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Steel industry Analysis

Indian Steel Industry

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Steel industry Analysis

  1. 1. STEEL INDUSTRY ANALYSIS By(Group 3): Deepanjan Kundu Devshuvro Ghosh Debadrita Ray Chaudhuri Damyanti Pathak Abhishek Bose
  2. 2. 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).
  3. 3. 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.
  4. 4. 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.
  5. 5. 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).
  6. 6. 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.
  7. 7. 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.
  8. 8. 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
  9. 9. 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.
  10. 10. Government Policies: •Pro-active stance of the government. •Encouragement for overseas investments.
  11. 11. Th an kY ou !