Macro Analysis of Indian Steel Industry

Management Research Project -I

Submitted
In the partial fulfillment of the Degree of
Master of Business Administration
Semester-III
By
Name

Exam No.

Patel Harshil D. (13044311069)

Patel Jigar B. (13044311078)
Patel Zalak M. (13044311114)
Patel Harshil K. (13044311070)
Patel Jainesh B. (13044311074)
Patel Prakash V. (13044311097)
Unde r the Guidance of:
Prof. (Dr.) Mahendra Sharma
Prof. & Head,
V. M. Patel Institute of Management.
&
Dr. HarshaJariwala
Dr. Abhis hek Parikh
Faculty Members
V. M. Patel Institute of Management.
Submitted To:
V. M. Patel Institute of Management,
Ganpat University,Kherva.

(Decembe r, 2014)

CERTIFICATE BY THE GUIDE

This is to certify that the contents of this Thesis entitled Macro Analysis Of India Steel Industry
in India' by Patel Harshil D. (13044311069), Patel Jigar B. (13044311078), Patel Zalak M.
(13044311114), Patel Harshil K. (13044311070), Patel Jainesh B. (13044311074), Patel Prakash
V. (13044311097), submitted to V. M. Patel Institute of Management for the award of Degree
Master of Business Administration (MBA) is original research work carried out by him under my
supervision.

This report has not been submitted either partly or fully to any or her University or Institute for
award of any degree or diploma to the best of my knowledge.

Prof(Dr) Mahendra Sharma,

Professor &Head ,
V.M.Patel Institute Of Management
Date:

Ganpat University,

Place: Kherva

Kherva.

CANDIDATES STATEMENT

I/We hereby declare that the work incorporated in this report entitled "Macro Analysis of Indian
Steel Industry " in fulfillment of the requirements for the award of Degree of Master of Business
Administration (MBA Semester-III) is the outcome of original study undertaken by us and it has
not been submitted earlier to any other University or Institution for the award of any Degree or
Diploma.
Patel Harshil D. (13044311069)
Patel Jigar B. (13044311078)
Patel Zalak M. (13044311114)
Patel Harshil K. (13044311070)
Date:

Patel Jainesh B. (13044311074)

Place: kherva

Patel Prakash V. (13044311097)

ii

Preface

It is a great experience being a part of corporate world. Real MBA can be achieved only with
such practical implications. We are very thankful to DEPARTMENT OF GANPAT
UNIVERSITY who planes such learning programs for its students.

The basic motive behind of this project is to acquire knowledge about various aspects of the
industry that can aid the student in their future career.

For our interest we have selected INDIAN STEEL INDUSTRY. The Indian Steel Industry is the
growth segment which has a large contribution in the formation of the Indian economy. The
growth and the demand increase which shows a great tremendous potential to have a study in this
industry. This report helps us to develop our skill & confidence to do better in all respect in
management fields. In our analysis we have gone for analyzing industry by pest analysis of the
industry, five force analysis of the industry and strength and weakness of the industry, financial
analysis also considered in analysis of the industry. Future outlook of the industry is concluded
that will help us in our future career.

We have tried our best and have applied all our efforts, knowledge and sources available, in this
project.

iii

Acknowledge ment

It is with profound in debtness that we acknowledge the efforts of all the well- wishers who have
in some or the other way contributes in their own special way to the success of this project.

It is a universal fact that for study of a project in depth, we need the support of many people
right from the stage of conceiving the idea to completion of report. It is difficult for ir single
person to do the job efficiently without interaction & involvement of others.

We express our gratitude to our college for giving us this opportunity. We are also grateful to
our Head of Department, Dr. Mahendra Sharma and our guide Dr. Harsha Jarivala , for giving us
Valuable Guidance and providing facilities to successfully complete our project. We are highly
indebted to valuable help and support.

We are also grateful to other faculty members of V.M. Patel Institute of management for their
support whenever required. Discussions with friends also have served to provide sought after
information. We are thankful to all our batch mates.

iv

Executive Summary

Our project title is "Macro Analysis of Indian steel industry ". The project includes collecting
information about Indian Steel industry.

Steel is a principal product in Indian economy and for the other driving factors. It has been
playing a prominent role in the development of nation's economy. Our industry provides
employment to large number of people on the one hand. On the other hand, it makes significant
contribution to national exchequer by way of excise revenue and foreign exchange earnings.

India is the one of the largest producer and exporter of Steel in the world. Rich and varied Indian
geographic and agro-climatic conditions foster consistent availability of wide range of Steel for
the industry growth. Indian Steel, by virtue of its qualities, sheer volumes and diversity, is
progressing gracefully to occupy its rightful place in the Lidian Industry market.

Although there is government initiative to create an environment for the maximum output of
steel industry, the commercial importance of steel product can never be underestimated due to
the revenue earning potentiality and employment generation capacity of the industry. Steel is
traditional item of India's foreign trade. India is one of the leading steel exporting countries in the
world.

Steel Industry in Lydia contributes in a unique manner to several important facets of the Indian
Economy, covering revenue, export, employment, and GDP growth. As the Steel consumption is
advantages to health government is taking many steps to increase the sales and consumption of
steel by preparing and enforcing acts and laws like finance Ministry of steel.

In this report we have given information about the background of the steel industry including
scenario and history of the steel industry. Then we have discussed about the market of the Indian
steel industry including export also.

The main analysis we have done is of five force analysis in which we have studied that the new
entry for the players in the industry is tough and the bargaining power of buyers and suppliers is
low that is favorable to the industry. Rivalry and substitute products threatening our industry.

In our pest analysis we have find that political environment affecting the industry negatively and
that result in the increase of steel sales. The government rules and regulation regarding
production, and advertisement of the steel is harmfully affecting our industry. Moreover the
economic analysis shows that how the industry contributes in economic growth and government
revenue.

It has been a great pleasure in preparing in this report. We believe that this report will help to
provide concise and clear picture of how the industry operates and what are the factors that have
a bearing on the industry.

vi

List of Tables

Table No.
Table 2

Critical Inputs for Steel Production.

Table 2.l.3

GCF in Transport Related Infrastructure.

Table 2.2

Crude Steel Production of various countries.

Table 4.4.1

Steel Production Capacity, Import, and Export turnover as on 2013-14.

Table 4.4.2

Crude Steel Production Capacity and Utilization.

Table 4.6.1

Position of India in Export and Import with other Countries.

Table 5.3.1

Market Share of players in the Steel Industry.

Table:5.3.2

Production of various players in the steel Industry as on 2013-14.

Table 6

Profit After Tax of the various industries as on 2010-14.

Table 6.1.1

Earning per Share of various industries as on 2014.

Table 6.2.1

Debt Equity Ratio of various companies in the industries.

Table 6.3.1

Gross profit ratio of various industries as on 2014.

Table 6.4.1

Fixed Assets Turnover ratio of various industries as on 2014.

Table 6.5.1

Curent ratio of various industries as on 2014.

List of Figures

Figure No.
Figure: 5.3.2.1

Production capacity of various players in the Steel Industry as on 2013-14.

Figure 6.1.1

Earning per share of various industries as on 2014.

Figure 6.2.2

Equity Debt Ratio of various industries as on 2014.

Figure 6.3.2

Gross profit ratio of various industries as on 2014

Figure 6.4.2

Fixed Assets Turnover ratio of various industries as on 2014

Figure 6.5.2

Current ratio of various industries as on 2014.

vii

Research Methodology

Title of the study:- " Macro Analysis of Indian steel Industry ."
Type of Research:- Exploratory and Analytical Research
Data Collection:- Secondary Data
Objective:1. To get brief idea about steel industry in India
1.1 History of Steel Industry in India.
1.2 Global and Domestic Players in the Industry.
1.3 Recent Mergers and Acquisitions in the Industry.
1.4 Product offering of steel industry in India.
1.5 References
2. To know total turnover and production of Steel Industry in India
2.1Key Success Factors driving demand of steel industry in India.
2.2 Prodlction of Steel Industry in India.
3. To analyze internal and external environment
3.1 SWOT Analysis
3.2 PEST Analysis
3.3 Porters Five Force Analysis
3.4 Porters Diamond Analysis
4. To know Regulatory Framework of Steel Industry in India.
4.1 Rules and Regulations framed by Government
4.2Policy framed by Government
4.3 Export and Import Policy pertaining to Industry.
4.4 Total Export and Import turnover.
4.5 Countries From/to goods were Imported/Exported.
4.6 Position of India in Export and Import with other countries.
4.7 References
5. Product Life Cycle of Industry
5.l Players in the Industry
5.2 Position of Players in the Industry
viii

5.3 Market Share of Players in the Industry

5.4 PLC of the Industry.
5.5 References
6. Financial Analysis
7. Business Plan

ix

Table of Contents

Sr. No.

Particulars

Page No.

CERTIFICATE BY THE GUIDE

CANDIDATES STATEMENT

II

Preface

III

Acknowledge ment

IV

Executive Summary

List of Tables

VII

List of Figure

VII

Research Methodology

VIII

Index

Introduction

1.1

History of Steel Industry in India

1.2

Global and domestic players in the Industry

1.3

Recent Mergers and Acquisition in the Industry

1.4

Product offering of steels in the Industry

To know total turnove r and production of steel industry

in India.
2.1.1 Demand for steel Industry lndia.

2.1.2 Steel supply

10

2.1.3 Infrastructure

13

2.1.4 Steel Price

14

2.1.5 Human Resource

15

2.1.6 Technology, Research and Development

16

2.1.7 Environmental Factors

17

2.1.8 Trade Policy

17

2.1.9 Investment Promotion and policy Impementation

18

2.2

Production of steel Industrv in India

19

2.2.1 Demand forecast for steel Industry in

24

2.2.2 Role of Iron and ore industry in GDP

24

To analyze Internal and External Environment

3.1

SWOT Analysis to the steel industry

30
30

3.1.1 Material for development and war

35

3.1.2 Growth of global steel industry in India

36

3.1.3 Growth Potential of the Industry

36

3.2

Pest Analysis

38

3.3

Porters Five Force Analysis

43

3.4

Porters Diamond Model

57

To Know Regulatory Frame work of Steel Industry In

60

India
4.1

Rules and Regulations Framed by government

60

4.2

Policy framed by the government

63

4.3

Export Policy for Iron Ore

68

4.4

Total Export and Import Turnover

78

4.5

Countries From goods were Imported and Exported

80

4.6

Position of India in Export and Import with other countries

80

4.7

References

81

Product Life Cycle of the Industry

82

5.1

Players in the Industry

82

5.2

Position of Players in the Steel Industry

88

5.3

Share of various Players in the Steel Industry

88

5.4

Product life cycle of the Industry

90

5.5

References

90

Industry Pe rformance

91

6.1

Earning Per Share

94

6.2

Debt Equity Ratio

95

6.3

Gross Profit Ratio

96

6.4

Fixed Assets Turnover

98

6.5

Current ratio

99

Business Plan

101

7.1

Introduction

101

7.2

Company Description

102

7.3

Process/Steps For Starting Business

102

7.4

Brand Information

103

7.5

Manufacturing Process

103

7.6

Stp Analysis

103

7.7

Marketing Strategy

104

7.8

Cost Of Project

104

7.9

Staff

105

7.10

Source Of Finance

105

7.11

Financial Analysis

105

Limitations

109

Conclusion

110

Annexures

111

CHAPTER 1
TO GET BRIEF IDEA ABOUT STEEL INDUSTRY IN INDIA
1.1 History of Steel Industry in India

The history of steel- making in India can be traced back to 400 BC when the Greek emperors
used to recruit Indian archers for their army who used arrows tipped with steel. Many more
evidences are there of Indians' perfect knowledge of steel- making long before the advent of
Christ .Archaeological finds in Mesopotamia and Egypt testify to the fact that use of iron and
steel was known to mankind for more than six thousand years and that some of the best
products were made in India. Among the widely-known relics is the Iron Pillar near Qutab
Minar in Delhi. The pillar, built between 350 and 380 AD, did not rust so far an engineering
marvel that baffles the scientists even today. Yet another engineering feat is the famous Sun
Temple at Konark in Orissa, built around 1200 AD, where steel structural were used for the
first time in the world.

These were the halcyon days when India flourished in all directions and when its prosperity
was a matter of envy for the foreigners. But as ill luck would have it, India's prosperity gave
way to poverty after the advent of the foreign rule. India's indigenous industry languished
because of a deliberate policy of the colonial rulers to make the country only a supplier of
raw materials.

Steel Role plays a vital role in the development of any modern economy. The per capita
consumption of steel is generally accepted as a yardstick to measure the level of socio
economic development and living standards of the people. As such, no developing country
can afford to ignore the steel industry.

Beginnings

The first notable attempt to revive steel industry in India was made in 1874 when the Bengal
Iron Works (BFW) came into being at Kulti, near Asansol in West Bengal. However, fortyfour years before that, in 1830 to be precise, a foreigner, named Joshua Marshall Heath, had
set up a small plant at Porto Novo on Madras Coast. Heath produced in his plant pig iron at
1

the rate of forty tones a week. His method of iron- making needed approximately four tones of
charcoal to produce one tone of low quality pig iron which proved to be too expensive for
Heath to carry on the face of stiff competition from the British steel industry. The BIW made
considerable improvement in the process of iron and steel making. It used coke as the fuel
instead of charcoal .But the plant fell sick as the source of funds dried up. It was taken over
by the Bengal Government and was rechristened as Breaker Iron Works. In 1889 the Bengal
Iron and Steel Company acquired the plant and by the tam of the century the Kulti plant
became a success story. It produced 40,000tonnes of pig iron in 1900 and continued to
produce the metal until it was taken over by Indian Iron and Steel Company (IISCO) in 1936.

For modern India's iron and steel industry August 27, 1907 was a red- letter day when the
Tata Iron and Steel Company (TISCO) was formed as a Swedes venture to produce 120,000
tones of pig iron. The TISCO plant at Sakchi (renamed Jamshedpur) in Bihar, started pig iron
production in December 1908 and rolled out its first steel the following year. TISCO had
expanded its production capacity to one million tones ingot by the time the country achieved
freedom. The Tatas, as Gandhiji said, represented the "spirit of adventure" and Jamsetji Tata,
in the words of Jawaharlal Nehru," laid the foundation of heavy industries in India". The
British rulers disfavored this and other attempts to start indigenous industry. It was chiefly
with the help of American experts that the Tatas started their industry. Its childhood was
precarious but the war of 1914-18gave it a fillip. Again it languished and was in danger of
passing into the hands of British debenture holders. But nationalist pressure saved it. In 1918,
soon after the war, Indian Iron and Steel Company (IISCO) was formed. The then Mysore
government also decided to start an ironworks at Bhadravati. While IISCO started producing
pig iron at Bumpur in 1922, the Mysore Iron and Steel Works took about 18 years to start its
plant. Meanwhile, the Bengal Iron Works went into liquidation and merged with IISCO. The
Steel Corporation of Bengal (SCOB) formed in 1937, started making steel in its Asansol
plant.

Prime Minister Nehru firmly believed that "no country can be politically and economically
independent unless it is highly industrialized and has developed its resources to the utmost
".Nehru's ideas about India's development were broadly incorporated in free India's first
Industrial Policy Resolution adopted by the Constituent Assembly in 1948. The resolution
officially accepted the principle of mixed economy. Industries were divided into four
categories. In the first category were strategic industries which were made the monopoly of
2

the Government. In the second category were six industries which included, among others,
coal, iron and steel.

It was decided that new units would be started exclusively by the government in the public
sector without disturbing the existing ones in the private sector. Eighteen industries, including
heavy castings and forings of iron and steel, ferro alloys and tool steel were covered by the
third category and the rest of the industries by the fourth. In sum, the government committed
itself to the development of basic steel industry while the private sector was to benefit
through the establishment of downstream units which would use pig iron, billets, blooms and
flat products to be made by the public sector steel plants.

In keeping with the spirit of the resolution the Government decided to start a chain of steel
plants all over the country in the public sector. The first such plant was set up at Rourkela in
Orissa. The second came up at Bhili in Madhya Pradesh. It was followed by a third at
Durgapur in West Bengal. Each of these three plants had an initial production capacity of one
million tone in got. Durgapur was followed by a steel plant at Booker in Bihar. The onward
march of Indian steel did not stop at Booker. The fifth public sector steel plant was set up at
Visakhapatnam in Andhra Pradesh. As a matter of fact, the country was dotted with steel and
steel-related plants in public and private sectors, like Alloy Steel Plant, Salem Steel Plant,
Kalinga Iron Works, Malavika Steel Ltd., Jindal vijaynagar Steel l-td., to name only a few.
About the same time TISCO launched its two million-tonne expansion programmer.

The Government's Industrial Policy had undergone changes once in 1956 and then in
1991.The resolution modified in 1956 brought changes in the category pattern and listed
more industries for the public sector than did the earlier one, though it was not harsher
towards the private enterprise. In the new industrial policy announced in 1991 iron and steel
industry, among others, was included in the list of industries reserved for the public sector
and exempted from the provision of compulsory licensing. With effect from May 24, 1992
iron and steel industry was included in the list of 'high priority' industry for automatic
approval for foreign equity up to 51% (now 74%). Export-import regime for iron and steel
has also undergone major liberalization. The freight equalization scheme was withdrawn
removing freight disadvantage to States located near steel plants.

The new policy has already borne fruit. The finished steel production in India has gone up
from mere 1.1 million tones in 1951 to 23.37 million tones in 1997-98 despite overall
economic slowdown in the country.

It has been estimated that the demand for finished steel in 2001-02 would touch 38.68 million
tones and the projected availability of 38.01 tones is almost adequate to meet the domestic
demand along with export of six million tones. Similarly, by2011-12, the final year of the
tenth plan, the demand for finished steel would be around 48.80 million tones, providing
adequate surplus for meeting the projected export potential of nine million tones.

However, there is hardly any scope for complacence over the fact that India continues to be
the10th largest steel producer in the world. In 1997 India's per capita steel consumption was
only 22kg which was much below the world average of about 126 kegs. Even if the domestic
demand grows up from 34.5 million tones to 100 million tones in2025 the industry is unlikely
to catch- up with the production in the developed countries.

The redeeming feature is the cost competitiveness of Indian steel in the global market.
According to World Steel Dynamics, the total cost of steel production in the USA is $510 per
metric tone while in Japan it is $550, in Germany $557, in Canada $493 and in India it is
$497. This is because of high material cost due to high excise and import duties. Reduction of
cost on these accounts will make Indian steel more competitive in the world market. Indian
steel can reasonably expect a good market in the neighboring countries now that the Asian
economy is looking up.

In conclusion, it can be said with a certain measure of confidence that India's iron and steel
industry which had a glorious past and has an uncertain present may now look forward to a
bright future.

1.2 Global and Domestic Playe rs in the Industry.

1st; 103.3 mMT; Arcelor Mittal

2nd;37.5 mMT; Nippon Steel

3rd; 35.4 mrnt; Baosteel Group

4th; 34.7 mMT POSCO

5th; 33.3 mMT; Hebei Steel Group

6th; 33.0 mMT; JFE

7th;27.7 mMT; Wuhan Steel Group

8th; 24.4 mMT; Tata Steel

9th; 23.3 mMT; Jiangsu Shagang Group

10th; 23.2mMT; U.S. Steel

PUBLIC SBCTOR
STEEL AUTHORITY OF INDIA LIMITED (SAIL)
RASHTRIYA ISPAT NIGAM LTD. (RINL)
TATA STEEL LIMITED.
ESSAR STEEL LTD.
STEEL STRIPS LTD.

PRIVATE SBCTOR
TATA STEEL LIMITED.
ESSAR STEEL LTD.

Others major steel producers are

Tesco ( Tata Iron and Steel Corporation ltd)

Jindal Vijaynagar Steels Ltd

Jindal Strips Ltd

JISCO

Saw Pipes

Uttam Steels Ltd

Uttam Steels Ltd

5

STEEL STRIPS Industries Ltd

Mukand Ltd

Mahindra Ugine Steel Company Ltd

Tata SSL Ltd

UshaSTEEL STRIPS Ltd

Kalyani Steel Ltd

Electro Steel Castings Ltd

Sesa Goa Ltd

NMDC

Lloyds Steel Industries Ltd

1.3 Recent Mergers and Acquisitions in the Industry.

Tata Vs. Corus:
The Corus was created by the merger of British Steel and Dutch steel company, Hoogovens.
Corus was Europe's second largest steel producer with a production of 18.2 million tonnes
and revenue of GDP 9.2 billion (in 2010).

Tata Steel Vs CSN: The Bidding War:

There was a heavy speculation surrounding Tata Steel's proposed takeover of Corus ever
since Ratan Tata had met Long in Dubai, in July 2011. On October 17, 2011. Tata Steel made
an offer of 455 pence a share in cash valuing the acquisition deal at US$ 7.6 billion. Corus
responded positively to the offer on October 20,2011.

Arcellor- Mittal Deal:

The deal, valued at $33.1 billion

1.4 Types of finis hed steel products and their terminologies:

Steel is not a single product. There are currently more than 3,500 different grades of steel
with many different properties - physical, chemical, environmental, 75% of which have been
6

developed in the last 20 years. If the Eiffel Tower were to be rebuilt today the engineers
would only need one third of the amount of steel, modern cars have new steels with higher
strength reducing the overall shell weighty 25%. Some of the finished steel terminologies
have been discussed below:

(l) Annealing: Annealing is a heat treatment process. With this, steel products are reheated to
a suitable temperature to remove stresses, resulting from previous processing and to soften
them and/or improve their mach inability and cold forming properties.
(2) Billet: Billet is a semi- finished steel product with a square cross section up to 155mm
x155mm. This product is either rolled or continuously cast and is further processed by rolling
to produce finished products like wire rods, merchant bars and other sections. The range of
semi finished products above 155 mm x 155 mm is called blooms.

(3) Carbon Steel: A type of steel generally having no specified minimum quantity of any
alloying element and containing only an incidental amount of any element other than carbon,
silicon, manganese, copper, sulfur and phosphorus.

(4) Coated Steel (Galvanized & Color coated): Steel sheet coated through a heat process or
through electrolysis with a layer of substance to protect the base metal (substrate) against
corrosion. The most commonly used material is zinc which can be applied either using the
heat process (hot-dip galvanizing) or using electrolysis (electro-galvanizing). An organic
coating (paint, plastic) can also be deposited on the layer of zinc. The zinc-coated steel is
often referred to as "galvanized steel".

(5) Electric Sheets: These sheets are produced from steel alloyed with silicon (up to 3.57o)
and are used in the manufacture of alternators, transformers and motors. Grain oriented
electrical sheets have a high silicon content and are used for the manufacture of large
transformers. Non-oriented products are used in electric motors and small transformers.

(6) Flat Steel Products: A flat steel product is a plate product or a (hot or cold) rolled strip
product. Typically steel is rolled between sets of rollers to produce the final thickness. Plate
products vary in dimensions from 10 mm to 200 mm and thin flat rolled products from 1 mm
to l0 mm. Plate products are used for ship building, construction, large diameter welded pipes
and boiler applications. Thin flat products find end use applications in automotive body
7

panels, domestic white goods' products, 'tin cans' and whole host of other products from
office furniture to heart pacemakers.

(7) Long Steel Products: A long product is a rod, a bar or a section - typical rod products are
the reinforcing rods for concrete, engineering products, gears, tools etc. are typical of bar
products and\ sections are the large rolled steel joists (RSJ) that are used in building
construction projects. Wiredrawn products and seamless pipes are also part of the long
products group.
(8) Refining Stand: A stage in the process of making crude steel, during which the crude steel
is further refined (i.e., most residual impurities are removed) and additions of other metals
may be made before it is cast.

(9) Semi- finished Products: Steel products such as billet, blooms and slabs. These products
can be made by direct continuous casting of hot steel or by pouring the liquid steel into
ingots, which are then hot rolled into semi- finished products.

(10) Slab: A semi- finished steel product obtained by rolling ingots on a rolling mill or
processed through a continuous caster and cut into various lengths. The slab has a rectangular
cross section and is used as a starting material in the production process of flat products, i.e.,
hot rolled coils.

(l l) Strip: Flat steel coil products, with widths of less than 600mm for hot rolled products and
than 500mm for cold rolled products.

(12) Thin Strip Continuous Casting: Casting technology that takes liquid steel and casts it
solid strip in one step, thereby eliminating the need for a continuous slab caster and hot strip.

Chapter 2
To know total turnover and production of Steel Industry inIndia
2.1.1Demand for Steel Industry

Urban Areas: The present steel consumption per capita per annum is about 30 kg in India,
compared to 150 kg in the world, and 350 kg in the developed world. The estimated urban
consumption per capita per annum is around 77 kg in the country, expected to reach
approximately165 kg in 2019-20, implying a CAGR of 5 percent. Apart from the anticipated
growth in the construction, automobile, oil and gas transportation, and infrastructure sectors
of the economy, conscious promotion of steel usage among architects, engineers and students
by the Institute of Steel Development and Growth (INSDAG) and the large producers will
drive this additional consumption. Steps would be taken to encourage usage of steel in
bridges, crash barriers, flyovers and building construction. Benefits of steel usage would be
added to the technical education curricula in the country.

Rural Areas: The rural consumption of steel in India remains at around 2 kg per capita per
annum, primarily because steel is perceived to be expensive among the village folks. Based
on the promotional efforts mentioned above, and an active focus on opening new block level
rural stock points, a target is set for raising the per capita rural consumption of steel to 4 kg
per annum by2019-20, implying a CAGR of 4.4 percent.

Exports: Although the focus of Indian steel industry is on the domestic market, export will
be another window on the demand side. The growth of exports of steel from India has been
around 10percent per annum over the past decade. That speaks for the intimation cost
competitiveness of the steel sector. It takes assiduous effort to create, and hold on to export
markets. While the business decision to export will depend on the prevailing relative prices,
Estimates of the Federation of Indian Mining Industries (FIMI)

The Government would encourage strategic alliances with buyback arrangements and
dedicated export production through l% export-oriented units. A growth rate of around 13
percent perineum is envisaged up to 2019-20. The issues related to exports have been
discussed in section 13on Trade Policy.
9

2.1.2 Steel Supply

While the country has rich endowments of iron ore and non-coking coal, and has cheap
labour, this advantage is neutralized considerably by low material and energy efficiency, poor
quality, poor productivity, and high cost of coking coal, power, freight and finance. The
policy for making the critical inputs available to the industry is outlined in the following
paragraphs.

Critical Inputs: In order to support steel production of 110 MT by 2019-20, at 100 percent
capacity utilization, the required quantities of critical inputs such as iron ore, coking and non
coking coal can be seen in Table 2 below. The projected requirements are based on the
assumption that new capacities will be 60 percent through the Blast Furnace (BF) route. 33
percent through the Sponge Iron - Electric Arc Furnace (EAF) route and 7 percent through
other routes.

Table 2: Critical Inputs for Steel Production

Production in 000's tones
Year

Iron Ore

Coking Coal

Non-Coking Coal

2019-20

190

70

26

2009-10

54

27

13

In order to ensure availability of 190 MT of iron ore for domestic production of steel by
2019-20, Government would encourage investments in creation of an additional modern
mining and beneficiation capacity of 200 MT. The size of these investments will be around
Rs. 20,000 crore. The current policy of captive mining leases for the private sector would
continue, but it is necessary that investment plans be put in place for idle mining leases. State
governments would recommend renewal of existing leases only against credible mining
investment plans in a specified period. The Government would lay down priorities and
guidelines for the State governments to recommend fresh mining leases, having regard to the
entrepreneur's mining

investment plans, and technical and

financial capabilities.

Environmental and forest clearances would be granted within a pre-specified time frame.
Though local value addition would be given priority, the Government would encourage iron
ore trading in order to make this essential raw material available to the iron and steel industry
10

throughout the country. The Government would encourage investments in adding value to
iron ore fines. Scientific mining and economies of scale would also be encouraged through
consortia of small users and by prescribing a minimum economic size for mines.

Exports of iron ore: After remaining stagnant at around 35MT for about a decade (between
l99l -92to 1999-2000), exports of iron ore from India have grown in the last 4 years to 78 MT
in 2004-05 on the back of large exports of iron ore fines to China. Fines and concentrates,
which have little use in India except as a negative environmental externality, make up about
90 percent of Indian iron ore exports currently. As investments are made into beneficiation,
sintering and pelletization in the country, which will use these fines, the growth in exports of
iron ore is likely to decline. Exports have thus been estimated to be around 100 MT by 201920. In terms of future policy, exposes of iron ore, especially high- grade lumps, would be
leveraged for imports of coking coal or for investment in India. Long-term export supply of
iron ore would be confined to a maximum of five- year contracts. This duration would be
reviewed from time to time. A judicious balance would continue to be maintained between
exports and domestic supply of iron ore.

Cooking coal: The proven reserves of prime coking coal are only 4.6 billion tonnes. The
quality of Indian coking coal is also not suitable for steel. The production of coal during
2001-02 was 328ml out of which coking coal amounted to only 29 MT. The low ash coking
(Indian Mineral Yearbook, 2003, Indian Bureau of Mines)
Including the requirements of the alternate routes and excluding requirements for captive
power coals required by steel makers was around 10 MT rn200l-02. Coking coal production
has declined at an annual rate of 4.7 percent during the decade ending 2001-02.4
Poor quality domestic prime coking coal has to be blended with imported coal. Currently the
steel industry imports around 19 MT of coking coal annually, and procures 7.5 MT from
indigenous sources including captive mines. By 2019-20, about 70 MT of coking coal will be
required, of which 85 percent will have to be imported.

The imperatives of coking coal security require that new sources of coking coal be tapped.
Accordingly, the Government would aim for the coal sector to become market-driven, but in
the meantime continue allocation of captive coking coal blocks to steel plants, and establish
mechanisms to share their surplus resource with other steel plants. The Government would
encourage joint ventures and equity participation abroad by steel and coal companies.
11

Simultaneously, efforts would be made to develop and adapt technologies, which have
synergy with the natural resource base (non-coking coal) of the country. The steel industry
would be encouraged to make investments in washing and beneficiation of coal.

Non-Cooking Coal: With proven reserves of 74 billion tones, non-coking coal constitutes
around82 percent of the total coal reserves in India. Production of non-coking coal at 294 MT
during 2001-02 was 9l percent of the total coal production of 328 MT. In 2009-10, the steel
sector consumed about 8 MT of non-coking coal, excluding thermal coal for captive power
plants. Sponge iron grade non-coking coal.' The sponge iron industry using non-coking coal
as input material will play an important role in future as a substitute input for coke. The
capacity of sponge iron industry would increase from the current 13 MT to 20 MT by the end
of 2010-11, at a growth rate of 6.5 percent per annum, and thereafter, till 202A, grow to 38
MT. The current trends indicate that a large number of sponge iron based steel units may
come up in the states of Orissa and Jharkhand. By 2019-20 the steel industry will demand
around 26 MT of non-coking coal of higher grades.

Calculated from production statistics provided in the Economic Survey 2009, Ministry
of Finance
Available data show a declining rate of growth in production of non-coking coal in India. In
the decade of 1980s, the growth rate was 6.5 percent, which fell to 3.9 percent in the 1990s.
In the last five years the growth rate has been 4.7 percent.6 The power plants are, therefore,
planning to import large quantities of thermal coal. Further, Indian coal is high in ash content,
which will force non-coking coal based steel production also to go for some imports. While
market forces should allocate resources to their most efficient uses, which would require the
coal sector to be deregulated, a strategy for the transitional period would be needed.
Accordingly, the sponge iron and steel industry would get first priority in the allocation of
higher grades of non-coking coal of below 12 percent ash content, being essential feedstock.
Greater flexibilities would be introduced in the form of sale of surplus coal, re-allocation of
existing unused linkages with Coal India Limited, and allocation to consortia of small users.
Joint ventures of public sector companies with the private sector would be explored in order
to finance the required investments.

Natural Gas: The pricing mechanism for natural gas, taking into account the cyclical nature
of the steel industry, needs to move gradually towards market-determined prices. It would
12

also be desirable to put in place the regulatory framework, as natural gas stocks are limited in
the country and sufficient level of competition has to be ensured in this sector. Further the
industry needs time for adjustment as price shocks lead to loss of business confidence.
Considering the importance of gas based steel plants due to (a) environmental cleanliness,
(b)shortages of coking coal required for other major routes, and (c) natural gas being a
feedstock for sponge iron plants and not just a heating source, the present system of
allocation and pricing of natural gas to the steel sector would remain under continual review.

Refractories: Refractories are used to line various high temperature vessels used in the steel
manufacturing process. India has a refractory industry of 80 units with 1.6 MT capacity, and
utilization of just 55 percent in 2014-10. It needs modernizing and upgrading. The
Government would foster closer technical interaction between the steel industry and the
refractory industry so as to achieve fewer breakdowns, reduced down time and prompt hot
repairs. The Government would also support basic and applied research in utilizing
indigenous refractory raw materials through partnerships between steel and refractory
producers.

2.1.3Infrastructure

Inland transportation: It is estimated that every tonne of steel production involves

transportation of 4 tonnes of material. The envisaged addition of 75 MT of steel annually
implies 300 MT of additional traffic. In a globally integrated economy, minimization of the
overall cost of transportation becomes an important instrument of maintaining the
competitive edge in both the domestic and overseas markets.

13

Table 2.1.3 below shows the year-on-year growth in gross capital formation for 'Railways'
and Transportation by other

Table 2.1.3: GCF in Transport Related Infrastructure

Particulars

Railways

Transport by other

(Rs. Crores)

2005-

2004-05

06

5069

16460

Means

2006-

2007-

2008-

2009-

2010-

07

08

09

10

11

5019

5307

5491

6981

8860

11609

(-0.99)

(5.7)

(3.5)

(27.1)

(26.9)

(31.0)

18153

21272

25802

21117

16476

29872

(10.3)

(17.2)

(21.3)

(-18.2)

(-22.0)

(81.3)

2.1.4 STEEL PRICES

Following de-regulation of prices for integrated steel plants in l99l-92, the domestic prices of
steel have become market-determined. Market prices remain in step with international prices,
though generally lower. During industry downturns, prices fall and during upturns, they rise.
While ratronahzation of the customs and excise duty structure is aimed primarily at reducing
fiscal and revenue deficits, it has an indirect influence on consumer prices. At present, there
are around three thousand units manufacturing steel and steel products, which are marketed
by over100,000 traders for ultimate consumers. This dispersal of the distribution chain has
been the principal reason why no price regulation of the steel trade has ever been in force.
Government has recently set up a Competition Commission to look into complaints of
monopolistic pricing.

Steel futures: The cyclical nature of the steel industry deters fresh investments due to risks
of recession. The mismatch between demand and supply also leads to price volatility
witnessed during recent times. Stagnation in steel prices for long periods followed by sudden.

At present there are large inter plant variations in labor productivity from 70 tonnes per manyear to 600 tonnes per man-year. The average productivity by 2O2O has been assumed to
340tonnes per man-year taking a mix of old and new plants.
Source: Office of Economic Advisor, Ministry of Comme rce & Industry
14

Spurt also affects the consumers and the infrastructure industry. Therefore, the efforts of
various stakeholders to develop risk-hedging instruments like futures and derivatives would
be supported.

2.1.5 HUMAN RESOURCES

The anticipated steel production of 110 MT by 2020 would require an additional workforce
of
220,000 after accounting for the expected productivity improvements7 Further the creation
of 1man-year of employment in the steel industry generates an additional 3.5 man-years of
employment elsewhere in the economy due to its strong linkages with other sectors such as
transport, mining, construction, machinery, and steel fabrication. The total additional
employment generated in the economy due to expected production of 110 MT by 2020 would
be around 1 million.

The profile of the required human resources will have a larger share of the skilled and semi
skilled labour force. It is a matter of concern that availability of scientists, engineers and
technicians per thousand of population in India is 7.05 compared to 113 in Japan, 90 in U.K.,
53in Korea, 54 in Australia and 85 in Germany.8 Further, the task is not limited to increase in
the stock of technical manpower. The technical and professional institutes of the country
would also be required to impart new competencies and capabilities in tune with changes in
technology and the needs of globalization. The existing training and research institutes under
the Ministry of Steel would be brought under an umbrella organization with representation
from each segment of the industry. The functions of this organization would include (a)
suitable training programmers especially for the secondary small scale units, (b) promotion of
steel consumption through dissemination of information on availability and suitability of steel
for various applications, and(c) collection and analysis of data on important parameters of the
industry.

Handbook of Industrial Policy & Statistics,2002, Office of Economic Adviser, Ministry

of Industry & Comme rce

For major steel companies, SAIL 0.36 percent, Yizag 0.04 percent, TISCO 0.20 percent
15

2.1.6 Technologies Research and Development

Though the choice of technology will be determined by entrepreneurs based on techno

economic considerations, the Government would encourage adoption of technologies, which:

Have synergy with the natural resource endowments of the country.

Are conducive to production of high-end and special steel required for sophisticated
industrial and scientific applications.

Minimize damage to the environment at various stages of steel making and mining.

Optimize resource utilization.

Facilitate modernization of the steel industry so as to achieve global standards of

productivity and efficiency.

Development of front end and strategic steel based materials.

India's expenditure on Research and Development has been negligible not only in absolute
terms but also as a percentage of GNP at 0.86 percent. This can be compared to the
developed world with an average ratio of 2.5 percent.9 In the case of steel industry, the ratio
of expenditure on R&D as a percentage of turnovers is only 0.26 percent.

The low priority to indigenous R&D has given rise to adoption of technologies that are more
suited to conditions prevailing in the developed world. For example, resource position of raw
materials requires development of technologies, which can use indigenous coking coals and
non coking coals and for improvement in quality of high alumina Indian iron ore. But lack of
innovation and adaptation to Indian conditions is resulting in large-scale import of coking
coal and low performance in iron making. Aggressive R&D efforts would, therefore, be
mounted to create manufacturing capability for special types of steel, substitute coking coal,
enrichment and agglomeration of iron ore fines, develop new products suited to rural needs,
enhance material and energy efficiency, utilize waste, and arrest environmental degradation.
Public sector steel companies would enhance R&D expenditure in the coming years to
finance internal R&D efforts and sponsor outside research, which may provide a framework
for inter-disciplinary cooperation with the private sector across national boundaries.
Government's contribution to fostering basic and applied R&D will be enhanced.

16

2.1.7 Environmental Factors

With a view to making various operations in steel industry environment friendly,

environmental audit and life cycle assessment of existing steel plants (including sponge iron
units) would be encouraged so that the relevant processes reduce emissions and effluents,
minimize and better manage solid waste generation, and improve resource conservation such
as energy and water. There are some fine examples of high- level environmental performance
in the steel sector already. However, the steel sector would join the efforts of other industries
to improve environmental performance even more. The secondary steel producers would be
proactively assisted in shifting to processes that are more environment-protective. A similar
policy would be followed in assisting natural resource industries, such as iron ore and coal
mining, where scientific mining and mineral processing would be encouraged.

SECONDARY AND SMALL SCALE SECTOR

The secondary sector primarily consists of non-integrated and comparatively small steel
producers. However there are large variations amongst various units in terms of scale of
operations, product-mix and technology. The secondary sector plays an important role in
providing employment, meeting local demand of steel in rural and semi- urban areas, and
meeting the country's demand of some special products required in small volumes.

The Government will strive to provide the necessary feedstock to these units at reasonable
prices from major plants through the existing mechanism of State Small Industries
Corporations.

2.1.8 Trade Policy

Exports: It is estimated that the country will achieve an export ratio of around 25 percent of
the total production in2Ol9-20 from 11 percent in 2014-10. This is comparable with a 30
percent share of exports in global production. The Government will support all efforts to
make available export credit, provide trade information, and cut transaction costs in general.
In view of the slow progress of multi- lateral negotiations, Government would focus on
regional trade agreements to broaden the export base. Exports of value-added steel and steel
products, including indirect export of steel through project exports, would be encouraged.
17

Imports: Import duty rates have been brought down progressively in the post-deregulation
period. The Indian steel industry has been able to successfully withstand the competitive
pressures of overseas producers. However, integration with the global economy requires that
the industry should be protected from unfair trade practices, which become common
especially during the periods of downturn. The Government would, therefore, institute
mechanisms for import surveillance, and monitor export subsidies in other countries.

2.1.9 Investment Promotion and Policy Implementation

The very nature of steel production, especially through the integrated route, requires a
number of clearances of the central and state governments for investment in the steel sector.
Delays at various levels not only add to project costs but also discourage fresh investments.

Hence a suitable executing mechanism will be evolved to discharge the following functions:

Provide a single-window clearance for large projects, to be followed by statutory

clearances by the concerned ministries.

Prepare and implement an action plan for achieving the strategic goal of 110 MT of
steel production by 2019-20, with separate plans for the growth of flats and long
products.

Prepare and implement road maps for technological and productivity improvements
benchmarking them to global standards.

Monitor the implementation of the National Steel Policy.

Conduct reviews to remove infrastructural, procedural and institutional bottlenecks

and to achieve policy coordination among central Ministries and State Governments.

The growth of India's Index of Industrial production (IIP) in200l-02 was a meager 2.7%
against 5.1% in the year before. The manufacturing sector, which accounts for 79.36% of
output, grew by this 2.7% average compared to 5.4% in the previous year.

Among the major steel consuming industries, automobile production was up I3%vis-a-visa
negative growth of 2% in the preceding year. A 33% hike in motorcycle production fuelled
this growth. Production of cars was up 10% compared to a negative 12.6% in 200001.Commercial Vehicle production recorded a negative growth of 6% mainly due to a 20%
18

drop-in the output of light commercial vehicles. Consumer durable production grew by
11.6%, lower than the 14.6% in the previous year. The capital goods sector performed
miserably inFY'02 recording a negative growth of 4%.

STEEL OUTPUT

Production of crude steel increased by 2.3% in200l-02 to 27 .52MT compared to 26.89MT in

the previous year. The share in production of crude steel, pig iron and finished steel in 200102bycompany is presented in Table 1.

EXPORTS

Export of pig iron was up 4.3% in FY'02 at 242kt over 232kt in the previous year. Despite the
antidumping measures by the US and other restrictive actions of some other countries, Indian
steel producers could find new destinations and achieved a 2.6% growth in the export of
finished steel to 2.73MT in 2001-02 compared with 2.66MT last year. Export of long
products was up 8.8% at4l9kt compared to 385kt in the previous year. Export of flat products
rose marginally by 1.3% at2.3MT in FY'02 compared to 2.28MT last year.

Output of pig iron was up 16.1% at 3.95MT in FY'02 compared to 3.40MT last year.
Integrated steel plant (ISPs) produced 1.01MT of pig iron in 01-02 vis-a-vis 964kt in the
previous year while the output of secondary producers rose to 2.93MT compared to 2.43MT
in 99-01.

2.2Production of Steel Industry in India

Production of long products rose by 2.6% to 12.8MT compared to 12.48MT last year.
Production of longs by ISPs was up 10.8% at 5.46MT in FY'02 over 4.93MT in the previous
year. However, the production of secondary producers declined by 2.8% from 7.56MT in
2000-01 to 7.35MT inFY'02.

The output of flat products was up 6% in2O01-02 reaching 17.80MT, vis-a-vis 16.79MT last
yearend the Production by SAIL plants declined by 2.3% while the output of TISCO was up

19

5.2%.The three new generation steel plants of Essar Steel, STEEL STRIPS and JVSL jointly
recorded a growth of 12.3% in production of flat products.

Table 2.2: Crude Steel Production of various countries.

Country

Crude Steel Production

China

272.5

Japan

112.7

United State

98.9

Russia

65.6

South Korea

47.5

F.R.Germany

46.4

Ukraine

38.7

Brazil

32.9

India

32.6

Italy

28.4

The Indian steel industry entered into a new development stage from 2010-11, resulting in
India becoming the 5th largest producer of steel globally. Producing about 53 million tonnes
(MT) of steel a year, today India accounts for a little over 7 per cent of the world's total
production.

India is the only country world over to post a positive overall growth in crude steel
production at1.01 per cent for the January-March period of 2014. The recovery in steel
production has been aided by the improved sales performance of steel companies. The steel
sector grew by 5.3 percent in May 2014.

According to a report from Barclays Capital, China and India are going to provide the
impetus for steel demand for the next few years.

20

Production

Steel production grew at 1.2 per cent in the January-March quarter of 2013-14 over the same
period last year. The fourth quarter saw most of the large steel companies such as SAIL, Tata
Steel, Essar and JSW operating at full capacity.

The National Steel Policy has a target for taking steel production up to 110 MT by 201920.Nonetheless, with the current rate of ongoing Greenfield and brown field projects, the
Ministry of Steel has projected India's steel capacity is expected to touch 124.06 MT by 20llI2. In fact, based on the status of Memoranda of Understanding (MOUs) signed by the private
producers with the various state governments, India's steel capacity is likely to be 293 MT by
2020.

In the first 10 months of 2013-14, India's steel production went up to 46.8 MT up by 1.1 per
cent from last year.

Cons umption

India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of
the total steel used is for kitchenware. However, its use in railway coaches, wagons, airports,
hotels and retail stores is growing immensely. Steel consumption grew at 5.2 per cent during
the first quarter of 2014-10 as against 3.8 per cent in the January-March quarter last year.

A Credit Suisse Group study states that India's steel consumption will continue to grow by 16
percent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.

The World Steel Association has forecast a 2 per cent growth in the country's steel
consumption in 2014, making it the only major economy to post an increase in a year that
will see global consumption of the metal fall by around 15 per cent. India is expected to
consume 53.5 MT of steel in 2014.

21

The scope for raising the total consumption of steel is huge, given that per capita steel
consumption is only 35 kg - compared to 150 kg across the world and 250 kg in China. Steel
players like JSW Steel and Essar Steel are increasing their focus on opening up more retail
outlets pan India with growth in domestic demand. JSW Steel currently has 50 such steel
retail outlets called JSW Shoppe and is targeting to increase it to 200 by March 2010. They
expect at least 10-15 per cent of their total production to be sold by their retail outlets.

Essar Steel also has 150 such retail outlets of which 65 are hyper arts across India with the
latest one being opened in Orissa.

Exports

Out of India's annual iron ore production of more than 200 MT, about 50 per cent is exported.
Iron ore exports increased 17 per cent to 12.6 MT in February 2014 from 10.8 MT in the
same month a year ago, owing to a moderate revival in demand from Chinese steel producers,
as per the latest data compiled by a group of top Indian mining firms.

Earlier, according to a study, with the rise in demand for steel in China, India's iron ore
exports went up by 38 per cent to reach 13.6 MT in December 2013 against 9.8 MT in
December 2012.Around 50-60 per cent of India's iron ore is exported to China.

India's exports during April- December 2013 were 64.4 MT. The government has reduced
export duty on iron ore lumps from 15 per cent to 5 per cent, which has given a further fillip
to exports. Further, the reduction in railway freight has also benefitted the domestic iron ore
miners.

Investments

A host of steel companies have lined up major investment proposals. Furthermore, with an
expanding consumer market, the Indian steel industry is likely to receive huge domestic and
foreign investments.

According to the investment Commission of India investments of over US$ 30 billion

in steel are in the pipeline over the next 5 years.
22

Arcelor-Mittal, the largest steel maker of the world, is planning to set up a captive
profiteer Para dip in Orissa. The port will be used to serve two mega integrated steel
plants of the company proposed in Orissa and Jharkhand.

Tata Steel has raised US$ 500 million by issuing 'global depository receipts'
(GDRs)aiming at expansion of its Jamshedpur plant and overseas mining projects.

Japanese steel major, Kobe Steel, has decided set up a subsidiary in Kolkata to market
its steel production machinery in India.

Steel companies have committed US$ 122.50 million for setting up sponge iron units
inkpad and Bellary in Karnataka.

SAIL will invest US$' 724.12 million to set up a 4- million tonne per annum steel rnill
at its Bhilai Steel Plant.

Government Initiative

Subsequent to the recent fall in international prices of commodities and to protect Indian
producers, the Indian government has announced some changes in customs duty rates, which
were effective from November 2013.

The government has removed full exemption of customs duty on some industrial and
agricultural commodities. Iron and steel products like pig iron, spiegeleisen, semi- finished
products, flat products and long products are now subject to a basic custom duty of 5 per cent
ad valorem.

The Indian government plans to invest over US$ 350 billion in industries related to
infrastructure and construction which will give a fillip to the steel sector.

Moreover, in the Union Budget 2014-10, the government has made a 23 per cent hike in
allocation for highway development and US$ 1.034 billion increase in budgetary support to
Railways which will further promote the steel industry.

23

2.2.1 Demand Forecast for Steel Industry.

While the demand for steel will continue to grow in traditional sectors such as infrastructure,
construction, housing automotive, steel tubes and pipes, consumer durables, packaging, and
ground transportation, specialized steel will be increasingly used in hi-tech engineering
industries such as power generation, petrochemicals, fertilizers, etc. The new airports and
railway metro projects will require a large amount of stainless steel.

According to an estimate, with the growing need for oil and gas transportation infrastructure,
a US $ 118 billion opportunity is waiting to be tapped by steel manufacturers in the next five
years. Indian steelmakers are set to make the most of booming global demand for steel pipes
and tubes with the government withdrawing the 10 per cent duty on the exports of these
products. According to a study by ICICI Direct, Indian steel companies are likely to get 19
per cent of the total global demand in the years to come.

Exchange rate used: 1 USD = 60.40 INR (as on November 2014)

2.2.2 Role of Iron and Steel Industry in India GDP

The Role of Iron and Steel industry in India GDP is very important for the development of
the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel
manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron
and steel are among the most important components required for the infrastructure
development in the country

Role of Iron and Steel Industry in India GDP-Facts

The Iron and Steel Industry in India is one of the fastest growing sectors

The demand drivers for the Indian Iron and Steel industry are increase in the activities
of the automobiles industry, real estates industry, transportation system, aircraft
industry, ship building industry, etc.

India ranks 5th in the world in terms of production of steel

The amount of crude steel produced in 2011-12 was 50.71 million tones

The amount of finished steel produced in 2406-07 was 51.9 million tones
24

The production of finished steel was increased by 16.52%

The production of finished carbon steel was 24.8 million tonnes in the year 2011-12

It is expected that India would become the second biggest producer of steel within the
year 2016and the production per year would be 137 million tones

The exports pertaining to the steel industry was 6.26 % during the period 2011-12

Role of Iron and Steel Industry in India GDP-Cons umption

The domestic consumption of steel has grown by125% in the past three years

The domestic steel consumption in the year 2011-12 was 41.14 million tones

The average growth rate of the Indian Iron and Steel Industry is 11.36%

The construction projects all over India are major consumer of steel

The per capita consumption of steel in India is 35kgs

As the per capita consumption of steel is lower than other countries, so the steel
industry hashuge opportunities in the future

Role of Iron and Steel Industry in India GDP-Growth in Future

The Arcelor Mittal, which is the largest steelmaker in the world, has plans of
establishing two Greenfield steel projects with capacity of 12 million tonnes annually,
in India

Acerinox SA, one of the important stainless steel manufacturers in collaboration with
Nisshin Steel, Japan is setting up a steel plant in India.

The Tata Steel ranks 5th in the world steel production and the company have plans of
expanding its capacity by the year 2015

SAIL, India's biggest producer of steel has plans of increasing the production to 24.98
million tonnes annually

Sino steel Corp, China are planning to invest US$ 4 billion to set up a 5 million
tonnes capacity Greenfield steel plant

The acquisition of the Corus, the Anglo-Dutch steel manufacturer by the Tata Steel

The Algoma Steel, Canada was acquired by Essar Global for US$ 1.63 billion

This may be ascertained from the fact that in 2001 the amount of steel used was 2.2% more
than what it was in 2011. Thus it may be ascertained that the supply and the demand for steel

25

is at the irrespective peaks. This bodes well for the Indian steel industry as India has plenty of
steel to meet up with both the domestic as well as international demand.

India has a lot of iron ores. This implies that India has a ready base for producing sufficient
amount of steel and the experts are also of the opinion that the Indian steel industry would
continue to grow in the coming years. In the recent times the production of steel has gone up
in the country from17 million tonnes in 1990 to 36 million tons in 2003.

The Indian steel industry is trying to reach the 66 million tonnes mark in 2011. The high
levels off of production would allow the Indian steel industry to establish a stronghold on a
number of areas like housing, construction, and ground transportation. The special steel
produced by the Indian steel industry is supposed to be used in high end engineering
industries like generation of power, fertilizers and petrochemicals.

The fact that India is not a voracious consumer of steel like some of the major economies like
China and the United States of America means that India would be able to use the surplus
steel it produces for exporting to other countries so that their demands are met. This would
help the Indian steel industry to be regarded as one of the most prominent steel industries if
not the leading one.

The Role of Iron and Steel Industry in India GDP is very important for the development of
the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel
manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron
and steel are among the most important components required for the infrastructure
development in the country.

Role of Iron and Steel Industry in India GDP-Facts

The Iron and Steel Industry in India is one of the fastest growing sectors

The demand drivers for the Indian Iron and Steel industry are increase in the activities
of the automobiles industry, real estates industry, transportation system, aircraft
industry, ship building industry, etc.

India ranks 5th in the world in terms of production of steel

The amount of crude steel produced in 2011-12 was 50.71 million tones
26

The amount of finished steel produced in 2011-12 was 51.9 million tones

The production of finished steel was increased by 16.52%

The production of finished carbon steel was 24.8 million tonnes in the year 2011-12

It is expected that India would become the second biggest producer of steel within the
year 2016 and the production per year would be 137 million tones

The exports pertaining to the steel industry was 6.26 % during the period 2011-12

Effects of Globalization on Indian Steel Industry:

The foreign direct investment in India being made in the steel industry of India has been
picking up in the recent years as a result of the immense growth potential of the country's
steel industry. In the Asian continent India is second only to China in terms of growth
potential. The gross domestic product of India has increased in the recent times.

This has sparked off the demand for production of steel in the country and the production has
increased as well. In the recent times India has been among the top producers of crude steel
of the world. A11 these factors are supposed to be important for attracting foreign direct
investment in the Indian steel industry.

The Indian national government also has been pretty liberal with their approach to the foreign
direct investment being made in the country. The Indian government has also relaxed the
various foreign investment laws. This has led to more international steel giants coming to
India to tap the abundant resources present in the country.

The increased interest shown by such companies has led to a growth in the steel industry of
India. Research and studies have shown that Orissa and Jharkhand would be the steel
junctions of India.

In the recent times these two states, which are located in the esteem part of India, have been
experiencing a number of steel projects in India. These projects have been funded by the
Indian national government, as well as, a number of companies that are forces to reckon with
in the context of the Indian steel industry.

27

Since, the government has also been taking steps to make sure that the production and
demand for Indian steel remains high in the international market, it may be assumed that an
increasing number of companies from around the world round be interested in the Indian steel
industry.

The effects of Globalization on Indian steel industry have been felt more profoundly in the
past few years. The India steel industry is one of the major industries in India. The effects of
Globalization on Indian steel industry are not same throughout the country. The effects
depend on the different regions, the type of raw materials used, the condition of the markets,
technological advancements, the policies of the governmental authorities pertaining to the
trade and business activities of the Indian steel industry, etc. In this age of the globalization,
as the other industries of the developing countries, the Indian steel manufacturing sector
needs to restructure itself, in order to have a sustainable growth. This will be very helpful for
providing the correct strategies for the steel industry in India. There structuring should
depend on the different requirements of the steel industry. The government played a very
important role in the development of the steel industry in India. The India steel industry is
experiencing a slow but steady growth. The steel industry in India has huge scopes in the
future with massive scale of infrastructural development happening all across the country.
The steel industry in India caters to many other industrial sectors such as construction
industry, mining industry, transportation industry, automobile industry, engineering industry,
chemical industry, etc. The steel segment includes the manufacturing of three different kinds
of steel such as carbon steel, Ferro-chrome steel, and stainless steel.

The steel industry in India has further plans of development. Plans are being chalked out on
setting up of three pig iron manufacturing units of the combined capacity of 6 lakh tons per
year and a steel manufacturing unit of the capacity of producing 1 million tons yearly in West
Bengal, with the technical and financial support of China. With all these developments steel
industry in India is all set to become one of the most reputed industries not only in India but
also in the interactional market as suggested by experts. In order to survive the immense
competition under the globalization, the Indian steel industry plans a reversal of the
production of steel industry. The main objectives of the strategy is the derivation of the
benefit from the optimum utilization of the plant capacity, the nullification of any form of
drawbacks, to track the opportunities in order to get the maximum from it and to tackle the
possible threats.
28

The strategy suggested for the reversal of the steel industry in India is double layered in
nature, effecting the reversal and at the same time sustaining the reversal. The strategy has to
be growth and survival oriented. The survival part would assure the survival of the industry in
the fierce competitive atmosphere and the growth part would boost the sustainable growth of
the industry. The two different parts of the strategy has to be integrated into one to have the
expected results.

The reduction of the cost is another major factor in the survival of the Indian steel industry in
the age of globalization. The cost reduction would be the main aspect of the improvement
pertaining to the competitiveness of the industry. The manufacturers under the steel industry
in India have to focus their attention in the areas such as:

The reduction in the cost of operations.

The reduction in the costs pertaining to the working capital.

The reduction in the costs pertaining to the production inventory or stock that is not
sold.

The improvement in the economics operating in the technological aspects of

production.

The transposition of basic materials of production.

The sources of the procurement should be different.

29

CHAPTER 3
TO ANALYZE INTERNAL AND EXTERNAL ENVIRONMENT
3.1 SWOT ANALYSIS OF THE STEEL INDUSTRY

STRENGTHS OF INDIAN STEEL INDUSTRY

1. Low labor wage rates

2. Reduction in workforce

Steel is no more the labor- intensive industry it used to be. Earlier, it was often associated with
the image of huge work force living in a captive township and all that has changed
dramatically. A modem steel plant employs very few people. In South Korea, Pasco employs
10,000 people to produce 28 million tones. As a thumb rule, one can put the direct
employment potential at 1,000per million tones, It could be less. However, steel being a basic
industry; it generates substantial growth of both upstream and downstream facilities.
According to some estimates one person year of employment in the steel industry generates
3.5 person-years of employment elsewhere. Considering all these, total employment
generation will be substantial.

The third quarter of the twentieth century witnessed massive growth of the global steel
industry. Annual production rose more than three times in 15 years from 1960. In the last
quarter of the century, production reached a plateau, rising only by around 100 million tones.
Increase in production gave way to increases in productivity.

During the period 1974 to 1999, the steel industry had drastically reduced manpower all
around the world. In USA, it was down from 521,000 to 153,000. In Japan, it was down from
459,000 to208,000. [n Germany, it was down from232,000 to 78,000. In UK, it was down
from 197,000 to31,000. In Brazil, it was down from 118,000 to 59,000. In South Africa, it
was down from100,000 to 54,000. South Korea already had a low figure. It was only 58,000
in 1999. The steel industry had reduced manpower around the world by more than 1,500,000
in 25 years.

30

3. Mature production base.

4. Positive stimuli from construction industry.
5. Booming automobile industry.

STRUCTURAL WEAKNESSES OF INDIAN STEEL INDUSTRY:

Although India has modernized its steelmaking considerably, however, nearly 6%of its crude
steel is still produced using the outdated open-hearth process.

Labor productivity in India is still very low. According to an estimate crude steel output at
the biggest Indian steelmaker is roughly 144 tones per worker per year, whereas in Western
Europe the figure is around 600 tones.

India has to do a lot of catching in the production of stainless steel, which is primarily
required- by the plant and equipment, pharmaceutical and chemical industries.

Steel production in India is also hampered by power shortages.

India is deficient in raw materials required by the steel industry. Iron ore deposits are finite
and there are problems in mining sufficient amounts of it. India's hard coal deposits are of
low quality.

Insufficient freight capacity and transport infrastructure impediments to hamper the growth of
Indian steel industry.

OPPORTUNITIEES IN THE STEEL INDUSTRY

To help the Indian Steel Industry achieve its potential and play a meaningful role in Indias
development some steps need to be taken: Steel is yet to touch the lives of millions of people
in India. Per capita consumption of steel India is only 29 kg and has to go a long way to reach
consumption levels of around 400 kg developed countries like USA and world average of 140
kg.

31

There is a need to continue the current thrust on infrastructure related activities and extend
them To rural India. Rural Indian today presents a challenge for development of the country
and the opportunity to increase usage of steel in these areas through projects such as rural
housing etc.

Current shortage of inputs has pushed up the costs for the steel industry. Government should
ensure that quality raw material such iron-ore and coke are available to the industry. With
Ministry of Steel targeting an output of 100 MT of steel by 2020 there is an urgent need to
develop raw material resources for inputs like iron-ore and coal within or outside the country.
Countries like Japan have already taken similar steps to safeguard their industries.

Adequate enabling infrastructure such as power, ports, roads, rail transport is pre-requisite for
the Indian steel industry to remain competitive.

Government should not regulate prices and free market forces should prevail. Intervention by
the Government is only a short-term solution to the issue of steel prices in the country. Once
left alone, market dynamics will automatically ensure price corrections and determine the
optimum price of steel.

The Indian steel Industry is amongst the least protected in the world. While developed
countries have put numerous tariff and non-tariff barriers on steel exports from the country,
the domestic industry is exposed to cheaper imports from competing nations. As in case of
other important industries, the Government should give reasonable levels of protection to the
domestic steel industry, which is just starting to get back on its feet.

Industry should be allowed to have a fair return on investment and contribute to the overall
health of the Indian manufacturing segment. The steel industry has invested a capital of over
Rs90, 000 crores. CRISIL in a recent study has concluded that given the large exposure that
banks and financial institutions have to the steel industry.

Today, Indian producers employ world-class standards of technology. Steel from Indian finds
growing acceptability in international markets. But despite this India's share in world trade
steel is a miniscule2To. Given the capabilities of the Indian steel industry there is tremendous
scope to increase this share further. While the steel industry will continue servicing the
32

domestic demand there is a lot of untapped export potential with the industry. The
Government, in line with EXIM policy 2002-07 , should take steps to make Indian exports
more competitive.

FDI in Steel Industry

The foreign direct investment in India being made in the steel industry of India has been
picking up in the recent years as a result of the immense growth potential of the country's
steel industry. In the Asian continent India is second only to China in terms of growth
potential. The gross domestic product of India has increased in the recent times.

This has sparked off the demand for production of steel in the country and the production has
increased as well. In the recent times India has been among the top producers of crude steel
of the world. All these factors are supposed to be important for attracting foreign direct
investment in the Indian steel industry.

The Indian national government also has been pretty liberal with their approach to the foreign
direct investment being made in the country. The Indian government has also relaxed the
various foreign investment laws. This has led to more international steel giants coming to
India to tap the abundant resources present in the country.

The increased interest shown by such companies has led to a growth in the steel industry of
India. Research and studies have shown that Orissa and Jharkhand would be the steel
junctions of India. In the recent times these two states, which are located in the eastern part of
India, have been experiencing a number of steel projects in India. These projects have been
funded by the Indian national government, as well as, a number of companies that are forces
to reckon with in the context of the Indian steel industry. Since, the government has also been
taking steps to make sure that the production and demand for Indian steel remains high in the
international market, it may be assumed that an increasing number of companies from around
the world would be interested in the Indian steel industry

Source: Economy Watch, 2014rgoogle surfed November 2014

33

Risk and Threat Analysis in the Steel Industry

Everybody is. Scanning the current steel environment, with the effects of the global financial
crisis looming in the domestic front, one may be able to see the major risks and threats which
should be strategically addressed. First is the prolonged global recession which is highly
probable to happen. Another is the influx of cheap (and probably low quality) imports as
neighboring countries will try to look for export market to unload their inventory surplus,
which will surely result in the lowering of prices and making the market highly competitive.
Such products have already in fact in the past and current year entered the Philippine market.
This will force production to attain highest levels of efficiencies, especially on cost reduction.
On the financial front, bank credit facilities will be tightened putting pressure on working
CapitaLand may result in material procurement delays, longer collection periods, etc.
Liquidity becomes extremely important and significant. Add to that the possible peso
depreciation and we have indeed a scenario of business survival. Obviously, those that may
be able to properly control these risks and threats and convert them into opportunities will
surely come out as the winners.

Challenges before the Steel Industry

There are certain challenges before the steel industry of India in the recent times. India has
been one of the major producers of steel in the world and has also been attracting a lot of
foreign direct investment. A few issues would need to be attended to if India wants to be
counted as one of the major and most economical producers of steel. The 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 condition of the infrastructural facilities of the steel industry in India is not at all
conducive to a sustainable growth and development of the steel industry of the India. The
methods that are adopted for the creation of wealth in the Indian steel industry are also
supposed to act as hindrances to the growth and development of the Indian steel industry. The
Indian steel industry has also not been able to draw the best professionals in the steel industry
and that has been a major drawback of the industry.

34

The experts are also of the opinion that not enough policies or measures have been adopted to
amend the situation in case of the infrastructural facilities available in the steel sector. Even
though India is capable of producing steel at a good rate and also increase the volume of
production there is not enough land available to support such activities. One of the major
reasons for such problems is the consistently increasing population of India. The design
institutions in India have not been successful at recruiting the best of engineers and
metallurgists in India. This has affected the technological aspect of the Indian steel industry.
The experts are of the opinion that this issue has to be countered in order to reduce the
dependence on the overseas technological assistance. The steps taken by Tata Steel are
instructive in such a context. The company has been increasing public awareness about the
steel industry through books and educational sessions at the Indian Institute of Technology at
Kharagpur.
Source : Economy watch on Google

3.1.1 Material for development and war

The volume of steel consumed has been the barometer for measuring development and
economic progress. Whether it is construction or industrial goods, steel is the basic raw
material. Lighter metals and stronger alloys have been developed; plastics and synthetics
have replaced steel in many areas.

Steel is made from ores still found in abundance around the world. Technological
developments have brought down the time for transformation from iron ore to steel to within
a day. Even after decades of use, it can be sent back to the furnaces as scrap, melted and
remade into new qualities of steel. It is the most recycled material in the world. [n developed
countries, recycling accounts for almost half of the steel produced.

Another major feature is the continuous improvement of steel grades. Half of today's steel
grades were not available ten years ago. Just take the example of the most commonly used
steel -rods or bars, used as reinforcement material with cement concrete. It used to be plain
bars even in the sixties, then came the ribbed bars, followed by the cold twisted deformed
bars and now it is thermo mechanically treated bars. Each development has added to the
strength of construction.
Older varieties of steel have been improved upon and newer grades introduced.
35

3.1.2 Growth of the global industry of steel

Global steel production grew enormously in the 20th century from a mere 28 million tonnes
at the beginning of the century to 781 million tonnes at the end. That was the period when the
steel industry developed in Western Europe and the USA followed by the Soviet Union,
Eastern Europe and Japan. However, steel consumption in the developed countries has
reached a highs table level and growth has tapered off.

After being in the focus in the developed world for more than a century, attention has now
shifted to the developing regions. In the West, steel is referred to as a sunset industry. In the
developing countries, the sun is still rising, for most it is only a dawn.

Towards the end of the last century, growth of steel production was in the developing
countries such as China, Brazil and India, as well as newly developed South Korea. Steel
production and consumption grew steadily in China in the initial years but later it picked up
momentum and the closing years of the century saw it racing ahead of the rest of the world.
China produced 220.milliontones in 2003,272.2 million tons in 2004 and349.36 million tons
in 2010. That is much above the production in 2010 of Japan at 112.41 million tones, the
USA at 93.90 million tones and Russia at 66.15 million tones.

3.1.3 Growth potential of the industry

Growth of the Chinese steel industry appears to be staggering. However, when one considers
that China has a population of 1.3 billion, the per capita steel consumption is around or below
that of the developed countries. Indeed, while China has been progressively raising steel
production for many years, it has also been importing substantial quantities of steel. It is only
now that China has become a net exporter of steel. This indirectly means that China has also
reached a level of production saturation and its steel industry is more likely to witness more
of consolidation and reorganization in coming years rather than any major expansion of its
assets.

Amongst the other newly steel-producing countries, South Korea has stabilized at around 46
48million tones, and Brazil at around 30 plus million tones. This brings the focus of the
industry to India. Considering a steel consumption of 300 kg per man per year to be a fair
36

level of economic development, India will have to come up to somewhere around 300 million
tones, if it is to fulfill its ambitions of being a developed country. That of course is a long
journey from the present production level of around of around 50 million tones but one must
consider its past before coming to a conclusion about its potential. India was producing only
around a million tons of steel at the time of its independence rn 1947. By 1991, when the
economy was opened up steel production grew to around 14 million tones. Thereafter, it
doubled in the next 10 years, and then it is doubling again, maybe over a slightly longer span.
Steel Production in India expected to reach I24 million tons by 2012 and 275 million tons by
2020 which could make her second largest steel maker.
In the developed countries, the trend is on consolidation of industry. Cross-border mergers
have been taking place for several years.

Globally, the steel industry became a billion tone industries in 2004. How much more it will
grow will depend primarily on how much more steel is consumed in the developing
countries.

SWOT ANALYSIS OF THE STEEL INDUSTRY:

The strengths, weaknesses, opportunities and

1. Unscientific mining

threats for the Indian steel industry have been

2. Low productivity

tabulated below. The national steel policy

3. Cooking coal import dependence

lays down the broad roadmap to deal with all

4. Low R&D investments

of them.

5. High cost of debt

Strengths

6. Inadequate infrastructure

1. Availability of iron ore and coal

2. Low labor wage rates
3. Abundance of quality manpower
4. Mature production base
Opportunities

Threats

1. Unexplored rural market

1. China becoming net exporter

2. Growing domestic demand

2. Protectionism in the West

3. Exports

3. Dumping by competitors

4. Consolidation

37

3.2 PEST Analysis

Mergers and acquisitions are taking place especially in the past few years as a growth
strategy as well as to capitalize Government(s) plays a very important role in steel industry
by two ways. First, it imposes tariffs and trade barriers when local manufacturers need
protection. However, with Free Trade Agreements signed, this role is reduced.
Government(s) also provides tax breaks(and subsidies in some countries) to support industry
growth. Second, it enforces international and local environmental laws to reduce pollution
and protect the environment.

High population or economic growth especially in India, China, Brazil and Russia has
increased demand for new buildings, vehicles and other infrastructures which in turn
increases the overall demand for steel and steel based products.

Steel industries are intensive energy users and the ever increasing fuel price is pushing the
manufacturers to keep on finding for and adopting a more efficient steel manufacturing
technology and process. Technology is also used to produce higher quality steel products. on
economics of scale during purchasing and production thus becoming more cost competitive
in this industry where there is not much differentiation and competition is basically based on
price. Recycling plays an important part in this industry and with scrap metals prices
increasing manufacturers are working on joint ventures to source for cheaper sources.

A scan of the external macro-environment in which the firm operates can be expressed in
terms of the following factors:

Political

Economic

Social

Technological

38

Political Factor

The role of the government is crucial, both as a supplier and as a customer, and also as the
supra environment for business, creating the rules for competition. It creates boundaries
within which the steel industry must operate. In the case of the Indian steel industry, the
government directly or indirectly controls the finance and many of the inputs - both raw
material and services. The government has opened the field for private power plants. 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 very important for the steel industry. The government
investments in infrastructure such as rail, highways, dams, power plants and ports are critical
prime movers for steel demand. In fact, government spending on infrastructure spurs the
demand for long products, which is followed, with a time lag, by a demand for flat products.
The demand for long products tapers off with a saturation of infrastructure development. This
is expected to provide the necessary fillip to the stagnant steel demand.

Environmental norms imposed by the government from time to time have a significant
impact, estimated to be around l5%o of project cost. Government regulations and concerns
regarding discharges from steel plants could become one of the major forces driving
development of new technologies. Government also, helps to steel industry for surviving in
the current crisis. It recently removed export taxes on semi finished and longs so that
domestic prices stay competitive with falling global prices

Economic Factor

Steel industry is affected by current economic crisis. The steel companies also provided
losses of Rs. 1424 crores on account of currency fluctuation

INDIA'S steel exports registered impressive growth in 2002-03. Provisional figures suggest
that exports stood at highest level, against last five years. The steel industry was finally
showing signs of recovery. Major producers started to export to capitalize on rising
international prices and to boost bottom lines that had rusted in 1998-99. However, yet again,

39

the good times comes for steel players. Indian economy become the strongest than it is
comparing since last many years, it is absolutely good time for Indian steel industry.

The analysis shows that the Indian steel industry suffers from low productivity of labour but
high capital, energy and transportation cost. The steps needed to enhance competitiveness of
the Indian steel to industry include investment towards technology up gradation. There is also
a vast scope for quality up gradation. Quality monitoring. Inspection and control measure
have also to be introduced at all stages of operation as well as technical discipline.
Automation in process routes, optimum capacity utilization, improved maintenance practices,
extensive mechanization in all possible areas as well as pollution control measures need to be
implemented.

The Indian steel industry is at crossroad. It needs to step up values-addition to ensure that the
wide fluctuations in HR prices are moderated with greater share of value-added products.
Further, it has to modernize itself to bring down production costs.

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 factor

In Social point of view, The responsibility of various steel companies towards society and for
the community is required to be analyzed.

Quality

Steel Industry (company) shall constantly strive to improve the quality of life of the
communities it serves through excellence in all facets of its activities. They are committed to
create value for all their stakeholders by continually improving their systems and processes
through innovation. The policy will be reviewed to align with business direction and to
comply with all the requirements of the Quality Management Standard.

40

Safety

Steel Industry is committed to the task of ensuring the safety and safeguarding the health of
all its employees under various companies. In the company like Tata Steel, Importance will
be given to continuous training for promoting safety consciousness among all employees.
Joint communities of executives and employees' representatives will supervise the Company's
safety measures. Company is accountable 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

Companies like SAIL & Tata Steel believe that the loyalty and commitment of its employees
depends upon the quality of life they are offered at work and at home. They recognize that
indiscriminate use of alcohol and drugs is injurious to the well-being of individuals, their
families and the community as a whole. We acknowledge that the misuse of these
psychoactive substances is a major health and safety hazard. Companies are committed to
creating an alcohol and drug- free environment at the work place by:
1. Raising awareness, through the dissemination of information, education and
training and by promoting healthy life styles among our employees and their
families.
2. Motivating those employees who have an alcohol/drug problem, to seek
assistance, while maintaining confidentiality about such cases.

Environmental Policy

In overall Steel Industry companies are commitment to minimize the adverse impact of its
operations on the environment. Towards this end, it shall endeavor to:

41

1. Set sound environmental objectives and targets, and integrate a process of review,
as essential elements of corporate management.
2. Install, maintain and operate facilities to comply with applicable Environmental
Laws, statutes and other regulations.
3. Conserve natural resources and energy by constantly seeking to reduce
consumption and wastage.
4. Minimize process waste, and promote the recovery and recycling of materials.
5. Phase out pollution-prone processes and install state-of-the-ar1 technology for
pollution prevention, and continual improvement, in environmental performance.
6. Develop and rehabilitate waste dumps through a forestation and landscaping.

Human Resource

In this tight competitive environment Steel companies recognize that its people are the
primary source of its competitiveness. It is committed to equal employment opportunities for
attracting the best available talent and ensuring a cosmopolitan workforce. It will pursue
management practices designed to enrich the quality of life of its employees, develop their
potential and maximize their productivity.

Technological Factor

Technological changes can alter the balance of the five forces and may force changes in the
industry structure. For example, with the advent of Midrex and Corex processes of iron
making, which use non-coking coal, the requirement for coking coal will drop drastically, as
non-coking coal is abundant in India. This will diminish the bargaining power of coal
suppliers. With the introduction of continuous strip processing (CSP) the cost of production
of cold rolled sheet will reduce significantly, due to elimination of intermediate steps and
improvement of yield and price performance ratio. These and many upcoming technologies
will shift the balance of power away from the integrated manufacturers and reduce the entry
barrier.

The convergence of IT with steel may change the marketing of steel fundamentally. For the
steel producers, e-commerce 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
42

along with kalyani Steel have participated in the formation of a steel portal named
Metaljunction.co. Buyer's bargaining power may increase with access to competitive price
information, and thereby exert downward pressure on steel prices.

3.3 PORTER'S FIVE FORCES ANALYSIS

In the post liberalization era, the Indian steel industry is passing through an intensely
turbulent transformation, belying the rosy forecasts of the early 90s. Financial institutions and
consultants have carried out substantial research, because of the huge investments in the steel
industry. However, most of these research reports are for private circulation. The Indian steel
industry consists of three strategic groups. Classified on the basis of size and the extent of
backward integration, these strategic groups are:

1. Integrated Steel Producers (ISPs) with high capacity and high degree of backward
integration. This group comprises the Steel Authority of India Ltd. (SAIL) with
four integrated steel plants at Bhilai (3 million tons), Bokaro (3MT), Durgapur ( 2
MT) and Rourkela
2. (1.15 MT); Tata Steel 5.2 MT); and Ashtray STEEL STRIPS Nigam Ltd. (3 MT).
3. Secondary Majors, where the capacities range between one and two million tones
using amix of technologies, with a much lower degree of backward integration.
This group consists of the STEEL STRIPS Group, Jindal Group, Lloyds and
Essar.
4. Tertiary Producers are mini-steel plants, using Electric Arc or Induction Furnaces
and are very small in size. Authentic data is not available regarding this group.
The first two strategic groups, that is the integrated and secondary steel,
producers, together hold around 707o if the mild steel capacity in the Indian Steel
industry for purposes of analysis.

(I) Degree of Rivalry:

Industry Growth

Steel is the product of a complex industry having strong forward and backward linkages in
terms of material flow and income generation. The linkage between the economic growth of a
43

country and the growth of its steel industry is strong. In India, the growth of the domestic
steel industry between 1970 and 1990 was similar to the growth of the economy, which as a
whole was sluggish. With projections made on the basis of current proposals by the Task
Force on Iron and Steel, the Ninth Plan had predicted the phenomenal growth of the Indian
Steel Industry. India have a demand of 29.6 million tones in 1994,31million tones in
200I,45.387 million tons in20004-05, 50.21 million tones in 2010-A6,58.45 million tone in
2011-12 . As the industry is not growing the only other way to grow is by increasing one's
market share. The steel industry is witnessing greater rivalry among existing firms, price wars
and heavy trade discounts. The market growth has been slower than growth in installed
capacity, creating a surplus between aggregate demand and supply. The International Iron
and Steel Institute (IISD have forecasted that the steel demand will go of from 1.12 billion
ton to 1.19 billion ton in 2013.

1. Average growth rate for past 15 years 7% pa

2. Improved rank to 7th place
3. Projected growth rate7.3% pa
4. Expected to be world's 2nd largest steel producer by 2016

Fixed Cost and Value Added

Steel is a capital intensive industry and fixed charges tend to be high with respect to the value
addition. The fixed cost as a proportion of value added is quite significant and has gone up
from56% rn 1997-98 to in 21%in 2000-01 For the pu{pose of analysis, Fixed Charges have
been takes as (Employee Cost + Interest & Financial Charges + Depreciation). Value Added
has been defined as (Net Sales - Cost of Material - Cost of Power & Fuel). The value addition
is slowly being squeezed under the pressure from rising costs of input material and lower
sales realization due to surplus capacity and cheap imports.

Because fixed charges are high, capacity utrhzation is a key driver of profitability in this
industry. The fixed steel proportion is higher in the case of integrated steel manufactures than
in the EAF based mini- mills. EAF mini- mills have the advantage of more flexibility in terms
of capacity utilization and can throttle their production without significantly affecting their
cost structure, but are more susceptible to price movement and supply of steel scrap .
However, Direct Reduced Iron is emerging as a viable but partial substitute for steel scrap.
44

Product Differences

As far as the standard steel grades for low, medium carbon steels are concerned, there is
hardly any difference in the products. These grades have well defined product characteristics,
chemistry and physical attributes that are standardized through Bureau of Indian Standards
(BIS), Deutsche Industries Norm (DIN) and other standards.

However, there is a nascent trend, pushed by steel users at the high end of the market. The
customer specifies product characteristics, suiting to their specific application, which are
much more stringent and demanding than existing standards. This is particularly noticeable in
the automobile and white- goods sector.

Brand Identity

Several producers, such as SAIL, Tata Steel and Lloyds, are attempting to create brand
identity for their flat products, for example, 'SAIL Jyoti' galvanized plain and corrugated
sheets have been positioned as premium products. Similarly. Tata Steel is attempting to build
a brand identity for 'Tata Steel' and its 'Bandana' brand corrosion resistant (CR) construction
bars.

Concentration and Balance

The Steel industry in India is highly concentrated in the hands of the integrated steel makers.
Tata steel produces 5.2 MT, SAIL produces 9.15MT. Both take market share 3l% of total
market share. While JSW and Essar produce 3.5 and 3.3 MT respectively. However, the
proportion of demand met by the secondary sector it increasing. If the secondary sector
continues to gain ground, and all the proposed new steel plants come into existence, the
industry will become fragmented, but the integrated steel makers will still remain formidable
competitors, with preferential access to critical raw materials.

45

Corporate Stakes

A study by the Industrial Development Bank of India ([DBD m 1997 estimated that the Net
Fixed Assets of the Indian Steel Industry were Rs. 149.336 billion, Paid-Up Capital for the
organized steel industry was Rs. 11.8247 billion, and Net Worth Rs. 83.2185 billion in
March1996. Long Term borrowing for the same period was R.s. 69.7754 billion and the Total
Capital Employed 256.5538 billion. Thus corporate stakes in the Indian Steel Industry are
quite substantial. The Indian Steel Industry is vital to the Indian economy, as it contributes
around 97oto the GDP.

Exit Barrier

The exit barrier for an existing steel company can be said to be insurmountably high. Given
the specialized nature of investments, it will be very difficult to get a fair market value for the
capital assets (plant and machinery). Because of the high exit barrier, companies unable to
compete in the industry do not have any option but to remain and compete at any cost. In this
do-or-die process they tend to destabilize the industry through price-cutting,

Number of firms

More firms will lead to increased competition. As such there are major in India are Steel
Authority of India (SAIL), Tata Steel, ESSAR Steel and JSW Steel there is stiff competition
in steel industry. Even there are many global companies' exits in India, which are also threats
for the local players.

(II) Threat of New Entry:

Threat of entry is determined by the entry barriers, which act to prevent new firms from
entering the industry. A lower entry barrier makes it difficult for the existing producers to
remain profitable for long. When an industry with low entry barrier becomes profitable, it
attracts new entrants, thereby increasing the number of competitors. Entry barriers can take
the form of intrinsic physical problems such as access to scarce raw materials or specific
technology. The most common entry barrier is usually the scale and investment required to
enter an industry. Entry Barriers can be divided into six main categories: Economies of scale,
46

switching costs, capital requirement, access to distribution channels, product differentiation

and brand identity.

Economies of Scale and Capital Require ments

The primary entry barriers to setting up a viable steel plant are the economy of scale and the
high capital requirements. The cost of setting up a steel plant in India went up almost fourfold
between 1973 and 1990. A 1996 crisis survey pure the capital requirements for setting up a
1million tonne integrated steel plant at around Rs. 30,000 million. The investments per tone
of finished HR coils vary from Rs. 18293/tonne to Rs 42800/tonne.

Over and above the huge capital required for setting up a manufacturing plant, the relatively
long gestation period of up to 3years and initial start-up losses may also act as deterrents.
While the interest rate in We stem economies is around 5-6Vo, the prevalent interest rates in
India are around I6%. This long-term burden of interest affects the profitability of steel
companies in India. The interest cost per tone of steel works out of around US$ 2O25,compared to US$ 10-2-in developed countries. The minimum economy of scale required
for offsetting the cost of research and development in the present Indian Steel market, seems
to be a production capacity of around 2 to 3 million tones. Smaller firms simply cannot afford
to invest in R & D and will thus be followers in the development of newer steels or rely on
foreign collaborators, at a high cost.

Product Differentiation

There is not much product differentiation in low and medium carbon steels, which form the
bulk of the production and consumption. The extensive use of ISI specification further
enhances the commodity nature of steel. The long products especially are not very
differentiated, except for the special sizes/grades/profits/ made by the steel majors. The flat
product steel market has a higher potential for value addition compared to long products,
owing to the profile to the endures segment. In addition, with the long product segment
flooded with several low-tech but highly competitive small scale steel making units and rerolling units, the flat products sector is more attractive for fresh entry. Most of the capacity
built up during the post- liberalization era is in the flat products and as per McKinsey
47

Projections; the over-capacity in the flat segment is likely to grow from2l%a in 1998 to 37%
in 2012. The cold rolled segment offers some scope for differentiation through special surface
finish, narrow tolerances, and high yields for the end- user. The other efforts at differentiation
are through the service route, in terms of door delivery, staggered delivery, etc.

Switching Costs for Customer

The cost incurred by a customer of steel in switching from one steel producer to another, for a
homogenous steel product, is practically zero. However, one entry barrier that the new
entrants may face is the hidden "psychological cost" of switching suppliers. The present
customers have long-term relationships with the existing major players. A steel customer,
who switches over to anew steel maker for a particular category of steel, would still have to
rely on the steel majors for other steels not produced by the new steel maker.

Access to Distribution Channels

Steel majors like SAIL and Tata Steel have unparalleled to distribution channels in terms of
company stockyards and dedicated dealer networks based on long term, exclusive
relationships new entrant may find it difficult to establish a national distribution network and
hence will have to remain content as a regional player. However the alternate distribution
network of appointing distributors and dealers can circumvent the distribution strength of
existing players.

Brand identity

Steel has long been sold as a commodity in the Indian steel market. With liberalization and
the threat of imports, major steel companies are trying to build brand identity for their
selected, high value products. Brand building efforts historically have not been successful.
The commodity nature of the product is reinforced by standardization of products by ISI
specifications.

48

(III) Threat of Substitutes:

It is very important for any industry to track emerging substitutes in order to build suitable
defenses. The threat of substitutes constitutes three highly interrelated factors:
1. Relative price performance of substitutes
2. Buyer's propensity to substitute
3. Switching costs

Plastics and composites pose a threat to steel in one of its biggest markets- automotive
manufacture. In the automobile industry, the other material at present with the potential to
upstage steel is aluminum. However, the high cost of electricity for extraction and
purification of aluminum in the automobile industry, and steel still remains the main input to
the automotive industry. Steel has the advantage of high recyclables as compared to other
competing substitutes. Typically around 45% of the incoming steel sheer used to fabricate an
automotive body ends up as engineering scrap, which is sold back to the metals industry. The
life-Cycle Inventory of the International Iron & Steel Institute (IISD and a similar study
conducted in India by the Institute of Steel Development and Growth (INSDAG) both
conclude that steel can be efficiently recycled and has distinct advantages over other
materials used by the industry. The net cost of aluminum required to build the body- in-white
is well over twice the cost of steel (aluminum $490.50, steel$212.45). The cost of switching
from steel to aluminums has enormous implications for the automobile industry in terms of
technology and cost. Most of the automation in the assembly of automobiles, especially cars,
is geared towards the use of steel. Shifting to aluminums would mean changing the
manufacturing methods radically.

Steel has been replaced in some large volume applications: railway sleepers (RCC
sleepers),large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and
domestic water tanks (PVC tanks). The proportion of usage of steel in the construction
industry in India is much lower than in the Western countries.

49

(IV) Buyer Powe r:

Buyer power influences the prices that a firm can charge. It can also influence cost and
investment, as powerful buyers can demand costly service. The steel market may be broadly
segmented into three categories:

1. Price-sensitive buyers are primarily concerned with cost rather than quality, as steel
represents a major portion of their total product costs. Pipes and tubes producers fall
in this category. Pipes being sold on tonnage basis for each nominal size, the customer
and the manufacturer are both interested in having the maximum number of pipes per
tone, insisting on negative tolerances around the nominal size for rolling.
2. Service-sensitive customers require the highest levels of quality and delivery
performance. For them price is secondary to both security of delivery and
performance, as steel represents a relatively small but crucial component of their total
costs. This category is exemplified by the manufactures of LPG (liquefied petroleum
gas) cylinders. The nature of their product requires stringent adherence to quality
requires stringent adherence to quality standards in the material, at the input stage and
various other stages of manufacture. They also require the steel delivered on schedule,
in the proper mix of different grades and sizes that go into the making of cylinders.
3. Commitment- focused customers value close, longstanding relationship for
developing superior steel applications to be employed in their products and processes.
Automobile manufactures fall in this category.

MAJOR CONSUMERS OF STEEL

Cons umers

Percentage

Construction industries

61

Capital goods

11

Auto

Packaging

Durable

Others

12

50

Buyer power consists of the sub-elements bargaining leverage, buyer concentration, buyer
volume, buyer's ability to integrate backward, price sensitivity. and impact on
quality/performance.

Bargaining Leverage

The leveraging power of the big buyers is on the rise. They are demanding price concessions
and more favorable commercial terms. Ultimately, this leads to pressure on net sales
realization for the steel maker. This has been the case for Indian steel makers over the last
few years.

Buyer Concentration

The end use segments of different steel products determine the concentration of buyers. The
Indian steel industry series large government buyers including railways and defense, and
large firms like Telco, Godrej and BEML etc. Large buyers increase buyer concentration, as
significant purchasing power is concentrated among a few customers.

Buyer Volume

The low and medium carbon steel business is volume driven. The integrated steel plants
produce in terms of million tones and the largest buyer buys in terms of tens of thousands
tones. Buyer volume is important for these steel makers, because of the high fixed cost
element of producing steel. The high volume steel buyers are able to exert downward
pressure prices on steels of standard grades/sizes. These products are largely undifferentiated
and the buyer does not incur any additional cost for switching to another supplier.

Price Sensitivity
The demand for steel is a derived demand and the purchase quantity depends on the end- use
requirements. Traders tend to exhibit price sensitivity and buy when there are discounts. By
and large, prices and fixed across the industry, subject to minor variations due to marketing
instruments as discounts. Buyers who use steel is critical and/or hazardous applications like
defense departments, LPG cylinder manufacturers and nuclear power plants are likely to be
51

fewer price sensitive. Starting September 2013, the global financial turmoil has left its
adverse impact on still industry. Prices of still products have declined 25% in last one month
and by 40% from their peak in June 2013.

Impact on Quality and Performance

For the processors and most end-users except the low-end users, the quality of steel, both
long and flat products, is of vital importance to the performance and quality of the
components.

Supplier Power

Supplier's bargaining power influences the cost and quality of input material. Higher supplier
power raises the input cost, thereby reducing the industry profitability. Supplier's bargaining
power depends on four variables: differentiation of inputs, supplier concentration, importance
of volume of supplier, and threat of forward integration by supplier relative to threat of
backward integration by firms in the steel industry.

Differentiation Of Inputs

The main inputs of steel industry are high iron ore, coking and non-coking coal, limestone,
dolomite and electricity. The input materials are commodities in nature with negligible
differentiation, preventing supplier from charging a premium on the input material supplied.

Importance of Volume for Supplier

Volumes are important for all suppliers. The steel industry's bargaining power is somewhat
helped by the large volume it consumes. However, this leveraging power is offset by the fact
that supplier companies are largely government controlled and the prices are government
administered.

52

(V) Threat of Forward Integration by Supplier:

Steel making has been integrated with the process of iron making and coke manufacture, in
some cases ever to iron ore extraction. Steel plants have, to a certain extent, tried backward
integration into generation of electricity. Large steel companies have invested in Ferro-alloy
production. Compared to this, the threat of forward integration by the principal suppliers to
steel plants for coal, iron ore, limestone, electricity and railway freight, is at present almost
negligible. These suppliers, being largely government owned, would not be able to forwardintegrate into steel business under the present government policies, unless there is a radical
shift in such policies.

Strategic Relevance of the Five Forces

The variables affecting the industry with regard to each of the five forces have been
categorized as favorable or adverse. Favorable variables have the potential to improve
profitability, while adverse variables reduce profitability of the industry.

Following are some strategies the Indian steel companies could adopt to leverage the
favorable forces and protect themselves from the adverse ones:

1. Concentration of competitors, with about 60%of installed capacity with the top
three manufacturers, is at present favorable for the industry. However, with
increasing production share of secondary producers, the industry is becoming
fragmented; the power of the big producers to control the market will decline.
Indian steel companies should focus on reducing fixed cost and building product
differentiation. SAIL and Tata steel are trying to reduce their fixed assets, rather
than aiming for high capacity utilization which the market may be unable to
absorb, especially in times of low demand growth. Promoting steel consumption
in newer applications and markets should be a major strategic thrust; steelintensive construction, agricultural and rural sectors are such examples. The
potential for steel in our villages in immense. For only one product, steel grain
storage bins, there is a latent potential to use 55 kegs of galvanized steel sheet
forever ton of food-grain. Tata steel has taken steps in the right direction by
promoting brands in line with the "Intel Inside" concept. This will help in de53

commoditizing steel industry and thereby help in reducing price-based

competition.

2. The favorable effect of high economies of scale has been negated to a certain
extent by the emergence of mini- mills using scrap and DRI. Strategic actions for
increasing the entry barrier should include enhancing product differentiation and
brand building, and increasing the switching cost of the customers through
downstream integration and increasing the switching cost of the customers
through downstream integration and increasing the level of service to the
customer, thereby enhancing the long-term commitment of the customer. The
automobile and white-goods industries in India are witnessing the entry of major
global players and also the emergence of Indian companies. These industries rely
on supply of high-grade, pre-processed steel components as inputs to retain their
competitiveness. Steel companies should lobby with the government to protect the
indigenous manufactures against harmful dumping of seconds and defective
steels. At the same time, they should increase their service levels and enter the
value chain of their customers at higher level, through the development of steel
service centers, value-adding services, pre-processing and part-processing, as
practiced in the EU and the US. Discussions have started on different forums for
proceeding along these lines to start service centers, either company-owned or
through tie- up with intermediaries or franchises. One US company Ryerson,
specializing in value-adding service in steel, has opened a service center as a joint
venture with Tata Steel.

3. The steel industry should keep track of developments taking place on substitute
materials that may replace steel on economy, strength and durability
considerations in the long run. Indian industry should make efforts to fine new
areas of applications of steel and aggressively promote the use of steel in the key
areas where it is being substituted. Strategic actions for companies should
concentrate on building higher strength-to-weight steels at lower costs and
Providing tailor- made solutions to customers. British Steel, through extensive
customer education, has influenced architects and promoted the use of steel in
building construction. The switch back of beer cans from aluminum to steel in
Japan in also a case worth emulating by the Indian steel industry. The
54

establishment of INSDAG (Institute of Steel Development and Growth) is a step

in the right direction for promoting steel usage in non-traditional areas. The
environment friendly aspects of steel, as demonstrated by the IISI's Life Cycle
Cost Analysis, should be highlighted to promote steel as the preferred material.
The recent catastrophic earthquake has forced the nation to rethink about steel in
construction. This has the potential to increase steel usage, especially long
products, and promote steel- intensive building construction. Moser Baer India
opted for an all- steel frame (rather than RCC) manufacturing facility, basing the
decision the decision on the need for fast project implementation, and has signed a
MoU with SAIL for supplying the necessary steel. Steel companies should
participate as equity-partners in projects such as highways (e.g. the proposed
"Golden Quadrilateral Super Highway" and the "National Highway Development
Project"), gas and oil pipelines and urban development projects, which are
potential consumers of millions of tones of steel. Steel can successfully stave off
the encroachment of substitutes if it can be made stronger, lighter and cheaper.

4. Strategic actions for decreasing the buyer's bargaining power include forging
long-term relationships with large customers, especially in the high- value items,
and customizing products and services in line with customers requirements. This
would give rise to some degree of product differentiation and also reduce the price
sensitivity of buyers. Indian steel companies could use "shape strategy" in
changing buyer behavior in non-traditional segments like agriculture. The industry
should also expand its customer base through retail sales in order to reduce buyer
concentration. This requires setting up a good distributor/retailer network. Ecommerce could also create access to large numbers of buyers throughout the
world and help in increasing the customer base.
5. The primary source of bargaining power for the suppliers to the steel industry is
their concentration. Most of the suppliers are state monopolies; hence firms in the
steel industry do not have much choice as regards sourcing of their raw material.
Similarly, it is unlikely that the government will, in the near foreseeable future,
relinquish its control over coal. Hence steel producers should form closer and
long-term relationships with government-owned coal companies and also continue
to import good quality coking coal to counteract the monopoly of domestic
55

suppliers. On the other hand, steel companies can and should strategically invest
in power generation companies or form joint ventures for assured power supply
and control over cost.

Forces

Favorable Variables

Adve rse Variables

Acting on
Industry
Degree

of

Concentration and balance

Rivalry

Low industry growth

High fixed cost/value

added

Absence

of

product

differentiation

Threat

of

Entry

Threat

of

High economies

of

scale

for

High corporate stakes

Low brand identity

Exit barriers

Lack

of

product

integrated steel plants

differentiation & low

High capital requirement

brand identity

Access to distribution channels

Low switching cost

Switching cost

Better

Substitutes

price/performance

of

substitutes
Buyer Power

Buyer's

inability

to

integrate

backward

High economies

High

bargaining

leverage of buyer
of

scale

for

integrated steel plants

High-to- medium buyer

concentration

High buyer volume

High price sensitivity

Little

impact

on

qualityperformance

in

low end-use segments

56

Supplier

Power

Lack of significant differentiation High supplier concentration

of inputs

Importance of volume to supplier

Threat of forward integration by

supplier
backward

relative

to

integration

threat
by

of
steel

producers negligible

3.4 PORTERS DIAMOND ANALYSIS

There are five forces in Porters Diamond analysis. They are:

1. Firms Strategy, Structure and Rivalry
2. Demand Conditions
3. Factors Conditions
4. Related Supporting Industries
5. Government
Firms Strategy, Structure and Rivalry
In the Indian Steel Industry, the major firms are TISCO, Steel Authority of India Limited,
Rashtriya STEEL STRIPS Nigam Limited, Essar Steel Limited, JSW Steel Limited. These
firms have many other rivalry in the Industry. The Firms Strategy in the present scenario is to
increase the Plant capacity and expansion of the plants by 2012. Firms present strategy is to
increase the production to meet the future demand and also with the Innovative Products. The
Industry consists of many industries with in, so the rivalry forces are very high. With
innovation in the products, they can satisfy their customer in best possible manner.

Demand Conditions

The demand for steel will continue to grow in traditional sectors such as infrastructure,
construction, housing automotive, steel tubes and pipes, consumer durables, packaging, and
ground transportation, specialized steel will be increasingly used in hi-tech engineering
industries such as power generation, petrochemicals, fertilizers, etc. The new airports and
railway metro projects will require a large amount of stainless steel.
57

The requirements of the sectors are very high with expectations of high quality. The Working
Group on Steel Industry set Lerp by the Plar- uringConcision for the 11th'Five-Year Plan
(2012-l2) has projected a total demand of'70.34 million tonnes for finished steel and a total
production of 80.23 million tonnes of crude steel by the end of the 11th Plan, that is 2011-12.

Factors Conditions

The National Steel Policy 2010 had projected consumption to grow at 7%based on a GDP
growth rate of 7-7.SVo and production of I l0 million tonnes by 2019-2020. These estimates
will be largely exceeded and it is envisaged that in the next five years. the steel production
capacity in the country by the year' 201 1-2012 will be nearly 124 million tonnes. The
expansion plans would increase the capacity of SAIL- from 14.6 million tonnes per annum
hot metal production (in2406-07) to 26.2 million tubules by 2010-11. In the case of RINL,
the expansion plan would increase its capacity tromp the present level of 3 million t of liquid
steel production per annum to 6.3 million toru1es by 2010- l I at an estimated cost of around
Rs. 12,228 crore. NMDC plans to expand its iron ore production capacity iron the present
capacity of 30 million tones per annum to 50 million tonnes per annum by 2014-15 through
capacity expansion of existing mines and by opening new r mines .all the major firms have
taken steps to meet the factor Conditions to meet the future demand in the near future.

Iron and Steel making involves energy intensive processes. The interactional norm of
energy consumption is 4.5 to 5.5 Giga calories per tone of crude steel. With adoption ol
modem Technology and equipment, beneficiation of raw materials and use of high grade
imported coking coal, Indian Steel plants have been able to achieve energy consumption al
the level of 6.5 to 7.0Giga Calories only. Further, steps are being taken to achieve much
lower allergy consumption and corresponding lower Greenhouse Gas (GHG) emission by the
end of 11th Five Year Plan. With the growth 'steel industry, increasing attention is being paid
to environment management .Steps such as a forestation. Installation of pollution .control
equipment are likely to abate the pollution emanating from steel industry. The Indian iron
and steel industry is taking advantages of the Clean development Mechanism under the
Kyoto Protocol, thereby improving energy efficiency and reducing GHG emission.

58

Related Supporting Industries

The Related and Supporting industries for steel industry in India are iron Ore, Coke. Coal.
Petroleum -rm and Aluminum industry. These Industries are providing raw material to the
steel industries. These firms provides information regarding the customers and other torches
in the industry. These firms provide raw material and information to meet future demands.

Government

The role of government plays a vital role in the industry. Excise duty on steel products
reduced from 14% to10% w.e.f., December 07 ,2013. The other initiatives taken by the
government are:

Reduction in Custom Duty in respect of non-alloy steel products and Zinc, Met coke
and Ferro alloys.

The Counter Veiling Duty (CVD) on TMT rods and bars was reduced from l4% to
NIL.

Export duty was imposed on the following steel categories w.e.f. May 10, 2013.

Export Duty of l5% on pig

iron, sponge iron, steel scrap, steel ingots, and all

categories 'of non-alloy semi- finished steel

Export Duty of 15% non -alloy Hot Rolled (HR) steel

Export Duty of 10% on non-alloy Cold Rolled (CR) steel

Export Duty of 5% on non-alloy Galvanized and Coated steel

Export Duty of 10% To on bar , rods, wire rods, angles shapes

Export Duty of 10% on pipes and tubes

Export duty was unmodified on June 13, 2013 as follows:

Export duty in respect of flat steel products was reduced from previous levels to NIL.

Export duties on bars and rods of non-alloy steel increased from 10% to l5%

These are the steps taken by the government to restrict and encourage the steel industry in
India.

59

Chapter 4
To know Regulatory Framework of Steel Industry in India
4.1 Rules and Regulations frame d by Governme nt

Action taken to control inflation in the steel sector

period April-Jnne2013:

Reduction in Custom Duty in respect of non-alloy steel products and Zinc, Metcoke
and Ferroalloys.

The Counter Veiling Duty (CVD) on TMT rods and bars was reduced from l4% to
NIL.

Export duty was imposed on the following steel categories w.e.f. May 10, 2013:

Export Duty of 15% on non-alloy Hot Rolled (HR) steel

Export Duty of 10% on non-alloy Cold Rolled (CR) steel

Export Duty of 5%on non-alloy Galvanized and Coated steel

Export Duty of 10% on bars, rods, wire rods, angles shapes

Export Duty of l0% on pipes and tubes

Export duty was modified on June 13, 2013 as follows:

Export duty in respect of flat steel products was reduced from previous levels to NIL

Export duties on bars and rods of non-alloy steel increased from 10% to l5%

Action taken to control demand and supply of steel:

Action taken in October-November 2013 consequent upon the global financial crisis:

Export duty on steel exports withdrawn w.e.f. October 31, 2013

Duty Entitlement Pass Book benefit restored on steel export w.e.f. November 14,
2013

Import duty @ 5 % imposed on import of non-alloy steel (except melting scrap) w.e.f.
November 18,2013

Excise duty on steel products reduced from 14 % to l0 %w.e.f ., December 07 ,2013

Excise duty on steel has been further reduced to 8 5 on February 24,2014

60

Action taken to facilitate conservation of iron ore resource

As a result of consistent efforts of Ministry of Steel, export duty on iron ore was imposed.
Imposition of Export duty on iron ore has been an important step for enhancing raw material
security for the domestic steel industry.

Following rates of duty were imposed on iron ore exports in the Finance Bill 2012-13:

Iron ore fines (iron content :up to 62%) - Rs. 50 Per Metric Tonne (PMT)

Iron ore fines (iron content 62% md above) - Rs. 300 PMT

Iron ore lumps (all sorts) - Rs. 300 PMT

Iron ore concentrates (a11 sorts) - Rs. 300 PMT

The matter of export of iron ore was further deliberated by a Group of Ministers
(GoM) constituted to consider the National Mineral Policy. In the GoM meeting to
consider National Mineral Policy, there was an agreement that iron ore resources of
the country should be conserved for the use of domestic steel industry. It was decided
that although conservation of iron ore resources of the country is of paramount
importance, the same may not be achieved by banning or capping the export of iron
ore but by taking recourse to appropriate fiscal measures. Accordingly, Government
of India imposed an ad-valorem export duty of 15%o on all varieties ofiron ore,
irrespective of Fe content w.e.f. June 13, 2013.

Subsequently, export duty on iron ore fines was amended to Rs. 2O0/Metric Tonne
(MT) with effect from October 31,2013, which was further modified to 8% advalorem with effect from November 7 ,2013. The export duty on iron ore lumps
remained at l5% ad-valorem.

Ministry of Finance vide notification dated December 7 , 2013 has revised the rates of
duty on Iron ore exports in the following manner:

a) Iron ore fines (all sorts): NIL

b) Iron ore other than fines(including lumps and pellets) 5% ad-valorem

Plan outlay for 11th Five-Year Plan (2012-12)

For the 11th Five Year Plan (2012-12), the Planning Commission has approved total
outlay of Rs. 45607.08 crore (i.e. Internal and Extra Budgetary Resources II&EBRI of
Rs. 45390.08 crore and Gross Budgetary Support IGBSI of Rs. 217 crore).
61

During the 11th Five Year Plan, a new schematize. "scheme for promotion of
Research and Development in Iron & Steel sector" has been approved with a
budgetary provision of Rs. 118crore for implementation. The objective of the scheme
is to develop path-breaking technologies in an environment friendly manner. The
scheme has been approved by Expenditure Finance Committee/Ministry of Finance
with the observation that the scheme may be initiated in the Financial Year 2014-10.
The Working Group on Steel Industry set up by the Planning Commission for the 11th
Five-Year Plan (2012 -12) has projected a total demand of 70.34 million tonnes for
finished steel and a total production of 80.23 million tonnes of crude steel by the end
of the 1lth Plan, that is, 2OIl-12. Both the 11th Plan projections and the NSP targets
are likely to be considerably surpassed. The 11th Plan would be crucial for realizing
the objectives pronounced in the National Steel Policy 2010 of building a modern and
efficient domestic steel industry of global standards with a capacity to cater to
diversified product demands. The Working Group on Steel industry has made
recommendations consistent with the targets/objectives of the National Steel
Policy,2010. The rejuvenated steel market in the country has already witnessed the
announcements of mega expansion plans of Special rust-resistant rails manufactured
at SAIL's Bhilai Steel Plant.

Foreign investments and private sector participation:

Domestic and foreign investors have shown a great deal of interest in setting up steel
capacities anthem country. prospective investors include the existing public sector as well as
private sector manufacturers, reputed foreign manufacturers, sponge iron makers going in for
forward integration as well as small rolling mills trying to get into backward integration,
among others' As per the latest information available in the Ministry of Steel, 222MoTJs have
been signed in various states within tended capacity of around 275.70 million tonnes, with an
investment of over Rs. 11 lakh crore' It appears that with major investment plans in the states
of Orissa, Jharkhand, West Bengal and Chhattisgarh, actual production may considerably
exceed the 110 million tonnes annual steel production by 2019-20 envisaged in the National
Steel Policy of November 2010.

62

Role of the Ministry of Steel

The pre-de-regulation phase has seen the Ministry of steel irr the key rolc of a regulator
which was essential, gavel the operator economic condition, the limited presence of industry
and the scarcity key raw material for steel- :making at home. Through skillful and judicious
decisions r:nallocation and pricing and formulating related policy measles, the Ministry of
steel played an important role in taking the steel industry forward in this phase.

In the post-de e-regulation , the role of the Ministry of Steel has primarily been that of a
facilitator for the Indian steel industry, being responsible for: the planning and development
of the iron, and steel industry, development of essential irrupts such as iron , limestone,
dolomite, manganese ore. chromates. Ferro alloys, sponge iron, and other related functions.
In its present clay role, the Ministry of Steel is extending all posited support for the
development of the iron and Steel Industry in the country. in matters like.

4.2 Policy frame d by Government

India to unveil remanufacturing policy in six months

It is reported that Mr Arun Yadav minister of state for heavy industries and public enterprises
said that the ministry will shortly be unveiling detailed policy guidelines to encourage
remanufacturing. The minister however said that the process would take four to six months as
remanufacturing is anew area and the Government would have to weigh the pros and cons
before framing regulations. Mr yadav at the ASSOCHAM National Seminar on
Remanufacturing said that inter departmental consultations, with the involvement of the
Planning Commission, have begun to frame the policy guidelines for remanufacturing.

The minister said that after the consultations process is over, the proposed guidelines would
be circulated to all stakeholders for inputs.

The ministry would also move a cabinet note on a remanufacturing policy for its approval
and necessary directions.
According to Mr Yadav, the government is seriously encouraging remanufacturing as it
reduces energy and raw material costs by more than 5%obenefiting consumers and original.
63

Remanufacturing is an industrial process in which worn out or obsolete components of a

product are repaired or replaced. It mostly applies to parts that are subject to degradation and
affect the performance or the expectedly life of the whole product,

Pas wan urges steel industry to support government in managing inflation

New Delhi, July 16 (ANI): Union Minister for Steel, Chemicals and Fertilizers Ram Vilas
Paswan Wednesday urged the steel industry to continue to support the effort of the
government in managing the in{lectionary trend in the country.

Government to review policy on iron ore exports

Mumbai: The government has proposed to review the policy on iron-ore exports amidst
rising demanded from domestic steel industry, but ruled out imposing a blanket ban on
shipments. A new policy would be framed soon to keep export of the raw material to the bare
minimum, as it would not be possible to impose a blanket ban on exports, union minister of
state for steel Akhilesh Das said. He was addressing the 60th annual technical meeting of
Indian Institute of Metals (IIM).managing the inflationary trend in the country.

Government to review policy on iron ore exports

Mumbai: The government has proposed to review the policy on iron-ore exports amidst
rising demanded from domestic steel industry, but ruled out imposing a blanket ban on
shipments. A new policy would be framed soon to keep export of the raw material to the bare
minimum, as it would not be possible to impose a blanket ban on exports, union minister of
state for steel Akhilesh Das said. He was addressing the 60th annual technical meeting of
Indian Institute of Metals (IIM).

64

Industrial Policy:

Main features

Objectives of the Industrial Policy of the Government are:

To maintain a sustained growth in productivity;

To enhance gainful employment;

To achieve optimal utilization of human resources;

To attain international competitiveness and

To transform India into a major partner and player in the global arena.

Policy focus is on:

Deregulating Indian industry;

Allowing the industry freedom and flexibility in responding to market forces and

Providing a policy regime that facilitates and fosters growth of Indian industry.

Policy measures

Some of the important policy measures announced and procedural simplifications undertaken
to pursue the above objectives are as under:

i) Liberalization of Industrial Licensing Policy

The list of items requiring compulsory licensing is reviewed on an ongoing basis. At present,
only six industries are under compulsory licensing mainly on account of environmental,
safety and strategic considerations. Similarly, there are only three industries reserved for the
public sector. The lists of industries reserved for the public sector and of items under
compulsory licensing are at.

65

ii) Introduction of Industrial Entrepreneurs' Memorandum(IEM)

Industries not requiring compulsory licensing are to file an Industrial Entrepreneurs'

Memorandum (IEM) to the Secretariat for Industrial Assistance (SIA). No industrial approval
is required for such exempted industries. Amendments are also allowed to IEM proposals
filed after l.7.1998.

iii) Liberalization of the Locational Policy

A significantly amended locational policy in tune with the liberalized licensing policy is in
place. No industrial approval is required from the Government for locations not falling within
25 kms of the periphery of cities having a population of more than one million except for
those industries where industrial licensing is compulsory. Non-polluting industries such as
electronics, computer software and printing can be located within 25 kms of the periphery of
cities with more than one million population. Permission to other industries is granted in such
locations only if they are located in an industrial area so designated prior to 25.7.91. Zoning
and land use regulations as well as environmental legislations have to be followed.

iv) Policy for Small Scale Industries

Reservation of items of manufacture exclusively for the small scale sector forms an important
focus of the industrial policy as a measure of protecting this sector. Since 24th December
1999, industrial undertakings with an investment up to rupees one crore are within the small
scale and ancillary sector. A differential investment limit has been adopted since 9th October
2001 for 41 reserved items where the investment limit upto rupees five crore is prescribed for
qualifying as a small scale unit. The investment limit for tiny units is Rs. 25 lakhs.

749 items are reserved for manufacture in the small scale sector. All undertakings other than
the small scale industrial undertakings engaged in the manufacture of items reserved for
manufacture in the small scale sector are required to obtain an industrial licence and
undertake an export obligation of 50Vo of the annual production. This condition of licensing
is, however, not applicable to those undertakings operating under 13% Export Oriented
Undertakings Scheme, the Export Processing Zone (EPZ) or the Special Economic Zone
Schemes (SEZs).
66

V) Non-Resident Indians Scheme

The general policy and facilities for Foreign Direct Investment as available to foreign
investors/company are fully applicable to NRIs as well. In addition, Government has
extended some concessions specially for NRIs and overseas corporate bodies having more
than 607o stake by the NRIs. These inter-alia includes (i) NRVOCB investment in the real
estate and housing sectors upto1007o and (ii) NRVOCB investment in domestic airlines
sector up to l00%.

NRVOCBs are also allowed to invest up to 10% equity on non-repatriation basis in all
activities except for a small negative list. Apart from this, NRVOCBs are also allowed to
invest on repatriation/non-repatriation under the portfolio investment scheme.

vi) Electronic Hardware Technology Park (EHTP)/Software Technology Park (STP)

scheme

For building up strong electronics industry and with a view to enhancing export, two schemes
viz. Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP) are
in operation. Under EHTP/STP scheme, the inputs are allowed to be procured free of duties.

The Directors of STPs have powers to approved fresh STP/EHTP proposals and also grand
post approval amendment in respect of EHTP/STP projects as have been given to the
Development Commissioners of Export Processing Zones in the case of Export Oriented
Units. All other application for setting up projects under these schemes, are considered by the
Inter-Ministerial Standing Committee (IMSC) Chaired

by Secretary (Information

Technology). The IMSC is serviced

vii) Policy for Foreign Direct Investment (FDI)

Promotion of foreign direct investment forms an integral part of Lydias economic policies.
The role of foreign direct investment in accelerating economic growth is by way of infusion
of capital, technology and modem management practices. The Department has put in place a
liberal and transparent foreign investment regime where most activities are opened to foreign
67

investment on automatic route without any limit on the extent of foreign ownership. Some of
the recent initiatives taken to further liberalize the FDI regime, inter alia, include opening up
of sectors such as Insurance(upto 26%); development of integrated townships (up to 100%);
defense industry (upto 26%); tea plantation (ut p 100% subject to divestment of 26% within
five years to FDI); EnCana cement of FDI limits in private sector banking, allowing FDI up
to 100% under the automatic route for most manufacturing activities in SEZs; opening up
B2B e-commerce; Intermit Service Providers (ISPs)worth out Gateways; electronic mail and
voice mail to 10% foreign investment subject to 26%divestment condition; etc.

The Department has also strengthened investment facilitation measures through Foreign
Investment Implementation Authority (FIIA).

4.3 Export and Import Policy pe rtaining to Steel Industry

The present EXIM policy permits export of iron ore from Goa and Redi sector to all
destinations by the iron ore producers; irrespective of the iron content.

KIOCL is the canalizing agency for its own products (iron ore concentrates and iron
ore pellets)since it rs a 100% E.O.U. (export oriented unit).

The export of iron ore with Fe content above 64%rs canahzed through MMTC.

Export of Iron of Goa origin to China, Europe, Japan, South Korea and Taiwan
(irrespective offer content) and Export of ore from Reid region to all markets
(irrespective of Fe content) is not canalized.

However, some types of high- grade iron ore (Fe content above 64%) from specific areas like
Bailadila in Chhattisgarh are allowed to be exported with restrictions on quantity imposed
primarily, with a view to meet domestic demand on priority.

68

Present quantitative ceiling of iron ore fixed by the Govt. are as under:

AREA

ANNUAL QUANTITY (in Million Tonnes)

a)

Bailadila Lumps

Not Exceeding 3.00 MT

b)

Bailadila Fines

Not Exceeding 3.80 MT

c)

High Grade Lumps

No limit

(Bellary-Hospet Sector)
d)

High Grade Fines (Bellary-

No limit

Hospet Sector)

Policy for export of Chrome Ore(Extract from Exim Policy of DGFT) is as unde r:

Tariff
Item

Unit Item Description

HS

Export

Nature

of

Policy

Restriction

Code
2610 00 00

Kg

Chrome ore other than (i) beneficiated Restricted

Export permitted

chrome

fines/concentrates

under

license

(maximum feed grade to be less than

other

than

427o Cr2O3) and(ii) those categories

categories at (b)

of

to (d) below

ore

Chrome

Ore,

mentioned

as

permitted through STEs.

2610 00 30

Kg

2610 00 40

Beneficiated

chrome

ore Free

fines/concentrates , (maximum feed

grade to be less than 42%
Cr2O3)

2610 00 30

2610 00 90

Kg

Kg

Chrome ore lumps with Cr203 not STE

Export

through

exceeding 40 percent

MMTC Limited

Low silica friable/fine ore with Cr2O3 STE

Export

not exceeding 52 percent and Silica

MMTC Limited

through

exceeding
4 percent.
69

2610 00 90

Kg

Low silica friable/fine chromites ore STE

Export

with Cr2O3 in the range of 52-54

MMTC Limited

percent

and

Silica

exceeding

through

percent.

Other Policies:-

National Steel Policy - 2010

OBJECTIVE:

Strategic Goal: The long-term goal of the national steel policy is that India should have a
modern and efficient steel industry of world standards, catering to diversified steel darned.
The focus of the policy would therefore be to achieve global competitiveness not only in
terms of cost, quality and product- mix but also in terms of global benchmarks of efficiency
and productivity. This will require indigenous production of over 100 million tons (MT) per
annum by 2019-20 from the 2014-10level of 38 MT. This implies a compounded annual
growth of 7 .3 percent per annum.

The above strategic goal is justified on the ground that steel consumption in the world,
around 1000MT in 2004, is expected to grow at 3.0 percent per annul to reach 1,395 MT in
2015, compared to2 percent per annum in the past fifteen years. China will continue to have a
dominant share of the world steel demand. At home, the Indian growth rate of steel
production over the past fifteen years was 7.0 percent per annum. The projected growth rate
of 1.3 percent per annum in India compares well with the projected national income growth
rate of 7-8 percent per annum, given an income elasticity of steel consumption of around 1.

In terms of consumption of steel, defined as production plus imports minus exports, the
present equation is 38+2-4 = 36 MT in 2014-10. Table 1 gives the equation for 2019-20 and
the projected compounded annual growth rates for production, imports, exports and
consumption.

70

National Environment Policy 2011

The principal Objectives of this policy are enumerated below. These Objectives relate to
current perceptions of key environmental challenges. They rnay.Accordingly.evolve over
time:

To protect and conserve critical ecological systems and resources. and invaluable
natural and man-made heritage, which are essential life support, livelihoods,
economic growth . and abroad conception of Hunan well-being.

To ensure equitable access to environmental resource and quality for all sections of
society, acne in particular, to ensure that pool communities. are. which ale most
dependent on environmental resources for their livelihoods, are assured secure access
to these resources.

To ensure judicial use of environmental resources to meet the needs and aspirations of
the present and future generations.

To integrate environmental concerns into policies, plans, programmers, and projects

for economic and social development.

To ensure efficient use of environmental resources the seers o1 reduction in their use
per unit if economic output, to monetize adverse environmental impacts.

To apply the principles of good governance (transparency" rationality, accountability,

reduction in time and costs, participation, and regulatory independence) to the
management and regulation of use of environmental resources.

To ensure higher resource flows. comprising finance. technology, management skills.

Traditional knowledge, and social capital. for environmental conservation thror-rgh
mutually beneficial multi stake holder partnerships between local communities, public
agencies, the academic and research community, investors, and multilateral and
bilateral development partners.

Air Pollution
Air pollution may have adverse impacts on human health, as well the health of other living
entities, manmade heritage, and life-support systems, such as global climate. Depending upon
the lifetime of the pollutants, the location of the source, and the prevailing air currents, the

71

receptors may be located at homestead, local. Regional. or global levels, at trine intervals
h:om near instantaneous, to several decades.

The direct causes of air pollution are emissions from the use of fossil energy. and other
industrial processes, and some consumption activities. The deeper causes arise in a
multiplicity old policy, and institutional. including regulatory shortcomings. in particular,
inefficient pricing of fossils free based energy. Indoor air pollution, a special case, aliases
from the larva societal stalls of women, leading to continued use of polluting, inefficient
biomass stoves. Besides pricing policies for agriculture chemicals which lead to substitutions
of biomass based fertilized by chemicals, the biomass they being used inefficiently as fuel.
These deeper causes need to be addresses through policies and programmers for redressing
womens status and dialogue animal consideration of the environmental impacts of pricing
policies for agricultural chemical .

ln addition. the following specific actions will be taken:

a) Take an integrated approach to energy conservator and adoption of renewable energy

technologies, including hydropower. by appropriately linking efforts to improve conversion,
transmission, distribution. and end- use efficiency . and R&D in" and dissemination of
renewable energy technologies . Remove policy. legal, and regulatory barriers to setting up
decentralized generation and distribution systems for power and other secondary energy
forms. trades on local primal energy resources.

b) Accelerate the national programs of dissemination of improved fuel wood stoves, and solar
cookers, suited to local cooking practices and biomass resources.

c) Strengthen the monitoring and enforcement of emission standard both point and non-point
sources.

d) Prepare and implement action plans for major cities for addressing air pollution for both
point and on-point sources, relying on a judicious combination of flats and incentive based
instruments.

72

e) Formulate a national strategy for urban transport to ensure adequate investment, public
and private, in low pollution mass transport systems.

f) Promote reclamation of wastelands by energy plantations for rural energy through multi
stakeholder partnerships involving the land owning agencies, local communities and
investors.

g) Strengthen efforts for partial of fossil fuels by bio-fuels, through promotion of befouls
plantations, promoting relevant research and development, and streamlining regulatory
certification of the new technologies.

Wate r Pollution

The direct and indirect causes of pollution of surface (river, wetlands) water sources,
groundwater. And coastal areas have been discusses above. The following comprise further
elements of an action plan:

a) Develop and implement, initially on a pilot scale. Public-private partnership models setting
up and operating effluent and sewage treatment plants. Once the models are validation.
Progressively use public resources including external assistance , to catalyze such
partnership. Enhance the capacities of municipalities for recovery of user charges for water
and sewage systems.

b) Prepare and implement action plans for major cities for addressing water pollution,
comprising regulatory systems relying on appropriate combination of fiats and incentive
based instruments. Projects implements through public agencies as well as public-private
partnerships for treatment reuse where applicable, of sewage from municipal sources, before
final discharge to water bodies.

c) Take measures to prevent pollution of water bodies from other source, especially waste
disposal on lands.

d) Enhance capacities for spatial planning among the State and Local Governments, with
adequate participation by local communities, to ensure clustering o1 polluting industries to
73

facilitate setting up of common effluent treatment plants. to be operated on cost recovery

basis. Ensure that legal entity status is available for common effluent treatment plants to
facility investments. and enable enforcement of standards.

e) Promote R&D in development of low cost technologies for sewage treatment at different
scales, in particular, replication of the East Kolkata wetlands and other bio-processing based
models for sewage treatment, to yield multiple benefits.

f) Take explicit account of groundwater pollution in pricing policies of agricultural inputs,

especially pesticides, and dissemination of agronomy practices. Encourage Integrated Pest
Management (IPM)and use of biodegradable pesticides.

Soil Pollution

Similarly, the immediate and deeper causes of soil pollution have been considered above.
Management of industrial and municipal waste is the major cause of soil pollution and is a
serious challenge in terms of magnitude and required resources.

An Action Plan will comprise:

a) Develop and implement viable models of public-private partnerships for setting up and
operating secure landfills, incinerators, and other appropriate techniques for the treatment and
disposal of toxic and hazardous waste, both industrial and biomedical, on payment by users,
taking the concerns of local communities into account. The consumed local communities and
State Governments must have clear entitlements to specified benefits from hosting such sites,
if access is given to non- local users. Develop and implement strategies for clean up of toxic
and hazardous waste dump legacies, in particular in industrial areas, and abandoned mines,
and reclamation of such lands for future, sustainable use

b) Survey and develop a national inventory of toxic and hazardous waste dumps, and an
online monitoring system for movement of hazardous wastes. Strengthen capacities of
institutions responsible for monitoring and enforcement in respect of toxic and hazardous
wastes.

74

c) Strengthen the legal arrangements and response measures for addressing emergencies
arising out of transportation, handling, and disposal of hazardous wastes, as part of the
chemical accidents regime.

d) Strengthen the capacities of local bodies for segregation, recycling, and reuse of municipal
solid wastes- recognizing inter-alia the positive impacts it may have on the welfare of safaika
ramchares and setting up and operating sanitary landfills, in particular through competitive
outsourcing of solid waste management services.

e) Give legal recognition to, and strengthen the informal sector systems of collection and
recycling of various materials. In particular enhance their access to institutional finance and
relevant technologies.

f) promote organic farming of traditional crop varieties through research in and dissemination
of techniques for reclamation of land with prior exposure to agricultural chemicals,
facilitating marketing of organic produce in India and abroad, including by development of
transparent, voluntary, science-based labeling schemes.

g) Promote biodegradable and recyclable substitutes for non-biodegradable materials, and

develop and implement strategies for their recycle, reuse, and final environmentally benign
disposal, including through promotion of relevant technologies, and use of incentive based
instruments.

h) Develop and enforce regulations and guidelines for management of e-waste, as part of the
hazardous waste regime.

i) Promote, through incentives, removal of barriers, and regulation, the beneficial utilisation
of generally nonhazardous waste streams such as fly ash, bottom ash, red mud, and slag,
including inclement and brick making, and building railway and highway embankments.

Noise Pollution

Persistent exposure to elevated noise levels has been established to result in significant
adverse health impacts. While in many instances, the identification of a particular sound as
75

"noise" is unambiguous, in the case of others, such as music" or "chanting" or "fir displays"'
it is inherently subjective. In all such cases, societal well-being would require that exposure
levels to third parties be maintained below levels at significant adverse health impacts may
occur. At the same time, it needs to be understood that certain environments in which people
choose to live and work necessarily involve a certain level of noise.

The following will comprise elements of an Action Plan on abatement of noise pollution:

a) Make appropriate distinctions between different environments in terms of setting ambient

noise standards, e.g. rural versus urban; educational and medical establishments visors other
areas, nighttime versus daytime in residential areas. areas in the vicinity of road, rail, airport
infrastructure, and protected areas, etc.

b) Distinguish between noise standards in the context of occupation exposure (with protection
measures), and environmental exposure to third parties.

c) Formulate noise emissions norms (e.g. loudspeaker, automobile horns, firework ratings)
appropriate to various activities to ensure that exposure levels to third parties who are not
participants in the activity do not exceed prescribed ambient standards.

d) Include ambient noise as among the environmental quality parameters to be routinely

monitored in specified urban areas.

e) Encourage dialogue between State/Local Authorities and

religious/community

representatives on the adoption of enforceable durations, timings. and use of lord

speakers/firework, etc., in case temporary exceeded of prescribed ancient noise standards for
observance of traditional religious/cultural/social events cannot be avoided.

Anti-Darning Duties:

Duties are imposed on a source specific basis and can be expressed either on ad valoren or
specific basis. Non-cooperative exporters are required to pay the residuary duty, which is
generally the highest of the co-operative exporters.

76

Lesser Duty Rule:

Under the GATT provisions, the national authorities cannot impose duties higher than the
margin of dumping. It is, however, suggested that it would be desirable if the appropriate
Government authorities impose a lesser duty which is adequate to remove the injury to the
domestic industry. Under the Indian laws, the Government is obliged to restrict the antidumping duty to the lower of the two i.e. dumping margin and the injury margin.

Injury Margin:

Besides the calculation of the margin of dumping, the Designated Authority also calculates
the injury margin which is the difference between the fair selling price due to the domestic
industry and the landed cost of the product under consideration. Landed cost for this purpose
is taken as the assessable value under the Customs Act and the basic customs duties.

De Minims Margins:

Any exporter whose margin of dumping is less than 27o of the export price shall be excluded
from the purview of anti-dumping duties even if the existence of dumping, injury as well as
the causal link are established. Further, investigations against any country are required to be
terminated if the volume of the dumped imports from that particular source are found to be
below 37o of the total imports, provided the cumulative imports from all those countries who
individually account for lessthan3%o, are not more than1%o.

PRICE UNDERTAKINGS:

The Designated Authority may suspend or terminate investigation if the exporter concerned
furnished an undertaking to revise his price to remove the dumping or the injurious effect of
dumping as the case may be. No undertaking can however be accepted before preliminary
determination is made. No anti-dumping duties are recommended on such exporters from
whom price undertaking has been accepted. No price undertaking ma], however, be accepted
in case it is found that acceptance of such undertaking is impracticable or is unacceptable for
any reason.

77

Products Imported by Units in E,PZs/100% EOUs , Advance License Holders and by

Other Exporters:

Anti-dumping duty is not payable on products imported by units in EPZs and 1007a EOUs, as
well as imports on products imported by advance license holders in terms of Customs
notification No. 41197 -Cus dated
30.4.1997. The final anti-dumping duty paid on imported goods used in the manufacture of
export goods are liable to be refunded as duty drawback in accordance with the drawback
rules.

Applicability of Anti-dumping Duties vise 6 vies Other Measures:

GATT agreement as well as the Indian laws provide that the injured domestic industry is
permitted to file for relief under the anti-dumping as well as countervailing duties. However,
no articles shall be subjected to both countervailing and anti-dumping duties to compensate
for the same situation of dumping or export subsidization.

4.4 Total Export and Import Turnover

The National Steel Policy 2t)0-5 had projected consumption to grow at77c based on a GDP
growth rate o1'7-7.So/c, and production of 110 million tones by 2019-2020. These estimates
will be largely exceeded and it is envisaged that in the next five years. Demand will glow at
a considerably higher annual average rate over 10% as compared to around 7% growth
achieved between 1991-92 and2010-11. It has been assessed that, on a 'most likely scenario'
basis, the steel production capacity in the country by the year 201I -2012 will be nearly 124
million tunes.

78

Table 4.4.1 Steel Production Capacity, Import, and Export turnover as on 2013-14.

Year

Total finished steel (alloy + non-alloy) (000 tones)

Production for

Import

Export

Cons umption

sale
2003-04

40709

1753

5207

33119

2014-10

43513

2293

4705

36377

2010-11

46566

4305

4801

41433

2011-12

52529

4927

5242

46783

2012-13

56075

7029

5077

52125

2013-14

56393

5775

3750

51850

Source: Ministry of Steel

Crude steel production has shor.vn a sustained rise since 2003-04 along with capacity. Data
on crude steel production, capacity and capacity r-retaliation is given in the table below:

Table 4.4.2 Crude Steel Production Capacity and Utilization

Year

Crude Steel
Capacity ('000 tonnes)

Production

Capacity utilization (%)

(0000 tonnes)
2003-04

43910

38727

88

2014-10

47995

43437

91

2010-11

51171

46460

91

2011-12

56843

50817

89

2012-13

59845

53857

91

2013-14

64400

54520

85

Source: Ministry of Steel

The growth was driven by capacity expansion from 43.91 million tonnes per annum
(MTPA)in2003-04 to 64.4 MTPA in 2013-14.
79

Crude steel production grew at more than 8.16% annually from 38.72 million tonnes
in 2003-04to 54.52 million tonnes in 2013-14.

Production of finished steel at 56.39 million tonnes during 2013-14 as against 40.71
million tones in 2003-04 at average annual growth rate of 7.7%.

With growth in production for sale lagging behind consumption growth, India has
turned into a net importer of finished steel in 2013-14. Exports also declined to ensure
greater domestic availability.

The above performance has been contributed largely by the strong trends in growth of the
electric route of steel making, particularly the induction furnace route, which accounted fot
32 percent of total crude steel production in the country during 2013-14 and has emerged as a
key driver of crude steel production.

4.5. Countries From/to goods we re Imported/Exported.

Global crude steel production reached 1.33 billion tonnes in 2013, a decline of 1.2 percent
over2012 . China was the largest crude steel producer in the world with production reaching
502 million tonnes, a growth of 2.6% over 2012. India, which was the eighth largest producer
in 2003, had emerged as the fifth largest producer in 2011. In 2013, the country retained its
rank as the fifth largest crude steel producing country in the world. India also emerged as the
largest sponge iron producing country in the during in 2013, a rank it has held on since 2002.
If proposed expansions plans are implemented as per schedule, Inlaid may become the second
largest crud steel producer in the world by 2015- 16.

Countries from where steel were Produced, imported and exported

China, Japan United States ,Russia, India ,South Korea ,Germany ,Ukraine, Brazil and Italy.

4.6. Position of India in Export and Import with other countries.

India was the fifth largest steel producer in the world during the last financial year. During
the financial year 2013-2014 India produced 55 million tones of steel and became the fifth
largest steel producer. China, which produced 501 million tones last year. was the leading
80

steel producers in the world followed by Japan(119 million tones), USA (91 Million tones),
Russia (69 Million tones).

As per the 11th five year plan, India has the target to achieve 124 million tonnes steel by 20ll12.

Table 4.6.1 Position of India in Export and Import with other Countries.

Country

Rank

China

Japan

United States

Russia

India

South Korea

Germany

Ukraine

Brazil

Italy

10

Source: Ministry of Steel

4.7 References

http://steel.nic.in/Annual%20Report%20(2013-14)lEnglish/Annual%20Report%20(201314).pdf
http://a2zindianews.com/2014/09/15/india-the-fifth- largest-producer-of-steel- in-the-worldindia- Indian-world-rank-in- manufacturing-of-steel/.html

81

Chapter 5
Product Life Cycle of the Industry
5.1 Players in the Industry

Indian steel Industry is comprises of Public Companies and Private Companies. The Players
in the industry both Public sector as well as Private Sector are as follows:

Steel Authority of India Limited.

Tata Iron and Steel Company Ltd.

Jindal iron and Steel Company Limited.

Essar Steel

STEEL STRIPS Industries Limited

Sunflag Iron and Steel Industry

Shah Alloys Limited

MUSCO

VIZAG

Indian Iron and Steel

Rashtriya ispat Nigam Limited (RINL)

JSW Steel Limited

Steel Authority of India Limited

The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presentence to the Parliament on December 2,
1972. On this basis the concept of creating a holding company to manage inputs and outputs
under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd.
The Company, incorporated on January 24,1913, was made responsible for managing five
integrated steel plants at Bhili, Bokaro, Durgapur, Rourkela and Burnout, the Alloy Steel
Plant and the Salem Steel Plant.
Steel Authority of India Limited (SAIL) is the leading steel- making company in India. SAIL
is afully integrated iron and steel maker, producing both basic and special steels for domestic.

JSW Steel Limited

82

Steel Authority of India Limited

The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presented to the Parliament on December 2,
1972. On this basis the concept of creating a holding company to manage inputs and outputs
under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd.
The Company, incorporated on January 24,1973, was made responsible for managing five
integrated steel plants at Bhili, Bokaro, Durgapur, Rourkela and Burn purr, the Alloy Steel
Plant and the Salem Steel Plant.

Steel Authority of India Limited (SAIL) is the leading steel- making company in India. SAIL
is a fully integrated iron and steel maker, producing both basic and special steels for domestic
construction, engineering, power, railway, automotive and defense industries and for sale in
export markets. The company's plants are divided as Integrated Steel Plants and Special Steel
Plants. The Integrated Steel Plants comprised Bhili Steel Plant (BSP) in Chhattisgarh,
Durgapur Steel Plant(DSP) in West Bengal, Rourkela Steel Plant (RSP) in Orissa, Bokaro
Steel Plant (BSL) in Jharkhandand IISCO Steel Plant (ISP) in West Bengal. The Special Steel
Plants includes Alloy Steels Plants(ASP) irr West Bengal, Salem Steel Plant (SSP) in Tamil
Nadu and Visvesvaraya Iron and Steel Plant (VISL) in Karnataka, totally 8 plants. SAIL, by
virtue of its Nirvana' status, enjoys significant operational and financial autonomy.

SAIL International Ltd was incorporated to coordinate the export and import business the
year 1974. In 1976, Durgapur Mishra STEEL STRIPS Ltd., Bhili STEEL STRIPS Ltd., and
Rourkela STEEL STRIPS Ltd., were formed as fully owned subsidiaries of SAIL for taking
over the running business of Alloy Steels Plants, Bhili steel Plant and Rourkela Steel Plant on
transfer from HSL. Two major schemes viz. new sinter plant III and expansion of oxygen
plant II were taken up for implementation. C.O. Battery No. 10 was commissioned during the
year 1994.

The Company bagged, 'Business world-FICCI-SEDF Corporate Social Responsibility Award

-2011'. SAIL has undertaken a massive modernization and expansion plan during the year of
2011'07with an indicative cost of over Rs. 40,000 crore to expand capacity of hot metal to
over 25 million tonnes from current level of 14.6 million tonnes. The company introduced
several new products in the domestic market during the year 2011-12: HCR-EQR TMT for
83

earthquake resistant construction, rock bolt TMT for tunnel construction, EN series HR coils
for LPG cylinders, MC 12 HR coils for chains etc. In addition, Bhili Steel Plant developed
high strength vanadium rails; Durgapur Steel Plant produced S-profile loco wheels for high
speed locos and Rourkela Steel Plant rolled special plates, which were used, in the
indigenously built rocket PSLV C-7.

As on January 2013, India's two biggest steel makers, public sector Steel Authority of India
Ltd(SAIL) and private sector Tata Steel Ltd, have formed a joint venture company (JVC) to
mine coal blocks for securing assured coking coal supply to meet their increasing production
needs. As on June2013, SAIL made a joint venture with Shipping Corporation of India may
own a few bulk carriers to have continuous availability of vessels. The Company is setting up
three steel processing units(SPU) in Madhya Pradesh for manufacturing various types of steel
items used by the construction industry. The company's Corporate Plan, 2012 (CPI2) was
formulated in 2004 for 4 integrated steel plants for increase in Hot Metal production to 20
MT by 2012. After merger of in IISCO Feb 06, the Hot Metal production Plan was revised to
22.5 MT by 2012. Expansion of Special Steel Plants was also included. Hon'ble Minister of
Steel reviewed the Corporate Plan 2012 in Jul'2011, wherein it was decided to take up the
Expansion of Integrated Steel Plants and Special Steel Plant in one go based on Composite
Project Feasibility Report (CPFR).

Tata Steel Ltd

Tata Steel is the world's 6th largest steel company. It is a Asia's 1st and as well as India's
largest integrated steel company in private sector with operations in 24 countries and
commercial presence in over 50 countries. The company's history is a century old, the origins
and ascent of Tata Steel, which has culminated into the century long history of an industrial
empire, emerge from the illustrious efforts of India's original iron man and the remarkable
people who thereafter, have kept the fire burning. Tata Steel was founded by Jamsetji
Nusserwanji Tata in the year 1907 as Tata Iron and Steel Company (TISCO) and later its
renamed to Tata Steel Limited. It is an ISO-14001 and also SA 8000 certified company, is
this reflected in company's pro-active measures to ensure optimum utilization of natural
resources and work conditions. Golden Jubilee of the company was celebrated in the year
1958 and Jubilee Park was given as a gift to the citizens of Jamshedpur. For symbol of selfreliance, Tata Steel Growth Shop which was introduced in 1968. Tata Steel introduced BOF
84

steelmaking during the year 1984, which could produce liquid steel in forty five minutes
when it took the old open hearth furnaces, close to five hundred under the first phase of
modernization. The company received the Award for Best- Integrated Steel Plant in 1994-95.
The company also received the prime Minister's Trophy for the Best Integrated Steel Plant
for the year t994-95. This award was subsequently conferred again in 1998-99, 1999-2000,
2000-01 and 2001-02. The World Steel Dynamics recognized Tata Steel as India's only
'world-class steel makers' thrice in a row. As on January 2013, Tata Steel Limited and the
members of the Al Batrja Group, a leading business house of Oman have entered into a Joint
Venture Agreement for the development of the Yuan Limestone deposits at Shalala in the
Sultanate of Oman.

JSW Steel Ltd

India's second largest private sector steel maker JSW Steel Limited (JSWSL) was originally
incorporated as Jindal Vijayanagar Steel Limited on March 15, 1994. Product portfolio of the
company includes Hot Rolled Product, Cold Rolled Product, Galvanized Product, Preprinted
Galvanized Product and Jindal Vishwas. JSWSL consists of the most modern, eco- friendly
steel plants with the latest technologies for both upstream & downstream processes. The
Company's four plants are situated in Vijayanagar, Vasind, Tripura and Salem. JSW Steel
Ltd. has received all the three certificates of ISO: 9001 for Quality Management System,
ISO: 14001 for Environment Management System and OHSAS: 18001 for Occupational
Health & Safety Management System. During the incorporated year itself, the MOU was
made with KSIIDC to be provided with grid support, approvals for construction of railway
siding etc and also the company entered into a technical arrangement with Voest Alpine
Industries an lagenbau (VAI), for technical details with respect to productivity, iron ore
technical details etc. CII-EXIM Bank Award was handed over to the company,
'Commendation Certificate for Significant Achievement' towards Business Excellence during
the year 2010 and in the same year the Prime Minister National Award also bagged by the
company for Excellence in Urban Planning & Design for Township. National Sustainability
Award was conferred to the company in the year 2011, Second Prize amongst the Integrated
Steel Plants Category by Indian Institute of Metals. During January 2012, JSW Steel has
executed a Development Agreement with The Government of West Bengal, West Bengal
Industrial Development Corporation Limited (WBIDC) West Bengal Mineral Development
and Trading Corporation Limited (WBMDTC) for setting up a 10 MTPA steel plant in
85

suitable phases. JSW steel has inaugurated two exclusive JSW Shoppe in Hubli, Karnataka
on December 4,2012, At JSW Shoppe, end consumer will also know about different
application of different steel products being manufactured by M/s JSW Steel through actual
components and pictures from Automobile, White Goods Sectors, and Construction. During
the period of 2012-13, JSWSL received Gold Award in Metal and Mining Sector for
Outstanding Achievement in Safety Management by Greentech Foundation. As on June
2013, JSW Steel stated that, it will set up a green field plant in Georgia(Europe) in
partnership with a UK-based company to produce rebars, the project will see an investment
of $42 million by way of equity and debt, where 49 per cent of equity will be held by JSW
while the balance will be held by Geo Steel LLC of the UK. Both companies will invest
$7million towards direct equity while the remaining amount will be raised by way of debt.
JSWSL inaugurated JSW Shoppe, an exclusive steel retail outlet in Ahmedabad IN June 2013
and planed to setup 200 exclusive JSW Shoppes across the length and breadth of the country
by 2010. Also it will invest around Rs 550 Crore in its Chilean mining concessions to ensure
50 per cent iron ore security by June 2OOg, up from 30 per cent now. The Company plans to
emerge as 32 million tones per year capacity steel major by 2020.

Essar Steel Ltd

Promoted by the Bombay-based Essar group controlled by the Ruias, Essar Steel initially
commenced operations of specialized construction in Jun.'76 as Essar Constructions. Its name
was changed to Essar Offshore & Explorations in May '87 and later to Essar Gujarat in
Aug.'87. It became Essar Steel in 1995. The company is a integrated producer with end-toend control of all operations related to steel making. Its energy division was operating the
largest fleet of rigs in the private sector. In 1987-88, it diversified into sponge iron and set up
a 8,80,000 tpa gas-based plant at Hazira, Gujarat. The plant incorporating technology
innovated by Midrex Corporation, US, commenced production in Aug.'90 with two 4,40,000
tpa modules. The plant commenced production in Sep.'95. Later the company transferred its
energy and offshore divisions to Essar Oil.

The company has become the country's first integrated steel plant to receive both ISO 9OO2
and TUV certifications. During 1998-99, Essar Minerals Ltd presently Hy-Grade Pellets Ltd
(HGPL) has become wholly owned subsidiary of the company. The Company has planned to
increase the capacity to 4.6 Million MTPA in next 2 years. The company has planned to
86

increase the pellet making capacity at Visakhapatnam from 4 to 8 Million tonnes in the
current year. The company has initiated production and sales of HR Pickled and Oiled, Cold
Rolled and Galvanized Products. Further the company has launched shot blasted and primer
coated plates for shipbuilding and general engineering applications.

The company has increased its installed capacity of Hot Briquette Iron Plant by 1400000 MT
during 2OO4-05 and with this expansion the total installed capacity of Hot Briquette Iron
Plant has increased to 3400000 MT.

STEEL STRIPS Industries Ltd

STEEL STRIPS Industries Limited is one of the leading integrated steel makers and the
largest private sector producer of hot rolled coils in India. It was incorporated in the year
1984 by founding chairman M. L. Mittal, a corporate powerhouse with operations in iron,
steel, mining, energy and infrastructure. The company's core competency is the production of
high quality steel, for which it employs cutting edge technologies and stringent quality
standards. It produces world-class sponge iron, galvanized sheets and cold rolled coils, in
addition to hot rolled coils, three ought its two state-of the art integrated steel plants, located
at Dolvi and Kalmeshwar in the state of Maharashtra. To better provide steel solutions to an
increasingly sophisticated marketplace, IIL had sets up a highly advanced cold rolling
reversing mill during the year 1988, in collaboration with Hitachi of Japan, to manufacture a
wide range of cold rolled carbon steel strips. In the same year, the company installed color
coating line, the first of its kind in India for the manufacture of pre-painted color steel sheets.
During the year 1994, Business interests within the STEEL STRIPS Group are demarcated.
The eldest son, Mr. L N Mittal continues to manage the international operations while Mr.
Premed Mittal and Mr. Vinod Mittal, the younger brothers focused on steel and other
businesses in India. In the identical year 1994, it commissioned the world's largest gas-based
single mega module plant for manufacturing direct reduced iron (sponge iron), at its
Maharashtra-based Dolvi plant. Within three months, the plant exceeds its capacity of 1
million tonnes per annum (MTPA) of high quality DRI. The company came out with a Euroissue of 125- mln fully convertible bonds rn 1994 to part-finance the expansion of its hot strip
mill (HSM) capacity to 2.50 lac TPA. The Company aims to consolidate its market leadership
in the national specialty steel market by capitalizing on the proximity of its manufacturing
facilities to major consumers of flat steel products in Maharashtra, while increasing its
87

presence in international markets by using its convenient port location. In the short span of
time since its inception, STEEL STRIPS Industries has steadily raised the bar - in terms of
its relentless pursuit of technological advancement, unwavering focus on innovation, strident
emphasis on quality products and its constant initiatives aimed at ensuring customer
satisfaction.

5.2 Position of Players in the steel Industry

SAIL is the leading player in the Indian Steel Industry with the largest market share. Tata
Steel is the world sixth largest steel company. Tata Steel is the second leading player in the
Indian Steel Industry with the market share of ll7o. Essar Steel, STEEL STRIPS , and Jindal
Steel is the largest steel company in the world followed by SAIL and Tata Steel.

5.3 Market Share of various Players in the Indian steel industry

There are various large scale to Medium scale companies are in the steel Industry in India.
SAIL is the largest manufacturer and producer of steel in India sc its market share is highest
than the other companies. Other than SAIL, TISCO is the largest manufacturer and producer
of steel in India followed by RINL (Rashtriya ispat Nigam Limited), STEEL STRIPS
Industries, Essar Steel, and other companies.

Market Share:

Table 5.3.1 Market Share of playe rs in the Steel Industry

Company

Market Share in Percentage terms

SAIL

32%

TISCO

11%

RNIL

8%

Essar, STEEL STRIPS , JSWL

19%

Others

30%

88

35%
30%
25%
20%
15%

Series1

10%
5%
0%
SAIL

TISCO

RNIL

Essar, STEEL
STRIPS
, JSWL

Others

Source: Ministry of Steel

Production of various players in the Steel Industry:

Table: 5.3.2 Production of various playe rs in the steel Industry as on 2013-14.
(In Million Tonnes)
CompanyName

Tata Steel

SAIL

STEEL

Jindal Steel

EssarSteel

STRIPS
YERS

2013-14

2012-13

2011-12

2010-11

2009-10

Production

5.37

3.5

3.6

3.5

3.3

Figure: 5.3.2.1Production capacity of various playe rs in the Steel Industry as on 201314.

(In Million Tonnes)

Production
6
5
4
3
2

Production

1
0
Tata Steel

SAIL

STEEL
STRIPS

Jindal Steel Essar Steel

Source: Ministry of Steel

89

5.4 Product Life Cycle of the Industry

India ranks as the fifth largest producer of crude steel in the world. Domestic crude steel
production grew at a compounded annual growth rate of 7 per cent during 2014-10 to 201314. The increase in production came on the back of capacity expansion, mainly in the private
sector plants, and higher utilization rates. This growth was driven by both capacity expansion
(from 47.99 million tonnes in2014-10 to approximately 64 million tonnes in 2013-14) and
improved capacity utilization. India, the worlds largest producer of direct reeducate iron
(DRI) or sponge iron, is also expected to maintain its lead in the near future. Sponge iron
production grew at a CAGR of 16% to reach a level of 20.80million tonnes in 2013-14
compared to 12.36 million tonnes in 2014-10. India is expected to become the second largest
producer of steel in the world by 2015-16, provided all requirements for fresh capacity
creation are met. Indian Steel Industry is in the Growing Stage.

5.5 References

http://steel.nic.in/annul%20report520(2013-14)/english/annual%20%report%20(2013-14).pdf
http://steel.nic.in/indiansteelmakers.html
http://steel.nic.in/policy.htm#pol2

90

Chapter 6
Industry Performance (Financial)
Performance of Indian Steel Industry

The steel industry witnessed a remarkable turnaround, buoyed by a spurt in the international
prices. The domestic industry capitalized on thus buoyancy, with a sharp surge in exports,
particularly to china. While the profit growth may continue, the industry has to reconcile
itself to fewer increases in prices. Otherwise, government is likely to reduce the customs
duty, which may impact the dream run that the industry is witnessing

Indian steel company performance

Table 6: Profit After Tax of the various industries as on 2010-14

( incrore)
Company Name

Year

PAT net

PBDIT

ESSAR

March 2010

---

---

STEEL STRIPS

March 2010

287.80

1,603.49

RINL

March 2010

2,565.53

3,246.64

SAIL

March 2010

6,656.66

11,165.92

TISCO

March 2010

3,441.17

6,112.57

Company Name

Year

ESSAR

March 2011

445.54

1,533.59

STEEL STRIPS

March 2011

-790.35

381.97

RINL

March 2011

1,245.55

2,347.46

SAIL

March 2011

3,896.21

7,447.07

TISCO

March 2011

3,463.25

6,141.17

PAT net

PBDIT

91

Company Name

Year

PAT net

PBDIT

ESSAR

March 2012

410.75

2,062.02

STEEL STRIPS

March 2012

-105.38

1,630.97

RINL

March 2012

1,446.70

2,619.77

SAIL

March 2012

6,073.47

10,999.47

TISCO

March 2012

4,287.88

7,398.89

Company Name

Year

ESSAR

March 2013

837.07

2,401.95

STEEL STRIPS

March 2013

-532.21

1,294.82

RINL

March 2013

1,930.58

3,498.09

SAIL

March 2013

7,310.27

12,806.83

TISCO

March 2013

4,447.90

8,591.82

Company Name

Year

ESSAR

March 2014

837.07

2,637.13

STEEL STRIPS

March 2014

-237.62

1,205.43

RINL

March 2014

---

---

SAIL

March 2014

6,270.67

11,221.33

TISCO

March 2014

4,904.03

9,481.80

PAT net

PBDIT

PAT net

PBDIT

Inte rpretation:
Above last few year net profit, and profit before depreciation interest and tax amount are
show major fluctuation. Since 2010 SAIL company profit show appropriate result but after
2010 profit of SAIL company decrease .not only sale but ESSAR company showing same
condition. But TATA steel always showing growth profit, tables indicate year to year profit
of TATA steel company increase between 2010 to 2014.

92

RINL steel also indicate good profit of last few years and profit growth rate of RINL
company also appropriate. So last few year income of steel industry companies cannot stable
result changes of government policy and demand.

RATIO ANALYSIS:

MEANING & IMPORTANCE

The output of the financial accounting is the financial statements viz. profit & loss account
and balance sheet. The purposes of these statements are to show profit & losses during a
particular period and the financial condition on a particular point of time but it fails to convey
the relationship of relevant variables.

Definition
"Ratio represents the quotient relationships between two relevant variables of the
financial statements & individual item to group item or a group item to group item,
which develop the meaningful relationships between these two set of variables."

Importance
Comparison with ideal ratio:- There are some ideal ratios in every type of business
with which the individual firm's ratios are compared so that useful conclusion can be
drawn.

Comparison with past ratios:- If the present ratios of a company are compared with its
past ratios, they will indicate trend.

Help of some related ratios:- The analysis and interpretation of some ratios may be
made more meaningful.

Comparison with ratios of other firms:- Comparison of firm's ratios with those of
other firm sin the same industry is useful and indicates strength or weaknesses of the
firm's position and performance.

93

6.1 Earning per share

Earning per share this ratio is important of measuring of profitability. EPS indicate per share
earning in this ration show net income of company (profit after tax) and total number of
share. Year to year increase of EPS that show of positive position of company. its main
component of measuring of company profit.

Table 6.1.1 Earning per Share of various industries as on 2014

Company

Earning per share

2014

2013

2012

2011

2010

Essar steel

7.34

3.08

3.6

7.67

----

STEEL STRIPS Ltd

1.95

-4.36

-0.86

-6.49

4.20

----

3.95

2.96

2.55

5.22

Steel Authority Of India Ltd

15.18

17.7

14.70

9.43

16.11

Tata Steel Ltd

65.61

60.56

73.84

62.56

62.15

Rind

Formula:
Earnings per s hare =Net profit for equity shares
No. of equity shares

Figure 6.1.1earning per share of various industries as on 2014

80
70

Essar steel

60
50

Steel Strips Ltd.

40
Rind

30
20

Steel Authority Of India

Ltd

10

Tata Steel Ltd

0
-10

2014

2013

2012

2011

2010

-20

94

Inte rpretation:

Last few year companies of steel industry could suffering overcapacity many companiesabove table and graph show last few year per share performance over all industries TATA
steel earning per share show good result compare other companies but growth of earning per
share is also stable last three to four year.
STEEL STRIPS limited earning per share result of last four year decline year to year. And in
increased in 2010performance of equity share of is pat company last three to four year bad
condition that show overcapacity of Indian steel companies.

6.2Debt Equity Ratio

Debt equity ratio indicate portion of debts which is investing in the company. it shows how
much percent debts invest in company compare of equity resource .high debts Equity ratio
show company use high level of leverage. But high level of depts. In company not attract to
borrowers .every industries ideal debt Equity ratio different.
Formula:
Debt equity ratio = Total Liabilities
Shareholder equity

Table 6.2.1 Debt Equity Ratio of various companies in the industries

Company
Year

Debt equity Ratio

2014

2013

2012

2011

2010

Essar steel

-----

1.08

0.99

1.38

4.55

STEEL STRIPS Ltd

9.04

11.65

13.88

13.66

4.33

Rinl

0.39

0.58

0.64

0.75

1.51

Steel Authority of India Ltd

0.26

0.13

0.21

0.34

0.55

Tata Steel Ltd

1.31

1.07

0.67

0.26

0.38

95

Figure 6.2.2 Equity Debt Ratio of various industries as on 2014

16
14

Essar steel

12
Steel Strips Ltd.

10
8

Rinl

6
4

Steel Authority of India

Ltd

Tata Steel Ltd

0
2014

2013

2012

2011

2010

Inte rpretation
Above table and graph showing use of debt over all steel industries companies year to year
increase. Most of companies use higher debt compares to their own equity like is pat
company Essar company dept. equity ratio show higher debt equity ratio. STEEL STRIPS
last2014 and 2013 debt equity ratio were 9.04and 11.65. its indicate very danger condition
and critical condition of company. SAIL and TATA steel companies there debt and equity
ratio more attractive for investor but those company cannot sufficient use of debt leverage.

6.3 Gross profit Ratio

It is a ratio expressing the relationship gross profit earned to net sales. The ratio shows
whether the mark up obtained on cost of production is sufficient. There is no standard
showing reasonableness of gross profit ratio. However, it must be enough to cover its
operating ratio. If this ratio is low, it indicates that the cost of sales is high or that the
purchasing is inefficient. Alliteratively, it may also mean that due to depression, the selling
price is reduced but there may be no corresponding reduction in cost of sales.

96

In such a case, the management must investigate the causes and try to bring up this ratio.
Formula:
Gross Profit ratio =Gross Profit

X 100

Net Sales

Gross Profit = Net sales - Cogs

Table 6.3.1 Gross profit ratio of various industries as on 2014

Company

Gross profit Ratio

Year

2014

Essar steel

2013

2012

2011

2010

14.37

14.81

16.95

16.42

-----

STEEL STRIPS Ltd

5.76

7.55

12.95

-4.25

17.41

Rinl

-----

23.35

20.31

20.20

30.30

Steel Authority Of India Ltd

17.48

25.10

24.56

18.96

32.60

Tata Steel Ltd

33.69

37.70

34.91

33.76

36.83

Figure 6.3.2 Gross profit ratio of various industries as on 2014

40
35

Essar steel

30
25

Steel Strips Ltd.

20
Rinl

15
10
5

Steel Authority Of India

Ltd

Tata Steel Ltd

-5

2014

2013

2012

2011

2010

-10

97

Inte rpretation
While Tata company most of companies performance showing good condition. Above graph
and table of Gross profit Ratio indicate appropriate earning of total sales. Over all industry
SAIL company good performance compare to other companies of industry .RINL steel is also
behind of SAIL company but last three and four year SAIL gross profit ratio decrease.
Overall gross profit margin ratio of industry indicates good but last few year decline gross
profit ratio.

6.4 Fixed assets turnover Ratio

To ascertain the efficiency and profitability of business, the total fixed assets are compared to
sales. The more the sales in relation to the amount invested in fixed assets, the more efficient
is the use of fixed assets. If the sales are less as compared to investment in fixed assets.
Formula:

Net Sales

Fixed Assets turnover ratio =

Net fixed assets

Table 6.4.1 Fixed Assets Turnover ratio of various industries as on 2014

Company
Year

Fixed assets turnover Ratio

2014

2013

2012

2011

2010

Essar steel

0.76

0.73

0.59

0.59

-----

STEEL STRIPS Ltd

0.60

0.63

0.57

0.44

0.75

Rinl

-----

1.02

0.89

0.82

0.84

Steel Authority Of India Ltd

1.35

1.31

1.16

0.96

1.03

Tata Steel Ltd

1.22

1.20

1.09

0.98

1.11

98

Figure 6.4.2 Fixed Assets Turnover ratio of various industries as on 2014

1.6
1.4

Essar steel

1.2
Steel Strips Ltd.

1
0.8

Rinl

0.6
0.4

Steel Authority Of India

Ltd

0.2

Tata Steel Ltd

0
2014

2013

2012

2011

2010

Inte rpretation
Above graph and table show fixed assets tumor ratio most of companies in good position.
Essar, Jindal ,is pat steel companies increasing its assets as compare few last year. And we
can say ispat steel ltd decrease its assets turnovers ratio in 2011 as compare 2010 and
increasing rn2012,2013,2014and another company like rink, sail, tata, and essar increasing its
turnover ratio as compare last year.

6.5 Curre nt ratio

This most widely used ratio shows the proportion of current assets to current liabilities. It is
also known as working capital ratio " as it is a measure of working capital available of a
particular time.
Formula:

Current ratio = Current assets

Current Liabilities

99

Table 6.5.1Current ratio of various industries as on 2014

Company

Curre nt Ratio

Year

2014

Essar steel

2013

2012

2011

2010

----

1.41

1.09

1.21

1.97

STEEL STRIPS Ltd

1.04

1.25

1.58

1.30

2.16

Rinl

3.52

4.36

4.33

3.82

3.52

Steel Authority Of India Ltd

1.82

1.73

1.59

1.23

1.18

Tata Steel Ltd

0.97

3.92

1.77

0.72

0.71

Figure 6.5.2 Current ratio of various industries as on 2014

5
4.5
Essar steel

4
3.5

Steel Strips Ltd.

3
2.5

Rinl

2
1.5

Steel Authority Of India

Ltd

Tata Steel Ltd

0.5
0
2014

2013

2012

2011

2010

Inte rpretation
First of all in current ratio 2:lis a good positioning ratio. And in RINL current ratio is better
than other company so it's current assets is much more than current liability. And also SAIL,
STEEL STRIPS and ESSAR current ratio is average. They have to improve their assets on
the liability to maintain liquidity in day to day business. Ratio of tata steel is increasing from
0.71 in 2010 to 0.97 in 2014.

100

CHAPTER 7
BUSINESS PLAN
7.1 INTRODUCTION

JB Steel Ltd.

created steel entirely in domestic marketplace and quickly emerged as

dominant market player. We specially focused on good quality provide the customer
segmentation. JB Steel Ltd. works to create a better future every day and provide a good
quality and long life steel.

7.1.1 OBJECTIVE
1. Start up manufacturing production in Rajasthan within 6 months of obtaining
financing.
2. Have first year revenues of Rs.5,00,00,000.
3. Show a profit in the first year of operation of the business of over 15,89,000.
4. Double sales revenue in 2nd year of operation.

7.1.2 VISION

We will develop new ways of doing business with the aim of doubling the size of our
company.

7.1.3 MISSION

JB steel Ltd. offer high quality and high value products to the customers and also tries to
improve consumer life.

101

7.2 COMPANY DESCRIPTION

COMPANY NAME

JB steel Ltd.

COMPANYS ADDRESS

Plot No. 523-533, Dhantha G.I.D.C.,

Idar High way, Himmatnagar. 383-001

OWNERS OF THE COMPANY

Harshil Patel (17% Share)

Jigar Patel (17% Share)
Zalak Patel (17% Share)
Harshil Patel (17% Share)
Jainesh Patel (16% Share)
Prakash Patel (16% Share)

THERE BASIC QUALIFICATION

All partners having MBA degree with specialization

on (Marketing and Finance.)

TOTAL INVESTMENT

Rs.5,00, 00,000

MAIN PRODUCT OFFERED

Steel

TYPES OF INDUSTRY

Steel Industry

7.3 PROCESS/STEPS FOR STARTING BUSINESS

To check our market potentiality.

Location selection
Physical set up (office/furniture etc.)
Purchasing of materials
Applying local govt. (municipal) for registration
Starting Business

7.3.1 LIST OF DOCUMENTS/FORMALITIES REQUIRED TO DO BUSINESS

Partnership deed (MoA / AoA )
License from Govt. (shop registered under municipality)
PAN number for business
Gumasta-dhara certificate
Opening of bank account
Telephone/Fax connection (land line)
102

7.4 BRAND INFORMATION

7.4.1 BRAND NAME
JB Steel

7.4.2 BRAND DETAILS

JB Steel is a pure S.S.

7.4.3 PRICE
JB Steel At Rs 100 (Per Kg).
Prices are decided on the basis of Cost Base pricing strategy

7.5 MANUFACTURING PROCESS

The pre-processing of materials involve various processes that modify the
characteristics of materials such that meet the demands of the main process for iron
reduction and steel production.
The reasons of pre-processing follow in the description of the main processes.
Pre-processing steps included are coke production, ore agglomeration and oxygen
production.

7.6 STP ANALYSIS

Segments:

The industry world wide demands high levels of competencies to reap fruitful
benefits.
Target groups:

All Industrial Group

Positioning:

Product which has all the qualities required from a steel-quality, low price
103

7.7.1 JB steel Ltd. (DISTRIBUTION CHANNEL)

Company Manufacturing Unit
Godown
Wholesaler
Retailer
Consumer

7.7.2 MARKETING & SALES PROMOTION

Personal sales
Internet / Interactive Selling
Consumer oriented sales Promotion
Chipset Rate
Free sample
Trade oriented sales Promotion
Dealer incentive
Trade Allowance

7.8 COST OF PROJECT

The estimated project cost under various heads has been worked out for New Project like
furniture & fixture, various electric items like machinery, etc
SR.NO.

PARTICULARS

(Amount in Rs.)
AMOUNT

Site on Rent

15,00,000

Computer

4,00,000

Furniture

25,00,000

Machinery & Equipments

2,45,00,000

Raw material expenses

1,00,00,000

Marketing and Sales Promotion Expenses

12,00,000

Staff Salary

24,00,000

Other Expenses

15,00,000
TOTAL
CASH ON HAND
COST OF PROJECT

4,40,00,000
60,00,000
5,00,00,000
104

7.9.1 STAFF
(Amount in Rs.)
JOB ROLE

NO. OF EMPLOYEE

SALARY

TOTAL

Machine Operator

50

20,000

10,00,000

Labour

175

8,000

14,00,000

TOTAL SALARY

24,00,000

7.9.2 MACHINERY PURCHASE EXPENSES

Machine No. 00009408438638

We purchase 2 machinery of (Rs. 1,22,50,000 * 2) 2,45,00,000

7.10 SOURCE OF FINANCE

(Amount in Rs.)
PARTICULARS

AMOUNT

Promoters Contribution
Harshil Patel

85,00,000

Jigar Patel

85,00,000

Zalak Patel

85,00,000

Harshil Patel

85,00,000

Jainesh Patel

80,00,000

Prakash Patel

80,00,000

TOTAL

5,00,00,000

.
7.11 FINANCIAL ANALYSIS
7.11.1 PROJECT SALES

YEAR

PRODUCTS

K.G.

PRICE (Per k.g.)

SALES

2014-15

STEEL

1,99,000

100

1,99,00,000

2015-16

STEEL

2,12,930

100

2,12,93,000

2016-17

STEEL

2,19,340

100

2,19,34,000

2017-18

STEEL

2,25,940

100

2,25,94,000

2018-19

STEEL

2,37,264

100

2,37,26,400
105

7.11.2 PROJECTED INCOME STATEMENT

Profit & Loss account for the year ended 2014-15 to 2018-19
(Amount in Rs.)
Particular

2014-15

2015-16

2016-17

2017-18

2018-19

Income: Sales

1,99,00,000 2,12,93,000 2,19,34,000 2,25,94,000 2,37,26,400

Scrap

19,90,000

TOTAL (A)

21,29,300

21,93,400

22,59,400

23,72,640

2,18,90,000 2,34,22,300 2,41,27,400 2,48,53,400 2,60,99,040

EXPENCES
Rent

15,00,000

15,75,000

16,53,750

17,36,500

18,23,330

Salary

24,00,000

25,20,000

26,46,000

27,78,300

29,17,220

2,80,000

3,20,000

3,70,000

4,00,000

4,40,000

Electricity bill
Raw material expenses
Advertising expenses
Dep. on furniture
Dep. on Machinery &

1,00,00,000 1,05,00,000 1,08,15,000 1,11,39,450 1,16,96,420

12,00,000

12,60,000

13,23,000

13,89,150

14,58,600

2,50,000

2,50,000

2,50,000

2,50,000

2,50,000

24,50,000

24,50,000

24,50,000

24,50,000

24,50,000

40,000

40,000

40,000

40,000

40,000

15,00,000

16,50,000

18,15,000

19,96,500

21,96,150

equipments
Dep. on computer
Other expenses
Total (B)

1,96,20,000 2,05,65,000 2,13,62,750 2,21,79,900 2,10,75,570

PBT (A-B)

22,70,000

28,57,300

27,64,650

26,73,500

28,27,320

Tax on profit

6,81,000

8,57,190

8,29,400

8,02,050

8,48,200

Net profit

15,89,000

20,00,110

19,35,250

18,71,450

19,79,120

106

7.11.3 PROJECTED BALANCE SHEET

Balance sheet for the year ended 2014-15 to 2018-19

(Amount in Rs.)
Particular

2014-15

2015-16

2016-17

2017-18

2018-19

Furniture

25,00,000

22,50,000

20,00,000

17,50,000

15,00,000

Computer

4,00,000

3,60,000

3,20,000

2,80,000

2,40,000

Assets: -

Machinery

& 2,45,00,000 2,20,50,000 1,96,00,000 1,71,50,000 1,47,00,000

Equipment
Cash balance

60,00,000

Finished goods

66,00,000

75,90,000

87,28,500 1,00,37,780

1,00,00,000 1,10,00,000 1,26,50,000 1,45,47,500 1,46,41,000

Pre paid expenses

55,00,000

60,00,000

65,00,000

74,75,000

95,96,250

Sundry Debtor

26,89,000

37,40,110

32,75,250

19,40,450

12,64,090

Total

5,15,89,000 5,20,00,110 5,19,35,250 5,18,71,450 5,19,79,120

Liabilities: Owner funds

5,00,00,000 5,00,00,000 5,00,00,000 5,00,00,000 5,00,00,000

Net profit

15,89,000

Total

20,00,110

19,35,250

18,71,450

19,79,120

5,15,89,000 5,20,00,110 5,19,35,250 5,18,71,450 5,19,79,120

7.11.4 PROJECTED CASH FLOW

Net present value (NPV)

YEAR

CASH

DEPRECIATION

FLOW

NET CASH

P.V.

P.V. OF

FLOW

FACTOR

CASH

@10%

FLOW

(11,00,000)

27,40,000

16,40,000

0.909

14,90,760

(17,40,000)

27,40,000

10,00,000

0.826

8,26,000

(13,40,000)

27,40,000

14,00,000

0.751

10,51,400

(69,000)

27,40,000

26,71,000

0.683

18,24,300

7,15,030

27,40,000

34,55,030

0.621

2,14,557

Total

73,38,030
107

Here cash outflow = Rs.1,00,00,000

Required rate of return= 10%
NPV= P.V of cash flow- cash outflow
= 73,38,030-1,00,00,000
= (26,61,970)

Here we can say that if NPV is less than 0 then the project is Rejected and we can see
that in our project NPV is less than 0 i.e. (26,61,970) so our project is Rejected.
P.I(Profitability Index):
P.I = P.V of cash inflow / cash outflow
= 73,38,030/ 1,00,00,000
= 0.73times
Here we can say that our projects P.I is 0.73 so our project is accepted.

108

Limitations
Lack of information provided by the companies where we have visited.
It is not possible for us to visit many place in Ahmedabad, because of scarcity of time.
We have conducted the research on the basis of information provided by the
companies, where we have visited and from the information available on the internet,
newspapers and magazines
Cost is the main limitation of our project.
As many companies are in business of the steel, and comprises in steel industry in
India, we have taken only five companies financial data to analyze the industry
performance (financial analysis).

109

Conclusion
From the analysis of the report, we come to the point that the investment in the steel industry
would be worth to make money but it needs huge investment at initial stages. The other
points which we have analyzed from this report are as follows:
Steel is the metal which is only used for consumption purpose and business purpose,
but not for the trading purpose.
Higher investments needed to start an steel company in India.
Government investment is higher in the steel industry in India.
Steel products need to be innovative.
There would be huge opportunities for steel companies to export their product in other
countries.
Production of steel in India highest than other countries expected china. India would
be the following country of the China in terms of production, export and import.
Steel is the main product which is used and consumed by the household of India and
many other countries across the globe.

110

Annexures
Blance sheet of Tata Steel Ltd
(Rs in Crs)
Year
Mar 14
SOURCES OF FUNDS :
971.41
Share Capital
Reserves Total
60,176.58
Equity Share Warrants
0
Equity Application Money
0
Total Shareholders Funds
61,147.99
Secured Loans
12,408.12
Unsecured Loans
15,509.14
Total Debt
27,917.26
5,163.57
Other Liabilities
Total Liabilities
94,228.82
APPLICATION OF FUNDS :
Gross Block
39,644.05
Less : Accumulated Depreciatio 15,240.76
Less:Impairment of Assets
137.54
Net Block
24,265.75
Lease Adjustment
0
Capital Work in Progress
18,509.40
Investments
54,661.80
Current Assets, Loans & Advances
6,007.81
Inventories
Sundry Debtors
770.81
Cash and Bank
961.16
Loans and Advances
1,481.58
Total Current Assets
9,221.36
Less : Current Liabilities and Provisions
12,869.80
Current Liabilities
Provisions
1,902.81
Total Current Liabilities
14,772.61
Net Current Assets
-5,551.25
Miscellaneous Expenses not writ
0
Deferred Tax Assets
1,566.11
Deferred Tax Liability
3,605.09
Net Deferred Tax
-2,038.98
Other Assets
4,382.10
Total Assets
94,228.82
8,874.18
Contingent Liabilities

Mar 13

Mar 12

Mar 11

Mar 10

971.41
54,238.27
0
0.16
55,209.84
2,036.02
25,471.77
27,507.79
4,769.29
87,486.92

971.41
51,245.05
0
0.17
52,216.63
1,915.47
24,256.78
26,172.25
4,424.33
82,813.21

959.41
45,807.02
178.2
0.61
46,945.24
2,009.18
26,291.94
28,301.12
4,075.35
79,321.71

887.41
36,074.39
0
0.14
36,961.94
2,259.32
22,979.88
25,239.20
1,164.11
63,365.25

38,531.91
13,519.65
137.21
24,875.05
0
8,722.29
50,418.80

23,485.63
11,986.17
133.2
11,366.26
0
16,046.75
50,282.52

22,846.26
10,914.86
126.3
11,805.10
0
5,612.28
46,564.94

22,306.07
10,037.56
106.07
12,162.44
0
3,843.59
44,979.67

5,257.94 4,858.99 3,953.76 3,077.75

796.92
904.08
424.02
434.83
2,218.11 3,946.99 4,138.78 3,234.14
2,823.63 1,905.34 6,596.67 5,503.89
11,096.60 11,615.40 15,113.23 12,250.61
11,002.01 9,846.89 7,073.36 6,656.87
1,544.26 2,172.38 2,219.85 2,346.52
12,546.27 12,019.27 9,293.21 9,003.39
-1,449.67
-403.87 5,820.02 3,247.22
0
0
0
0
1,604.59 1,017.27 1,125.07 1,178.58
3,448.33 1,987.78 2,061.87 2,046.25
-1,843.74
-970.51
-936.8
-867.67
6,764.19 6,492.06 10,456.17
0
87,486.92 82,813.21 79,321.71 63,365.25
6,865.02 4,861.67 4,895.34 4,108.01

111

Profit & loss account of Tata Steel Ltd

(Rs in Crs)
Year
14-Mar
INCOME :
Sales Turnover
46,309.34
4,598.31
Excise Duty
Net Sales
41,711.03
Other Income
787.64
Stock Adjustments
155.18
Total Income
42,653.85
EXPENDITURE :
Raw Materials
10,030.34
Power & Fuel Cost
2,772.31
Employee Cost
3,673.08
Other Manufacturing Expenses
6,547.62
Selling and Administration Expenses 4,654.46
2,543.18
Miscellaneous Expenses
Less: Pre-operative Expenses Capita 1,029.92
Total Expenditure
29,191.07
13,462.78
Operating Profit
Interest
1,820.58
Gross Profit
11,642.20
Depreciation
1,928.70
Profit Before Tax
9,713.50
Tax
3,098.02
Fringe Benefit tax
0
Deferred Tax
203.29
Reported Net Profit
6,412.19
Extraordinary Items
10.44
Adjusted Net Profit
6,401.75
Adjst. below Net Profit
968.94
P & L Balance brought forward
24,616.17
Statutory Appropriations
0
Appropriations
2,566.72
P & L Balance carried down
29,430.58
Dividend
971.21
Preference Dividend
0
Equity Dividend %
100
Earnings Per Share-Unit Curr
65.33
Earnings Per Share(Adj)-Unit Curr
629.48
Book Value-Unit Curr

13-Mar

12-Mar

11-Mar

10-Mar

42,317.24
4,117.81
38,199.43
914.37
404.6
39,518.40

37,005.71
3,072.25
33,933.46
1,397.44
220.72
35,551.62

31,902.14
2,505.79
29,396.35
1,176.45
173.65
30,746.45

26,757.80
1,735.82
25,021.98
1,193.58
-134.97
26,080.59

10,330.74
2,510.17
3,608.52
5,686.04
4,113.99
2,791.32
876.13
28,164.65
11,353.75
1,876.77
9,476.98
1,640.38
7,836.60
1,370.70
0
1,402.93
5,062.97
-271.34
5,334.31
-179.84
21,145.04
0
1,412.00
24,616.17
776.97
0
80
50.79

8,223.89
1,990.16
3,047.26
4,555.30
3,240.10
2,038.93
478.23
22,617.41
12,934.21
1,925.42
11,008.79
1,151.44
9,857.35
3,115.11
0
45.82
6,696.42
603.66
6,092.76
-174.17
16,639.46
0
2,016.67
21,145.04
1,165.46
0
120
67.07

6,424.21
1,558.49
2,837.46
3,833.94
2,681.29
951.1
198.78
18,087.71
12,658.74
1,735.70
10,923.04
1,146.19
9,776.85
2,857.00
0
54.16
6,865.69
560.53
6,305.16
-4.54
12,772.65
0
2,994.34
16,639.46
1,151.06
0
120
69.93

5,663.82
1,383.44
2,354.08
3,509.37
2,003.03
1,347.29
326.11
15,934.92
10,145.67
1,848.19
8,297.48
1,083.18
7,214.30
1,998.00
0
169.5
5,046.80
624.85
4,421.95
12.28
9,496.70
0
1,783.13
12,772.65
709.77
45.88
80
54.97

568.35

537.53

487.45

416.51

112

Balance sheet of Steel Authority of India Ltd

(Rs in Crs)
Year
Mar 14
SOURCES OF FUNDS :
Share Capital
4,130.53
Reserves Total
38,535.82
Equity Share Warrants
0
Equity Application Money
0
Total Shareholders Funds
42,666.35
Secured Loans
11,560.89
Unsecured Loans
13,720.51
Total Debt
25,281.40
Other Liabilities
5,282.58
Total Liabilities
73,230.33
APPLICATION OF FUNDS :
Gross Block
54,168.36
Less : Accumulated Depreciation 27,397.71
Less:Impairment of Assets
0
Net Block
26,770.65
Lease Adjustment
0
Capital Work in Progress
33,650.54
Investments
720.2
Current Assets, Loans & Advances
15,403.86
Inventories
Sundry Debtors
5,481.98
Cash and Bank
2,855.95
Loans and Advances
3,352.00
Total Current Assets
27,093.79
Less : Current Liabilities and Provisions
14,669.15
Current Liabilities
Provisions
2,224.99
Total Current Liabilities
16,894.14
Net Current Assets
10,199.65
Miscellaneous Expenses not written
0
Deferred Tax Assets
1,487.33
Deferred Tax Liability
3,527.79
Net Deferred Tax
-2,040.46
Other Assets
3,929.75
Total Assets
73,230.33
Contingent Liabilities
20,044.44

Mar 13

Mar 12

Mar 11

Mar 10

4,130.53
36,894.11
0
0
41,024.64
8,746.16
12,850.79
21,596.95
5,475.28
68,096.87

4,130.53
35,680.79
0
0
39,811.32
7,481.91
8,837.59
16,319.50
4,871.19
61,002.01

4,130.40
32,939.07
0
0
37,069.47
11,645.71
7,728.99
19,374.70
4,288.20
60,732.37

4,130.40
29,186.30
0
0
33,316.70
7,755.90
8,755.35
16,511.25
0
49,827.95

42,702.42
25,925.02
0
16,777.40
0
35,890.85
718.36

41,759.04
24,600.77
0
17,158.27
0
28,049.14
685.04

38,236.45
23,177.94
0
15,058.51
0
22,075.31
684.14

35,396.19
21,780.91
0
13,615.28
0
14,953.13
668.83

16,192.02
4,424.18
3,850.35
2,803.69
27,270.24

13,917.16
4,748.77
6,415.70
2,845.39
27,927.02

11,470.72
4,130.27
17,480.09
3,630.50
36,711.58

9,192.67
3,493.90
22,436.37
4,196.43
39,319.37

11,880.36
2,696.51
14,576.87
12,693.37
0
1,219.10
2,947.63
-1,728.53
3,745.42
68,096.87
13,315.72

11,393.49
2,471.83
13,865.32
14,061.70
0
1,023.36
2,667.84
-1,644.48
2,692.34
61,002.01
6,739.93

11,176.10
2,851.38
14,027.48
22,684.10
0
1,028.40
2,519.47
-1,491.07
1,721.38
60,732.37
5,042.42

10,918.38
6,395.36
17,313.74
22,005.63
0
1,031.89
2,446.81
-1,414.92
0
49,827.95
4,719.64

113

Profit & loss account of Steel Authority of India Ltd

(Rs in Crs)
Year
14-Mar
INCOME :
Sales Turnover
52,375.70
Excise Duty
5,677.29
Net Sales
46,698.41
Other Income
1,972.65
Stock Adjustments
-894.63
Total Income
47,776.43
EXPENDITURE :
Raw Materials
19,271.94
Power & Fuel Cost
5,034.90
Employee Cost
9,578.67
Other Manufacturing Expenses
4,487.79
Selling and Administration Expenses 2,925.98
Miscellaneous Expenses
568.42
Less: Pre-operative Expenses Capit
0.15
41,867.55
Total Expenditure
Operating Profit
5,908.88
Interest
967.64
Gross Profit
4,941.24
Depreciation
1,716.69
Profit Before Tax
3,224.55
Tax
276.1
Fringe Benefit tax
0
Deferred Tax
331.97
Reported Net Profit
2,616.48
Extraordinary Items
765.3
Adjusted Net Profit
1,851.18
Adjst. below Net Profit
0
P & L Balance brought forward 31,215.42
Statutory Appropriations
0
Appropriations
1,471.80
P & L Balance carried down
32,360.10
Dividend
834.35
Preference Dividend
0
Equity Dividend %
20.2
Earnings Per Share-Unit Curr
5.99
Earnings Per Share(Adj)-Unit Curr
103.3
Book Value-Unit Curr

13-Mar

12-Mar

11-Mar

10-Mar

49,829.22 51,029.49 47,629.15 43,903.56

5,388.64 4,694.37 4,321.79 3,383.32
44,440.58 46,335.12 43,307.36 40,520.24
1,155.52 2,140.65 1,715.01 2,822.59
2,016.09 1,368.51 1,352.67 -1,161.01
47,612.19 49,844.28 46,375.04 42,181.82
21,201.69
4,907.01
8,637.58
4,034.30
2,868.20
572.37
0.26
42,220.89
5,391.30
747.66
4,643.64
1,402.98
3,240.66
1,057.87
0
12.44
2,170.35
-108.88
2,279.23
0
30,314.68
0
1,269.61
31,215.42
826.1
0
20
4.93

25,563.51
4,533.71
7,932.05
3,643.95
2,224.49
782.49
2,537.81
42,142.39
7,701.89
983.99
6,717.90
1,567.03
5,150.87
1,494.73
0
113.42
3,542.72
-166.08
3,708.80
139.17
27,954.29
0
1,321.50
30,314.68
826.1
0
20
8.25

22,080.62
3,621.51
7,623.33
3,316.14
1,934.03
473.02
1,828.49
37,220.16
9,154.88
474.77
8,680.11
1,485.80
7,194.31
2,352.61
0
-63.04
4,904.74
97.49
4,807.25
0
24,774.29
0
1,724.74
27,954.29
991.3
0
24
11.48

17,342.97
3,413.90
5,416.86
4,480.20
1,520.42
689.46
2,553.27
30,310.54
11,871.28
402.01
11,469.27
1,337.24
10,132.03
3,295.94
0
81.72
6,754.37
19.68
6,734.69
0
20,345.05
0
2,325.13
24,774.29
1,363.03
0
33
15.8

99.32

96.38

89.75

80.66

114

Balance sheet of Rashtriya Ispat Nigam Ltd

(Rs in Crs)
Year
Mar 14
SOURCES OF FUNDS :
Share Capital
5,739.85
Reserves Total
6,403.60
Equity Share Warrants
0
Equity Application Money
0
Total Shareholders Funds
12,143.45
Secured Loans
589.44
4,354.02
Unsecured Loans
Total Debt
4,943.46
Other Liabilities
696.99
Total Liabilities
17,783.90
APPLICATION OF FUNDS :
13,618.23
Gross Block
Less : Accumulated Depreciation 9,083.47
Less:Impairment of Assets
0
Net Block
4,534.76
Lease Adjustment
0
Capital Work in Progress
10,697.55
Investments
362.52
Current Assets, Loans & Advances
3,863.04
Inventories
Sundry Debtors
803.65
Cash and Bank
175.89
Loans and Advances
3,558.08
8,400.66
Total Current Assets
Less : Current Liabilities and Provisions
6,318.20
Current Liabilities
Provisions
301.64
Total Current Liabilities
6,619.84
Net Current Assets
1,780.82
Miscellaneous Expenses not written
0
Deferred Tax Assets
0
268.03
Deferred Tax Liability
Net Deferred Tax
-268.03
Other Assets
676.28
Total Assets
17,783.90
Contingent Liabilities
3,568.29

Mar 13

Mar 12

6,346.82
6,130.50
0
0
12,477.32
1,827.78
3,072.22
4,900.00
519.77
17,897.09

7,727.32 7,827.32 7,827.32

5,931.97 5,401.90 5,057.68
0
0
0
0
0
0
13,659.29 13,229.22 12,885.00
931.7
274.89
387.32
1,643.44
860.99
845.23
2,575.14 1,135.88 1,232.55
562.96
626.41
0
16,797.39 14,991.51 14,117.55

12,588.34
8,798.53
0
3,789.81
0
9,987.44
362.58

10,393.86
8,607.02
0
1,786.84
0
10,611.09
362.58

9,794.60
8,264.71
0
1,529.89
0
9,455.01
361.6

9,473.95
8,008.55
0
1,465.40
0
7,506.90
0.25

3,828.60
1,009.65
1,625.02
3,514.48
9,977.75

3,403.11
427.15
2,068.34
2,593.51
8,492.11

3,254.71
330.27
1,998.89
1,817.81
7,401.68

2,605.10
181.18
5,415.54
1,502.42
9,704.24

6,353.13
173.09
6,526.22
3,451.53
0
51.54
280.75
-229.21
534.94
17,897.09
3,172.56

Mar 11

Mar 10

4,036.03 3,291.20 2,871.95

610.44
690.77 1,589.47
4,646.47 3,981.97 4,461.42
3,845.64 3,419.71 5,242.82
0
0
0
55.32
0
60.07
116.3
79.97
157.89
-60.98
-79.97
-97.82
252.22
305.27
0
16,797.39 14,991.51 14,117.55
2,762.13 2,617.17 2,243.26

115

Profit & loss account of Rashtriya Ispat Nigam Ltd

(Rs in Crs)
Year
14-Mar
INCOME :
Sales Turnover
13,431.48
Excise Duty
1,403.15
Net Sales
12,028.33
Other Income
308.87
Stock Adjustments
-18.65
Total Income
12,318.55
EXPENDITURE :
Raw Materials
7,025.82
Power & Fuel Cost
671.34
Employee Cost
1,751.10
Other Manufacturing Expenses
793.47
Selling and Administration Expenses
501.28
Miscellaneous Expenses
416.79
Less: Pre-operative Expenses Capit
0
Total Expenditure
11,159.80
Operating Profit
1,158.75
Interest
338.12
820.63
Gross Profit
Depreciation
271.48
Profit Before Tax
549.15
Tax
-7.1
Fringe Benefit tax
0
Deferred Tax
189.8
Reported Net Profit
366.45
Extraordinary Items
0
Adjusted Net Profit
366.45
Adjst. below Net Profit
-53.37
P & L Balance brought forward
3,187.58
Statutory Appropriations
0
Appropriations
40.54
P & L Balance carried down
3,460.12
Dividend
34.65
Preference Dividend
0
Equity Dividend %
0.75
Earnings Per Share-Unit Curr
0.74
Earnings Per Share(Adj)-Unit Curr
23.1
Book Value-Unit Curr

13-Mar

12-Mar

11-Mar

10-Mar

13,565.28
1,454.59
12,110.69
470.48
303.74
12,884.91

14,551.76
1,319.15
13,232.61
334.63
-45.37
13,521.87

11,616.30 10,755.70
1,045.81
824.19
10,570.49 9,931.51
460.91
643.7
532.32 -415.35
11,563.72 10,159.86

8,046.49
669.12
1,469.07
915.11
634.81
77.71
0
11,812.31
1,072.60
359.25
713.35
186.88
526.47
5.41
0
168.23
352.83
0.45
352.38
3.4
2,990.49
0
159.14
3,187.58
35.28
101.29
0.72
0.47

8,422.55
534.72
1,466.67
789.76
551.57
111.13
0
11,876.40
1,645.47
190.6
1,454.87
344.86
1,110.01
377.54
0
-18.99
751.46
1.75
749.71
0
2,460.81
0
221.78
2,990.49
75.15
115.67
1.54
123.69

7,139.26
442.79
1,273.00
730.08
458.64
105.36
0
10,149.13
1,414.59
166.99
1,247.60
265.94
981.66
341.02
0
-17.85
658.49
2.03
656.46
0
2,117.83
0
315.51
2,460.81
65.85
205.62
1.35
83.61

5,491.85
433.9
1,398.52
713.76
460.78
55.78
0
8,554.59
1,605.27
80.45
1,524.82
277.17
1,247.65
477.7
-0.05
-26.67
796.67
0.64
796.03
0
1,653.83
0
332.67
2,117.83
79.67
205.62
1.63
111.18

22.54 2,213.12 2,104.72 2,034.32

116

Balance sheet of Essar Steel Ltd

(Rs in Crs)
Year
Mar 13
SOURCES OF FUNDS :
2,841.80
Share Capital
4,261.71
Reserves Total
Equity Share Warrants
0
Equity Application Money
0
Total Shareholders Funds
7,103.51
Secured Loans
28,230.54
Unsecured Loans
1,419.91
Total Debt
29,650.45
Other Liabilities
818.23
Total Liabilities
37,572.19
APPLICATION OF FUNDS :
Gross Block
39,080.03
Less : Accumulated Depreciati 10,294.90
Less:Impairment of Assets
0
Net Block
28,785.13
Lease Adjustment
0
Capital Work in Progress
6,004.77
Investments
1,033.31
Current Assets, Loans & Advances
3,847.52
Inventories
Sundry Debtors
681.27
Cash and Bank
623.11
Loans and Advances
3,342.00
Total Current Assets
8,493.90
Less : Current Liabilities and Provisions
10,142.90
Current Liabilities
Provisions
73.18
Total Current Liabilities
10,216.08
Net Current Assets
-1,722.18
0
Miscellaneous Expenses not wr
Deferred Tax Assets
4,268.23
Deferred Tax Liability
2,515.57
Net Deferred Tax
1,752.66
Other Assets
1,718.50
Total Assets
37,572.19
Contingent Liabilities
5,596.33

Mar 12
2,671.11
6,382.35
0
0
9,053.46
26,510.99
236.65
26,747.64
649.13
36,450.23

Mar 11

Mar 10

Mar 09

2,571.00 2,257.33 1,184.08

7,732.98 6,834.50 3,591.58
0
0
0
248.24
33.53
0
10,552.22 9,125.36 4,775.66
20,295.17 16,713.63 6,482.69
2,088.23 1,473.61
993.77
22,383.40 18,187.24 7,476.46
1,741.25
0
0
34,676.87 27,312.60 12,252.12

29,348.52 18,187.56 16,329.22 15,367.85

8,738.37 7,933.13 7,045.54 6,239.03
0
0
0
0
20,610.15 10,254.43 9,283.68 9,128.82
0
0
0
0
11,295.17 16,474.94 14,492.20
549.61
539.87
397.02
492.79
791.31
4,044.64
589.66
650.96
2,868.36
8,153.62

5,222.50
514.76
902.95
2,970.44
9,610.65

2,633.23
471.24
1,771.25
3,094.80
7,970.52

2,157.52
407.47
508.16
1,544.27
4,617.42

5,883.17 4,261.12 4,345.22 2,545.82

425.87
135.37
434
175.54
6,309.04 4,396.49 4,779.22 2,721.36
1,844.58 5,214.16 3,191.30 1,896.06
0
0
0
0
2,010.81 1,175.61
838.07
885.11
1,687.04 1,111.74
985.44
998.79
323.77
63.87
-147.37
-113.68
1,836.69 2,272.45
0
0
36,450.23 34,676.87 27,312.60 12,252.12
5,926.82 5,216.20 2,322.08 2,371.91

117

Profit & loss account of Essar Steel Ltd

(Rs in Crs)
Year
13-Mar
INCOME :
Sales Turnover
16,349.49
Excise Duty
1,311.04
Net Sales
15,038.45
Other Income
301.16
Stock Adjustments
27.07
Total Income
15,366.68
EXPENDITURE :
Raw Materials
7,829.99
Power & Fuel Cost
2,822.34
Employee Cost
308.07
Other Manufacturing Expenses
1,675.55
Selling and Administration Expenses
866.8
Miscellaneous Expenses
1,388.17
Less: Pre-operative Expenses Capi
0
14,890.92
Total Expenditure
Operating Profit
475.76
Interest
3,139.88
Gross Profit
-2,664.12
Depreciation
1,562.21
Profit Before Tax
-4,226.33
Tax
0.95
Fringe Benefit tax
0
Deferred Tax
-1,442.34
Reported Net Profit
-2,784.94
Extraordinary Items
-1,353.14
Adjusted Net Profit
-1,431.80
Adjst. below Net Profit
0
P & L Balance brought forward
456.8
Statutory Appropriations
0
Appropriations
0
P & L Balance carried down
-2,328.14
Dividend
0
Preference Dividend
0
Equity Dividend %
0
Earnings Per Share-Unit Curr
0
Earnings Per Share(Adj)-Unit Curr
25.23
Book Value-Unit Curr

12-Mar

11-Mar

10-Mar

9-Mar

17,561.42
1,287.55
16,273.87
536.79
-969.27
15,841.39

13,345.85 11,388.31 12,703.78

1,044.35
768.76 1,015.48
12,301.50 10,619.55 11,688.30
565.93
282.32
185.18
1,495.50
167.12
160.44
14,362.93 11,068.99 12,033.92

7,643.06
3,046.68
388.51
1,764.04
1,021.39
40.23
0
13,903.91
1,937.48
2,235.29
-297.81
986.37
-1,284.18
-1.58
0
-31.04
-1,251.56
152.41
-1,403.97
0
1,708.36
0
0
456.8
0
0
0
0

7,477.22
2,475.42
309.27
1,779.58
786.84
157.46
337.73
12,648.06
1,714.87
1,200.91
513.96
891.46
-377.5
0.01
0
-211.24
-166.27
327.59
-493.86
0
1,882.27
0
7.64
1,708.36
0
6.53
0
0

3,713.62
3,107.52
215.86
1,839.26
567.84
30.2
178.59
9,295.71
1,773.28
908.4
864.88
792.85
72.03
15.89
0
33.69
22.45
33.95
-11.5
10.92
1,859.10
0
10.2
1,882.27
0
8.72
0
0.11

2,509.58
4,208.16
227.81
1,874.39
547.75
747.84
0
10,115.53
1,918.39
789.47
1,128.92
828.11
300.81
5.29
5.33
104.99
185.2
-108.88
294.08
0
1,673.90
0
0
1,859.10
0
0
0
1.62

34.29

40.6

69.93

41.49

118

Balance sheet of Steel Strips Ltd

(Rs in Crs)
Mar 14 Mar 13 Mar 12 Mar 11 Mar 10
Year
SOURCES OF FUNDS :
Share Capital
8.28
8.28
8.28
8.28
8.28
Reserves Total
-10.65
-10.54
-10.48
-10.4
-13.68
Equity Share Warrants
0
0
0
0
0
Equity Application Money
0
0
0
0
0
Total Shareholders Funds
-2.37
-2.26
-2.2
-2.12
-5.4
Secured Loans
0
0
0
0
0
0.11
0.16
0.05
0.02
0
Unsecured Loans
Total Debt
0.11
0.16
0.05
0.02
0
Other Liabilities
2.27
2.08
2.08
2.08
0
Total Liabilities
0.01
-0.02
-0.07
-0.02
-5.4
APPLICATION OF FUNDS :
Gross Block
0
0
0
0
0.16
0
0
0
0
0
Less : Accumulated Depreciation
Less:Impairment of Assets
0
0
0
0
0
Net Block
0
0
0
0
0.16
Lease Adjustment
0
0
0
0
0
Capital Work in Progress
0
0
0
0
0
Investments
0
0
0
0
0
Current Assets, Loans & Advances
0
0
0
0
0
Inventories
Sundry Debtors
0
0
0
0
0
Cash and Bank
0
0
0
0
0.04
Loans and Advances
0.02
0.02
0.03
0.03
0.48
Total Current Assets
0.02
0.02
0.03
0.03
0.52
Less : Current Liabilities and Provisions
0.02
0.05
0.11
0.06
6.03
Current Liabilities
Provisions
0
0
0
0
0.05
Total Current Liabilities
0.02
0.05
0.11
0.06
6.08
Net Current Assets
0
-0.03
-0.08
-0.03
-5.56
Miscellaneous Expenses not written off
0
0
0
0
0
Deferred Tax Assets
0
0
0
0
0
Deferred Tax Liability
0
0
0
0
0
Net Deferred Tax
0
0
0
0
0
Other Assets
0.01
0.01
0.01
0.01
0
Total Assets
0.01
-0.02
-0.07
-0.02
-5.4
Contingent Liabilities
0
0
0
0
0

119

Profit & loss account of Steel Strips Ltd

(Rs in Crs)
Year
14-Mar
INCOME :
Sales Turnover
0
Excise Duty
0
Net Sales
0
Other Income
0.04
Stock Adjustments
0
Total Income
0.04
EXPENDITURE :
Raw Materials
0
Power & Fuel Cost
0
Employee Cost
0
Other Manufacturing Expenses
0
Selling and Administration Expenses
0.14
Miscellaneous Expenses
0
Less: Pre-operative Expenses Capitalise
0
Total Expenditure
0.14
Operating Profit
-0.11
Interest
0
Gross Profit
-0.11
Depreciation
0
Profit Before Tax
-0.11
Tax
0
Fringe Benefit tax
0
Deferred Tax
0
Reported Net Profit
-0.11
Extraordinary Items
0
Adjusted Net Profit
-0.11
Adjst. below Net Profit
0
P & L Balance brought forward
-27.33
Statutory Appropriations
0
Appropriations
0
P & L Balance carried down
-27.44
Dividend
0
Preference Dividend
0
Equity Dividend %
0
Earnings Per Share-Unit Curr
0
Earnings Per Share(Adj)-Unit Curr
-2.85
Book Value-Unit Curr

13-Mar

12-Mar

11-Mar

10-Mar

0
0
0
0.03
0
0.03

0
0
0
0.04
0
0.04

0
0
0
3.5
0
3.5

0
0
0
0.14
0
0.14

0
0
0
0
0.08
0
0
0.09
-0.05
0.01
-0.06
0
-0.06
0
0
0
-0.06
0
-0.06
0
-27.27
0
0
-27.33
0
0
0
0

0
0
0
0
0.12
0
0
0.12
-0.08
0
-0.08
0
-0.08
0
0
0
-0.08
0
-0.08
0
-27.19
0
0
-27.27
0
0
0
0

0
0
0
0
0.09
0
0
0.09
3.41
0
3.41
0
3.41
0
0
0
3.41
2.88
0.53
0
-30.6
0
0
-27.19
0
0
0
4.12

0
0
0.01
0
0.12
0.01
0
0.14
0
0.01
-0.01
0
-0.01
0
0
0
-0.01
0
-0.01
0
-30.59
0
0
-30.6
0
0
0
0

-2.72

-2.66

-2.56

-6.68

120