SWOT Analysis for JSW steel

About Us: JSW steel is an Indian steel company owned by the JSW Group based in Mumbai,
Maharashtra, India. JSW Steel, after merger of ISPAT steel, has become India's second largest
private sector steel company.

Industry: Steel

Revenue: 485.27 billion (US$7.2 billion)

SWOT Analysis:

The SWOT analysis for Daimler is presented below:

Strengths Weakness
1. Strong presence in domestic market 1. Very low capacity utilization
2. Reduced labor costs 2. Less number of mines under its hood
3. Experienced business units affects availability of raw materials
4. First steel producer in the world to
use Corex Technology for producing
hot metals
Opportunities Threats
1. Growing economy therefor increasing 1. Government changes to auction rules of
demand mining
2. R&D in steel industry is underdone 2. Rising cost of coal
and can be a good opportunity for cost
reduction
3. Government regulations and rules

Strengths

1. Strong presence in domestic market A 5.8% market share in India . Set up in 1982 at
Vasind near Mumbai, the group diversified and finally has a very strong presence in India
 with plants in six locations in India Vijayanagar in Karnataka, Salem in Tamil Nadu,
and Tarapur, Vasind, Kalmeshwar and Dolvi in Maharashtra.

2. Reduced labor costs According to a study , In 2014-15, SAIL spent seven times more
on employees for producing each tonne of steel as compared to JSW Steel. JSW has the
lowest employee costs among the major players in the industry.

3. Experienced business units - JSW Steel is testimony of years of experience and a self-
motivated culture that has concluded in the company becoming the top manufacturer of
value added and high end steel in India.

4. First steel producer in the world to use Corex Technology for producing hot metals-
JSW Steel is the first Indian Company to use the Corex technology to produce hot metal.
They went for this technology although it was untested in Indian conditions due to its
benefits to the environment.

Weakness

1. Very low capacity utilization- It has an aggregate capacity utilization of only 76%
whereas competitors like tata have 103%.

2. Less number of mines under its hood affects availability of raw materials -
Only 5 mines available for raw material acquisition
Opportunities

1. Growing economy therefore increasing demand- Indian steel consumption of 65kg per
capita is well below world average of 235kg per capita leaving plenty of room for market
growth in 2015

2. R&D in steel industry is underdone and can be a good opportunity for cost
reduction- Using Corex technology, JSW has already pioneered in R&D in the industry.
It needs to maintain its zeal and keep investing in R&D in order to reduce manufacturing
costs.

3. Government Rules and Regulations - The government has recently imposed minimum
import price on steel imports for six months that can benefit JSW having strong presence
in trade segment.

Threats

1. Government changes to auction rules of mining - The government changed rules

protecting tribal rights, forests and environment to ensure that more than 130 mines do
not face fresh auctions and are retained by the miners concerned. This might hinder new
acquisition of mines by JSW.

2. Rising prices of Coal - The cost of power generation in the state had firmed up by 5% to
7% after the public sector giant Coal India Ltd (CIL) raised coal prices by 6.3% few
months back and the ministry of railways started levying coal terminal charge for loading
 and unloading of coal. This will thus increase the cost of raw material and controlling the
cost of manufacturing will be a threat.

PESTLE Analysis of Steel Industry

Political

The government plays a crucial role, both as a supplier and a customer, and creates an
environment for business thereby creating the rules for competition. It creates boundaries within
which the steel industry must operate. In the Indian steel industry, the government controls
financial and many other inputs - both raw material and services. The government has however
also given opportunities to private players. This is, in the long run, expected to improve the
power situation in the country, to the benefit of the steel industry.

The government as a buyer is critical for the steel industry. Investments in infrastructure such as
rail, highways, dams, power plants and ports are critical and chief movers for steel demand.
Government spending on infrastructure shoots the demand for long products and then for flat
products. The demand for long products finishes with a saturation of infrastructure development.
This is expected to provide the necessary boost to the stagnant steel demand.

Environmental norms imposed by the government have a significant impact, estimated to be

around l5%o of project cost. Discharges from steel plants would become one of the major
reasons for driving development of new technologies as Government would soon come out with
regulations regarding these and protection of the environment. Government however has often
pulled the industry out of crisis situations. It recently removed export taxes on semi-finished and
longs so that domestic prices stay competitive with falling global prices

Economic

The growth of steel industry will be funded by expected investment in manufacturing units
requiring steel as the government, partnering up with private investors, is investing in the
development of Indias infrastructure. iron and steel industry is expected to continue growing at
a CAGR of 11% over 2015-2020 reaching Rs12 trillion by 2020. The Indian steel industry
suffers from low productivity of labour and high capital, energy and transportation cost. Industry
needs investment towards technology up gradation and quality upgradation.
China makes strong impact in Indian economy. Various steel majors are planning to exports in
millions of tones to china this year. So Overall there is a good and grooming economy for Indian
steel industry.

Social

Quality

Steel Industry constantly strives to improve the quality of life of the communities it serves
through excellence. It is committed to create value for all their stakeholders by continually
improving their systems and processes.

Safety

Steel Industry ensures the safety and health of all its employees under various companiess.
Company sets up dedicated committees in order to maintain safety standards and it takes safety
as a very critical and major agenda. The company is responsible for :

1. Establishing safe and healthy work environment.

2. Ensuring compliance with mandatory safety and health requirements.
3. Proper maintenance and orderly house keeping, to control the risk of damage to plant and
equipment.
4. Insisting on safe work procedures being followed by employees, contractors and visitors.
Alcohol and Drugs

Human Resource

In this competitive environment, Steel companies know that its people are the primary source of
its advantage. It is committed to just employment opportunities to attract the best available talent
and ensure a satisfied workforce.
Technological

With the advent of Midrex and Corex processes of iron making, which use non-coking coal, the
requirement for coking coal dropped drastically. With the introduction of continuous strip
processing (CSP), due to elimination of intermediate steps and improvement of yield and price
performance ratio, the cost of production of cold rolled sheet reduced significantly.
The convergence of IT with steel may help reduce direct and indirect sales costs, keep control
over the sales channel and enhance reach.
In India, two steel majors, Tata steel and SAIL along with kalyani Steel have participated in the
formation of a steel portal named Metaljunction.co.

Environment

Climate change

The greenhouse house gas emission from the burning of fossil fuels. Air emissions from the
production from coke, naphthalene, ammonium compounds, crude light oil, sulfur and coke dust.

Emissions to Water

Water emissions come from the water used to cool coke after it has finished baking. Most
pollutants can be removed by filtration.

Slag, the limestone and iron ore impurities make up the largest portion of iron-making by-
products. Gaseous emissions and metal dust are prominent sources of waste.

Legal

Recently Draft Legal Steel Policy 2017 was made public:

 Build a globally competitive industry by increasing crude capacity to 300MT by 2030-31.
To increase per capita consumption to 160Kgs by 2030-31.
To domestically meet the demand for high quality grade steel by 2030-31.
To become a net exporter of steel by 2025-26.
To encourage more raw material efficient steel production by 2030-31 in a safe manner.

Develop and implement quality standards for domestic steel products.