Mining and Metallurgy

Jayaram Ponnada Lopamudra Panda Monisha Ranjit 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 Indias 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

Top Five Consumer Countries of Steel

Indian Potential for Steel

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

Skilled Human Resources

Growth factors

Abundant Iron Ore Reserves 10.3 billion tonnes

Government Policy Stable currency Easing of regulations Strong Banking & judicial system Encouraging trade relations with ASEAN and other countries Infrastructure building Exploring new Energy resources

Strengths
Increase Demand Availability of labour at low wage rates Huge Resources Of Raw material Environment laws

Weaknesses High cost of capital

Lack of infrastructure Slow decision making Low labour productivity Insufficient transport system

Threats

S.W.O.T
Opportunities High potential to be tapped
Unexplored rural market Export market penetration Consolidation

ANALYSIS Slow Industry Growth

Technological change Price sensitivity and demand volatility Threat from substitutes Huge bottlenecks in foreign invested projects

Cheap Imports

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. Indias emergence as a global player.

Market Share of Leading Players in Iron and Steel Industry

Company Production of Steel(in million tonnes) 13.5 5.2 3.5 8.4 14.5 45.1 Market share(in percentage terms) 32 11 8 19 30 100

SAIL TISCO RNIL ESSAR, ISPAT,JSWL OTHERS TOTAL

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.