Mining and Metallurgy

Jayaram PonnadaLopamudra PandaMonishaRanjit Pisharody

Timeline Top Companies Size and Composition Statistics Growth drivers Globalization SWOT Analysis Government Policies Foreign Direct Investment Technology Privatization Competition Future growth and Recommendations

Ahmedabad Steel Craft Bengal Industries Bokaro Steel Plant Central Steel Corporation Essar Steel Devson Steels Buyao Info Jindal Steel & Power Lloyds Steel Steel Authority of India Tata Steel Vizag Steel

India is ranked 5th among the top steel producers - 53MT.

The steel industry of India has capital investments of more than Rs 100,

000 crores.

The total employment in the industry is more than 2 million (including

direct and indirect employment).

Steel production grew at 1.2 per cent in the January-

March quarter of 2008-09 over the same period last year.

Out of India’s annual iron ore production of more than 200

MT, about 50 per cent is exported.

Accounts for over 7 per cent of the world's total

production.

Accounts for around 5 per cent of the global steel

consumption.

Top Five Consumer Countries of Steel

Skilled Human Resources Abundant Iron Ore

Government Policy

Huge Potential for Demand

• High GDP growth rate of 8%• 1.2 billion population• Low per capita steel consumption of 49kg (World av. 150 kg)

Reserves 10.3 billion tonnes

• Stable currency• Easing of regulations• Strong Banking & judicial

system

Growth factors

•Encouraging trade relations with ASEAN and other countries

• Infrastructure building• Exploring new Energy resources

Indian Potential for Steel

StrengthsIncrease DemandAvailability of labour at low wage ratesHuge Resources Of Raw materialEnvironment laws

StrengthsIncrease DemandAvailability of labour at low wage ratesHuge Resources Of Raw materialEnvironment laws

Weaknesses• High cost of capital• Lack of infrastructure• Slow decision making• Low labour productivity• Insufficient transport system

Weaknesses• High cost of capital• Lack of infrastructure• Slow decision making• Low labour productivity• Insufficient transport system

Opportunities• High potential to be tapped• Unexplored rural market• Export market penetration• Consolidation

Opportunities• High potential to be tapped• Unexplored rural market• Export market penetration• Consolidation

Threats• Cheap Imports• Slow Industry Growth•Technological change• Price sensitivity and demand volatility• Threat from substitutes•Huge bottlenecks in foreign invested projects

Threats• Cheap Imports• Slow Industry Growth•Technological change• Price sensitivity and demand volatility• Threat from substitutes•Huge bottlenecks in foreign invested projects

S.W.O.T ANALYSIS

Industrial and Trade Policy Resolutions in 1991 with regard to the Steel industry:

Licensing requirement for capacity creation has been abolished. Steel industry has been removed from the list of industries reserved for the

state sector. Automatic approval granted for foreign equity investment in steel has

been increased up to 74%. Price and distribution controls were removed from January 1992. Restrictions on external trade, both in import and export, have been

removed. Import tariff reduced from 105% in 1992/93, to 30% in 1996-97. Other policy measures like convertibility of rupee on trade account,

permission to mobilize resources from overseas financial markets, and rationalization of existing tax structure.

Big Barons like ArcellorMittal and Posco enter India

Investments projected to the tune of US$ 30 billion

Bottleneck:

Why Still they are in slippery ground?

Reduction in economies of scales

Less capital requirement per tone of capacity

Less operating cost

Improved quality.

Increased labour productivity.

Increased export

The market share of public sector SAIL has now come down to around 34 per cent.

The government of India encouraged Tatas, Mittals, Essar and Jindals to develop and expand their capacity. There was full autonomy to take decisions by these companies.

Effects: Increase in profitability. Improvement in infrastructure. Increase in employment. India’s emergence as a global player.

Company Production of Steel(in million

tonnes)

Market share(in percentage terms)

SAIL 13.5 32

TISCO 5.2 11

RNIL 3.5 8

ESSAR, ISPAT,JSWL 8.4 19

OTHERS 14.5 30

TOTAL 45.1 100

Market Share of Leading Players in Iron and Steel Industry

Its predicted that the steel production will double to 120 billion tonnes by 2010 and will become 280 billion tonnes by 2015.

Energy savings potentials.

Environment friendly production- Greenfields

Further liberalization towards tariff structure, full convertibility of Indian currency, more equity participation by foreign partners, rationalization of tax structure etc. will be required.

R&D focus is to be increased substantially.

Firms must do technological forecasting.

Resource utilization must be more effective to improve on the productivity.

Investment in infrastructure is crucial to step up demand for steel.