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Analysis of the steel industry


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Analysis of the steel industry

  1. 1. Analysis of the Steel Industry
  2. 2. Present Situation of the Indian Steel Industry The steel industry is one of the major industries of India India ranks 5th in the world ranking for production of steel Projected to become the world’s second largest producer by 2015–2016 India produced 66.8 million tonnes in 2010-11, while China, at the top of the list, produced 626.7 million tonnes. The total employment in the industry is more than two million (including direct and indirect employment) Per capita consumption of steel in India (at 50 kg per annum) is well below the world average (at about 200 kg per annum) and much below that of the developed world (around 350 kg per annum)
  3. 3. Players in the Industry Tata Steel: Producer and supplier of wire rods, bars, and steel flats Jindal Steel & Power: Manufacturer of mild steel slabs and sponge iron Jindal Iron & Steel: Producer of galvanized steel products Essar Steel: Producer of sponge iron, steel and iron ore pellets Bokaro Steel Plant: Steel manufacturer Ambica Steel: Producer of carbon steel, alloy, and stainless steel Lloyds Steel: Producer of corrugated sheets and steel coils Steel Authority of India: Manufacturer of steel and iron
  4. 4. Market Share of Different Players SAIL TISCO 17% 6% RNIL 4%OTHERS 63% ESAAR, ISPAT, JSWL 10%
  5. 5. Current Challenges Being Faced Many steel giants signed MoUs with several state governments (especially Jharkhand, Odisha, Chattisgarh and West Bengal) for new projects but none of them have materialised It has taken 5 long years for Tata Steel’s Kalinganagar (Odisha) project to complete the rehabilitation and resettlement process JSW’s proposed Salboni plant (W.B) hasn’t been allotted the required amount of land, and moreover the government, recently, took control over about 400 acres of land bought by the company because of a state rule that any outsider can’t buy more than 24 acres of village land POSCO is facing massive resistance from the natives of Jagatsinghpur (Odisha) for land acquisition while many other steel plants are awaiting aid from the government in terms of either land or infrastructure
  6. 6. Challenges before the Indian Steel Industry Three areas that need to be improved upon in the view of the exports are the infrastructure, ability to draw the top names in steel, and wealth creation issues. The methods that are adopted for the creation of wealth act as hindrances to the growth and development of the Indian steel industry Not been able to draw the best professionals in the steel industry and that has been a major drawback of the industry Not enough land available to support increase the volume of production because of consistently increasing population of India Dependence on the overseas technological assistance
  7. 7. Government Regulations More importance on infrastructure development in the Union Budget 2011. It would lead to development of highways, ports, power projects, bridges and others, which will increase the demand for steel With effect from May 24, 1992 steel industry was incorporated in the list of ‘high priority’ industries for automatic approval for foreign equity investment up to 51 per cent. This limit has since been increased to 100 per cent Import duties on key steel-making raw materials, comprising of mineral products, ores and concentrates have seen noteworthy reductions in successive budgets during the last few years The government introduced special economic zones (SEZs) in June 2005, with the plan of creating internationally competitive regions. Steel plants operating in SEZs receive some advantages like tax holiday; they can freely source inputs domestically or externally without any specific approval or duty payable
  8. 8. Environment The Eleventh Five Year Plan (2007–2012) has allocated investments worth US$ 490 billion for the infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining and irrigation. Steel giants such as JSW Steel and Tata Steel are investing to enhance the capacities of products such as TMT bars (rebars) With stricter implementation of environmental rules, and a new mining bill that seeks to have companies pay 26 of their profits to displaced locals Companies are expected to spend more on environment and society
  9. 9. Road Ahead The Indian crude steel production will grow at a compound annual growth rate (CAGR) of around 10 per cent during 2010- 2013, according to a research report by RNCOS titled, “Indian Steel Industry Outlook to 2012 Initiatives have been taken by the Government to boost economic growth, by injecting funds in industries such as construction, infrastructure, automobile, and power. This will provide an impetus for growth for the steel industry in future Steel consumption in India is expected to grow considerably in coming years A report by Ernst & Young states that India would have annual production capacity of 101 MT in 2011-12 Many global steel players have been planning to enter the market or have announced their expansion plans.E.g. ArcelorMittal and POSCO have planned mega Greenfield projects at various locations in India.
  10. 10. THANK YOU!!