This reports gives reader an overview of India steel industry. It will explain India position from world prospective, its working and dominant players.

1. Steel Industry IndiaSteel Industry India

2. Industry Facts
 India is the world’s second-largest producer of crude steel (up from eighth in 2003). The steel sector in India
contributes nearly two per cent of the country’s gross domestic product (GDP) and employs over 6,00,000
people.
 China is the largest producer of steel in the world accounting for nearly 48.0 - 50.0 per cent of global production
of the metal (including EU) contributing to the 91.1 per cent of global steel production in 2017.
 According to the World Steel Association (WSA), India’s per capita finished steel consumption is of only 70.9
kilogram (kg), against the global figure of 224.5 kg. India's per capita finished steel consumption grew by 7% in
CY 2018, over 66.2 kg in 2017. China is the biggest steel producer with a per capita consumption of 590 kg.

3. Story in Charts
189
270
347
456
595
644
717 719
770 753
850 852
905
971
1063
1148
1250
1348 1343
1239
1433
1538 1560
1650 1669
1620 1627
1730
1808
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
World Crude Steel Production (million tonnes)

4. Story in Charts
38%
9%
2%
15%
7%
7%
9%
4%
9%
World Steel Production Geographical Distribution
51%
6%
2%
9%
6%
7%
6%
6%
7%
China
CIS
Other Europe
EU(28)
Others
Other Asia
Japan
India
NAFTA
2008 2018

5. Story in Charts
1445.6
1544.6 1549.9 1504.9 1519.5
1632.5
1712.10.66%
0.68% 0.70%
0.74% 0.77%
0.81%
0.88%
2012 2013 2014 2015 2016 2017 2018
Finished Steel Products
World (Mn Tonne) India (%)
97 102 110
122 128
138 138
78 82
89 90
98 103 10781% 80%
81%
74%
76%
75%
77%
65%
70%
75%
80%
85%
2013 2014 2015 2016 2017 2018 2019*
0
50
100
150
India Steel Industry
Production Capacity Crude Steel Production Capacity Utilization
• During 2015-16, the capacity utilisation rate fell below 80 per cent due to ban on iron ore mining which led to a fall in the
raw material available in the market.

6. Story in Charts
12%
29%
43%
3%
2% 2%
4%
5% Sector Wise Steel Consumption In India
Infrastructure
Construction
Engineering & Fabrication
Automotive
Railways
Packaging
Energy
Others
10.9
11.7
8.47.9 8.2 8.8
FY17 FY18 FY19
Trend in steel exports and imports (in million tonnes)
Exports Imports
37.4%
19.6%
16.2%
3.3%
2.9%
20.5%
Country-wise imports by India for FY19
Korea
China
Japan
Taiwan
Indonesia
Others

7. Steel Industry Value Chain

8. Steel Company Value Drivers
Profit
Revenue
Price
Realization
Demand-Supply
Dynamics
Cyclical
Period
Contracts
Value Added
Product
Volume
Pricing Competition
Economic
Growth
Housing
Infrastructure
Auto & Capital
equipment
Consumer
Durable
Costs
Raw
Materials
Power
Coal
Employees Interest Logistics

9. India Steel Industry Analysis
41.2% 38.6% 36.4% 34.3% 32.3% 32.0%
42.8% 42.5% 42.9% 42.7%
58.8% 61.4% 63.6% 65.7% 67.7% 68.0% 57.2% 57.5% 57.1% 57.3%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
INDUSTRY STRUCTURE
Integrated Steel Producer Secondary Producer
Integrated Producers: Steel Producers starting their operation from iron making like production of hot metal or sponge iron using iron ore
and producing crude steel of standard specifications, with processing facilities. They are the only one who converts ore to steel.
Secondary Producers: These producers make use of steel scrap, sponge iron or hot briquetted iron (HBI). They mainly comprise of the
Electric Arc Furnace (EAF) and Induction Furnace (IF). Apart from these two, other manufacturing units like independent hot and cold rolling
units, re-rolling units, galvanizing and tin plating units, sponge iron producers and pig iron producers are covered under secondary producers
or value adders. These largely produce long steel products.

10. India Steel Industry Analysis
40%
17%
15%
12%
5%
4%
3%
2%
2%
Crude Steel Production – Producer (2017)
Other EAF-IF
JSW Steel
SAIL
Tata Steel
Essar Steel
Rashtriya Ispat
Jindal Steel & Power
Other BOF
Other BOF
50%
27%
10%
10%
3%
Finished Steel Production – Producer (2017)
Other Producers
ESL,JSWL,JSPL
SAIL
Tata Steel
Rashtriya Ispat

11. Steel Companies Analysis
• We will be conducting a industry analysis on four listed companies. These companies are:
1. SAIL
2. Tata Steel
3. Jindal Steel and Power
4. JSW Steel Ltd
• The analysis of these companies is going to be based on the following parameters. They are as follows: –
1. Sales
2. Net Profit
3. M.Cap
4. Debt/Equity

12. Steel Companies Analysis
-10,000
-5,000
-
5,000
10,000
15,000
20,000
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Net Profit
SAIL Jindal Steel & Power Ltd Jsw Steel Ltd Tata Steel Ltd
-
20,000
40,000
60,000
80,000
1,00,000
1,20,000
1,40,000
1,60,000
1,80,000
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Sales

13. -
20,000
40,000
60,000
80,000
1,00,000
1,20,000
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Market Cap
-
0.5
1.0
1.5
2.0
2.5
3.0
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Debt/Equity
SAIL Jindal Steel & Power Ltd Jsw Steel Ltd Tata Steel Ltd

14. Conclusion
• In our opinion Indian steel industry enjoys an inherent advantage in terms of availability of high grade iron ore and
non-coking coal – the two critical inputs of steel production, this gives Indian integrated players a great advantage of
producing and selling steel at competitive rates. Albeit India consumption story remains intact and India remains a
bright spot in the global steel industry.
• It is estimated that India will require INR 50.0 lakh crore in infrastructure spending through 2022. The National Steel
Policy, 2017 envisages total reliance on domestic steel production by 2030. Overall economic growth and more
specifically accelerated spend in infrastructure sector including roads, railways and ship building, anticipated growth
in defense sector and the automobile sector are expected to create significant demand for steel in the country and
meeting our set targets
• We also understand, we are going through a declining growth phase in various sectors specifically infrastructure,
auto and many more which directly contribute to the growth of steel industry but we believe Indian consumption
story remains intact and India remains in a bright spot in the global steel industry. When the growth cycle revives,
steel industry and its related company will be key beneficiary. We have recommended one company from our
previous comparison in our Adroit Model Portfolio.

15. Disclaimer
Prepared By:
Research Associate: Samarth Gupta
Email ID: samarthgupta@adroitfinancial.com
Phone Number: 0120-4550300*270/388
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