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STEEL INDUSTRY ANALYSIS By(Group 3):

Deepanjan Kundu Devshuvro Ghosh Debadrita Ray Chaudhuri Damyanti Pathak Abhishek Bose

Overview: India ranks 5th in the world ranking for production of steel and fourth largest producer of crude steel in 2011-12 with 89 million tonnes (MT).

• India produced 66.8 million tonnes in 2010-11in comparison to China’s 626.7 million tonnes.

• About 50% of the steel produced in India is exported.

• India accounts for over 7% of the total steel produced globally.

• India accounts for around 5 per cent of the global steel consumption.

• The total employment in the industry is more than 2 million (including direct and indirect employment).

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Players in the Industry: •

Tata Steel: wire rods, bars, and steel flats.

• Jindal Steel & Power: mild steel slabs •

• •

• • •

and sponge iron.

JSW Steel: gamut of steel products .

Essar Steel: sponge iron, steel and iron ore pellets.

Rashtriya Ispat Nigam Ltd: liquid steel.

Bhushan Power & Steel Ltd: iron Ore Beneficiation.

Lloyds Steel: corrugated sheets and steel coils.

Steel Authority of India Limited: steel and iron.

Reasons for Growth of the Indian Steel Industry: • Abundant resources of iron ore.

• Low cost and efficient labour force.

• Strong managerial capability.

• Strongly globalised industry and emerging global

competitiveness.

• Modern new plants & modernised old plants.

Development enhancing facilities: • Huge Infrastructure demand.

• Rapid urbanisation.

• Increasing demand for consumer durables.

• Untapped rural demand.

• Increasing interest of foreign steel producers in India.

PEST Analysis of Indian Steel Industry: Political Factors: • Recommendations on Captive Mines.

• National Steel Policy to Remove Bottlenecks.

Economic Factors: • GDP Growth Rate.

• Reduction in Customs Duty.

Social Factors: • Rural-Urban Divide.

• Higher Disposable Income.

Technological Factors: • Popularity of Steel Portals.

• Application of SML (Steel Markup Language).

Michael Porter’s Five Forces Analysis Buyers’ Power: • Increasing Demand for Steel.

• Fragmented Coke Suppliers.

Suppliers’ Power: • High Raw Material Prices.

• Lack of Transportation.

Intensity of Competition: • Competition from Foreign Players.

• Spurt in Merger and Acquisition

Activities.

Threat of New Entrants: • High Cost of Basic Inputs and

Services.

• Industry is Capital Intensive.

Threat of Substitutes: • Use of Aluminium, Plastic, Carbon

Fibre.

Challenges faced by the Indian Steel Industry: • High cost of energy.

• Higher duties and taxes.

• Quality of coking coal.

• Dependence on imports for steel manufacturing

equipments & technology.

Global Impact on the Indian Steel Industry: • Slow growth in infrastructure development.

• Market fluctuations and China’s export possibilities.

• Global economic slowdown.

Government Regulations: • Emphasis on infrastructural development during the

formulation of the Union Budget 2011.

• Noteworthy reductions in import duties on key steelmaking raw materials.

• To ensure growth of Iron and Steel Sector in India, Ministry of Steel takes up their issues with the other concerned Ministries/ Departments such as: Ministry of Coal for allocation of Coal Blocks and Coal Linkages to Iron and Steel Industry. Ministry of Petroleum & Natural Gas for supply of Natural Gas to Iron and Steel Industry

Future Prospects for Development: Resources: • Strong Managerial skills in Iron and Steel making.

• Large pool of skilled Man-power.

• Established steel players with strong skills in steel making.

• Abundant Iron Ore reserves.

Opportunities: • High economic growth driven increasingly by industry.

• Faster Urbanisation.

• Increased Fixed Asset Building.

• Automobiles and component industry growth.

Government Policies: • Pro-active stance of the government. • Encouragement for overseas investments.