involved in the production of alloy steels andpig iron and located in the city of Bhadravathi, India. It was started as the Mysore Iron Works on January 18, 1923 by Sir M Visvesvaraya. It is now a steel plant under the jurisdiction of the Steel Authority of India Limited. The Iron Works were started by Nalvadi Krishnaraja Wodeyar, the king of Mysore, under the guidance of his Diwan, Sir M Visvesvaraya. The main objective was to tap the rich iron oredeposits near Kemmanagundi in the Baba Budangiri hills and manufacture pig iron and other products. A preliminary investigation of setting up an iron and steel factory at Bhadravathi was done in 1915-1916. This investigation was done by a New York based firm who explored the possibility of manufacturing pig iron with the use of charcoal fuel. The years 1918-1922 were spent in setting up the factory. To start with, a wood distillation plant for manufacturing charcoal and blast furnace for smelting iron were setup in the factory. Agencies were established in Madras, Ahmedabad and Karachi and a sales office was opened in Bombay. A cast iron pipe plant, open hearth furnace, rolling mills and a cement plant were later added and the name of the factory was changed to The Mysore Iron and Steel Works. In 1939, the Shimoga-Talguppa railway line was laid, using wood from the Malnad forests were transported to this plant, to be used as a fuel in its furnaces. In 1952, two electric pig-iron surfaces were installed in the company, thereby making VISL the first iron and steel company in India to use electricity in the smelting of iron ore. In 1962, the name was changed to The Mysore Iron and Steel Limted and the factory was converted into a Government company jointly owned by the Government of India and the Government of Karnataka with an equity share ratio of 40:60 respectively. The year 1962 also saw the

establishment of a new steel plant which could produce steel using the relatively new L D Process. In order to honour its founder, the company was renamed as Visvesvaraya Iron and Steel Limited in 1975. In 1989, it was taken over by the Steel Authority of India as a subsidiary entity and in 1998, VISL was merged into SAIL.

Vizag steel

Vizag Steel, also known as Visakhapatnam Steel Plant , is a steel company in India. Founded in 1971, the company focuses on producing "value-added steel", with 214,000 tonnes produced in the month of August 2010, out of 252,000 tonnes total of saleable steel produced.

Introduction to The PESTLE Analysis tool

PESTLE analysis is a useful tool for understanding the “big picture” of the environment in which you are operating, and the opportunities and threats that lie within it. By understanding the environment in which you operate (external to your company or department), you can take advantage of the opportunities and minimize the threats.

Specifically the PEST or PESTLE analysis is a useful tool for understanding risks associated with market growth or decline, and as such the position, potential and direction for a business or organization.

The PESTLE Analysis is often used as a generic 'orientation' tool, finding out where an organization or product is in the context of what is happening out side that will at some point effect what is happening inside an organization.

A PESTLE analysis is a business measurement tool, looking at factors external to the organization. It is often used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and Threats analysis).

PESTLE is an acronym for

Political, Economic, Social, Technological, Legal and Environmental factors,

which are used to assess the market for a business or organizational unit strategic plan

The PESTLE analysis headings are a framework for reviewing a situation, and can also be used to review a strategy or position, direction of a company, a marketing proposition, or idea. There are many variants on this model including PEST analysis and STEEPLE analysis.

Completing a PESTLE analysis can be a simple or complex process. It all depends how thorough you need to be. It is a good subject for workshop sessions, as undertaking this activity with only one perspective (i.e. only one persons view) can be time consuming and miss critical factors.

Use PESTLE analysis for business and strategic planning, marketing planning, business and product development and research reports.

The PESTLE template below includes sample questions or prompts, whose answers are can be inserted into the relevant section of the table.

The questions are examples of discussion points, and should be altered depending on the subject of the analysis, and how you want to use it.

Make up your own PESTLE questions and prompts to suit the issue being analyzed and the situation (i.e. the people doing the work and the expectations of them).

It is important to clearly identify the subject of a PESTLE analysis (that is a clear goal or output requirement), because an analysis of this type is multi faceted in relation to a particular business unit or proposition - if you dilute the focus you will produce an unclear picture - so be clear about the situation and perspective that you use PESTLE to analyze.

A market is defined by what is addressing it, be it a product, company, organization, brand, business unit, proposition, idea, etc, so be clear about how you define the market being analyzed, particularly if you use PESTLE analysis in workshops, team exercises or as a delegated task. The PESTLE subject should be a clear definition of the market being addressed, which might be from any of the following standpoints:

• A company looking at its market

• A product looking at its market

• A brand in relation to its market

• A local business unit or function in a business

• A strategic option, such as entering a new market or launching a new product

• A potential acquisition

• A potential partnership

• An investment opportunity

PESTLE ANALYSIS OF STEEL INDUSTRY

POLITICAL FACTORS

Steel is a heavily protected industry. Governments use a variety of strategies, e.g. tariffs, subsidies, loans and import restrictions to ensure that their steel industry remains competitive

domestically. In many cases, this has allowed the local steel industry to continue operations even when better quality, cheaper steel could be imported from another country.

Many years of government intervention have negatively affected competition and efficiency in the steel industry. The use of protection to support inefficient producers has led to a global steel industry which is characterised by overcapacity and poor profitability. In response, there has been a marked decline in government protection since the late 1980s though this is still occurring in countries seeking to develop new steel making capacity or preserve existing capacity. For example, most of the countries which are export destinations for Indian steel still use tariffs as an import tax on steel. Moreover, tariff rates used in these countries are higher than those generally used by India. Also, India allows 100% FDI in steel sector, which induce more and more foreign investment in India.

ECONOMIC FACTORS

Steel demand strongly reflects major economic forces and political upheavals. Steel production increases when economies are growing, i.e. more goods are being made and governments are investing in infrastructure and transport. Economic recession means a dip in steel production as investment falls.

Major historical events also affect steel production. The two world wars for example represented a peak in production. This was then immediately followed by a dip then a strong climb in production as economies recovered from the war and entered a period of prosperity and growth.

Steel is a strategic industry. Consider the products made from steel, e.g. pipes, railways, tins, concrete reinforcing, wire, screws and nails and the consumer goods, e.g. cars, electrical appliances where steel is an essential input. Every country wants its own steel industry to help give it economic independence and no country wants to rely on others for its steel supply.

Since steel is such an important product, many countries protect their local steel industry but on a global scale, this has led to excess productive capacity, lower prices and poor profitability. Add to this new electric arc furnace technology which delivers a high quality product at a lower price and the overall result for the global steel industry is rationalisation and structural change.

Companies with older technology are either uncompetitive and have to be closed or their productivity has to be increased by investing in new facilities. Both scenarios invariably lead to job losses. For example, between 1990 and 1996, annual capital investment by TATA across its steel making operations ranged from US$563 million to US$667 million per annum

while over the same period, employment by TATA continued to fall from 30 000 workers in 1990 to 21 000 by 1996.

SOCIAL FACTORS

Social factors have a great impact on the steel industry. As the industry is related with the production of metal, it has greater implications on the environment. Social factors include the employment opportunities, as well as need recognition of the society.

TECHNOLOGICAL FACTORS

Like most manufacturing this century, technological development is a key feature of the steel industry. It has become extremely difficult for older steel making plants to be competitive with newer plant. Remaining competitive means older firms have to continually invest in multi-million dollar capital improvement programs or increasingly rely on government protection to survive.

Steel is not a complex manufactured product, i.e. involving a large number of components and steps, in comparison to a car or computer. The steel making process itself however is very complex and involves high quality technological solutions because of the:

• Size and scale of the steel making operation

• Skill required to make different types and grades of steel

• Drive to lower production costs.

New technologies related to environmental protection , production techniques, product quality and the development of new products. Some current examples include:

Production techniques: direct reduction iron technology; electric furnace operation; use of artificial intelligence in operations

Product quality: consistency in physical properties of steel; variations in strength, hardness, and bending properties

New products: new types of steel alloys; building and construction products.

ENVIRONMENTAL FACTORS

Being a heavy industry, steel making has a major impact on the environment. The manufacturing process creates significant air, water and noise pollution while mining raw

materials and the high-energy demands of steel making also contribute greatly to pollution of the environment.

Globally, the steel industry is acutely aware of the need to improve its environmental record and much is being done to address the issue. There is also no doubt that increased political pressure and associated legislative sanctions are playing a part.

It is estimated that in the last decade, close to US$20 000 billion or over 10% of total steel industry expenditure has been on environmental control and protection. From an environmental viewpoint, major contributions include:

• Steel has become a major input in the construction of various environmental protection systems, e.g. industrial pollution filters; solar and wind power

• Steel recycling means that over 40% of all steel produced comes from scrap steel

• Steel uses less energy per ton to produce than many similar competitive materials.

The steel industry has focused on life cycle assessment to determine the overall environmental impact of steel production and use. These studies have quantified environmental impacts and resulted in research and development on reducing greenhouse emissions, developing new products and increasing recycling.

In terms of greenhouse targets, the world steel industry has reduced energy consumption per ton of steel by 20% in the last 15 years. This means less carbon dioxide is being released through the burning of fossil fuels to generate electricity. In comparison to power generation, much more carbon dioxide however is released into the atmosphere during the steel making process when coke is added to the blast furnace. Current research is therefore focused on reducing greenhouse emissions in the steel production process.

The steel industry is also contributing to greenhouse targets through the development of light weight automobile steel (lighter cars need less fuel) and various construction applications which result in less electricity being required for the building space.

LEGAL FACTORS

The legal factors have a large impact on the steel industry of the country. Government regulates the steel industry. It decides the rules and regulations for regulating the steel industry. Government have to decide the taxes to be imposed, export prices of steel and the foreign direct investment in the sector. Government keeps a close eye on the steel sector, as it is one of the crucial sector for the economic development of the country.

LITERATURE REVIEWS

1) The Indian Steel Industry in a Global Perspective

BY- MRITUNJAY KUMAR PANDEY

The iron and steel sector has the characteristic of being a leading industry in India's economy as well as in the process of industrialization. When the progress of the iron and steel industry and its relation to the country's development periods were observed, it was seen that forward and backward linkages play an important role in the development of the sub-sectors related to iron and steel. The importance of this sector originates from its providing input to all kinds of industries of the nation. The Indian steel industry registered a strong growth in steel consumption, driven by a strong growth in all steel consuming sectors, viz., automotive (13.6%), capital goods (18.3%), construction (10.7%), consumer non-durables (10.5%), and consumer durables (9.1%), etc. During the fiscal year 2006-2007, India's apparent steel consumption grew by 11.7% to 43.8 Million Tonnes (MT). The flat and long products' consumption grew by 11.5% and 12.3% respectively. Domestic steel consumption grew by 11.1% to 49.4 MT. Steel exports grew by 6.1% to 4.7 MT, while steel imports increased by 6.4% to 4.1 MT. The Indian steel industry was internationally cost-competitive till the end of the 1970s. However, since then and even today, it is suffering from high costs, especially labour cost. Thus, it was considered apt to have a comprehensive study in this area. The Indian steel industry has raw materials, but these need to be turned better and in accordance with standardized international demand. For doing this, the government should also assist them technologically, economically and lawfully, with the help of excise, customs and by taking new steps in this regard. From the above picture, it can be inferred that due to the availability of raw materials and low cost manpower, the Indian steel industry is in the growth stage, and this trend will continue for the next 20 years.

CONCLUSION

Author has discuss about the growth of iron and steel industry in India over the period of last five or ten years. Indian steel industry has made a remarkable growth in every sector whether it be capital goods or consumer goods, its consumption has increased. Also the demand for the steel in domestic market has increased, on the other hand side its exports have also increased. Seeing the growth of the steel industry, it can be said that its future is very bright. Also to make it possible, government have to support equally.

2)Strategies to make Indian Steel Industry Globally Competitive

BY-AMIT CHADDA

“Innovation is the key to achieve a competitive edge in the international market. Innovation in its broadest sense includes new technologies, new ways of managing or discovering new market segments.” In this paper I have tried to analyse the Indian Steel Industry with the Global Steel Industry considering the past with the present scenario and formulating a

strategy for the future. I have tried to explore ways and give a roadmap so that the Indian steel Industry can become globally competitive. The various problems faced by the industry like overcapacity, low productivity, low profit margins, low exports etc. are discussed in this paper and the formulation of a long term strategy to address these problems have been looked into. It is found that that the industry has to increase production of finished steel through expansion of existing plants and installation of new plants using the latest technology. Also a distinctive shift in product mix of companies by the production of value added products and products of international quality standards makes them more competitive as regards their global counterparts. A look into the power reforms and financial restructuring of steel companies are also envisaged so that the performance of the steel industry is improved. The study tries to suggest strategies and a road map to achieve and sustain competitive advantage in global arena.

In developed countries the labour costs are 35% of the total cost of steel production whereas it is only 15% in India inspite of overmanned steel plants

Steel has always been the backbone of any economy. The Indian iron and steel industry is nearly a century old, and it was the first core sector to be completely freed from the licensing regime. At present India is the 8th largest producer of steel in the world producing nearly 30mt of steel. Two of its companies (SAIL ranks 13th and Tata Steel 57th) figure among the world’s 80 largest steel producers. With a market capital of 102billion it, gives direct employment to about 0.5million and indirect employment to 1.5million people. Indian steel sector enjoys easy availability of raw materials (iron ore) and cheap labour. However they have to bear additional costs pertaining to power, fuel and freight costs.

CONCLUSION

Author has discussed on the steel industry growth and its contribution in the economy. The emergence of various steel plants in India and their development over the period of time. Its contribution to the economic growth, economic development as well as for generating the employment opportunities in the country.

3)Growths pattern of iron and steel industry in India's economic development

BY-A.K. SAHU

The current annual production of finished steel is just over 4 million tonnes in India. The growth pattern of Indian iron and steel industry from current production figures to a production capacity of over 20 million tonnes of crude steel at the end of the Fourth Five Year Plan, has been outlined stage by stage and rationally analysed. The individual expansion pattern of different steel plants currently operating in India has also been outlined in relation to estimated requirements of finished steel by 1970-71. Likewise, the growth pattern of foundry pig iron from the current production of just over a million tonnes a year to over 4

million tonnes annual capacity to be established by the end of the Fourth Five Year Plan, has been outlined whilst highlighting current shortfalls of foundry pig iron in the country. The establishment and projected growth of alloy, tool, special and stainless steel industry in India have likewise been analysed in relation to its growth pattern to be followed till the end of the Fourth Five Year Plan. The estimated short-term and long-range requirements of the diverse ranges of ferro-alloys to cater to the needs of the alloy, tool, special stainless steel industry have been outlined in relation to Third and Fourth Five Year Plans including the financial implications of the ferro-alloys' requirements. The role of Indian raw materials such as iron ore and flux, their inherent shortcomings and optimum remedial beneficiation treatments required have been discussed in relation to their indispensibility in satisfying the growth pattern of Indian iron and steel industry. The role of small foundry iron production plants has been specifically highlighted in relation to integrated iron and steel complexes in the background of Indian conditions and projected developments. It has been shown that even though the iron and steel industry is highly capital intensive, it cannot be left to the vagaries of international trade both in times of peace and that of war to satisfy the almost unlimited applications of iron and steel product-mix in light, medium and heavy engineering and consumer industries. The paper outlines the current planning of Indian iron and steel industry and its steady growth during the successive Five Year Plans to assist the country to attain the economic 'take-off' stage. Of necessity, such an upward growth of the basic heavy steel industry entails its inevitable toil and sweat, success and pitfalls and yet the ultimate objective of attaining Indian self-sufficiency in iron and steel industry is undisputed, provided, however, metallurgical problems of the raw materials, installation and maintenance of iron and steel plants at their peak operational efficiency are squarely faced and effectively overcome and not lost sight of the maze of endless discussions and explanations. (Dr. B.R. Nijhawan, Director, National Metallurgical Laboratory, Jamshedpur. The paper was presented at the Unesco Inter Regional Symposium on 'The Application of Modern Technical Practices in the Iron and Steel Industry to Developing Countries' held at Prague, Czechoslovakia in November 1963.

CONCLUSION

Author has discussed about the growth of steel industry, also the various aspects of its growth, i.e. what are the reasons behind its growth. Use of new technologies and government support have helped Indian steel industry to grow.

REFERENCES

http://www.highbeam.com/doc/1G1-107795016.html

http://www.citucentre.org/monthly_journals/sub_topic_details.php?id=115&phpMyAdmin=3a7a0d985d532b349002380a96a45723

http://www.google.co.in/search?

ENDING

Indian steel industry has emerged in last two decades in a most fruitful manner. Indian Steel industry has shown the second highest growth rate for steel production in Asia after China in 2008. With a GDP growth of around 8% in 2008-09, Indian economy as well as the industrial development got a boost and this helped to shape the increasing steel demand and production in India. Indian steel industry has contributed significantly to the economic development and economic growth of the country, consequently GDP of the country has increased. Apart from that a vast number of employment opportunities has also increased in the country. Looking at the growth of steel sector, it can be interpreted that it is going to emerged as one of the largest industry the country and a leading one of the world.