Business Environment 2th Assignment

CourseCode: MGN303
Business Environment
Course Instructor: Dr. Sandeep Singh chil
Academic Task No.:
2
industry
Date ofAllotment: 21/9/2015
19/10/2015
Students Rollno: A-24
11312430

CourseTitle:

Academic Task Title: Steel

Date ofsubmission:
Studen ts Reg. no:

LearningOutcomes:
I have learned from this assignment about the Steel industry in india, the
Global Scenario of steel ,the contribution of steel , Future prospect, SWOT
analysis of steel industry in india, PESTEL Analysis and Future outlook of steel
industry in india.
Declaration:
I declare that this Assignment is my individual work . I have not copied
it from any other students work or from any other source except
where due acknowledgement is made explicitly in that ext, nor has
any
part
been
written
form
by
any
other
person.
Student signature:
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Business Environment 2th Assignment

Marks Obtained:

Max.Marks:

Contents:

1. Introduction of Steel sector.1-4

1.1
History
of
sector....2-2
1.2
The
Global
Industry..2-3
1.3
Current
Global
Scenario
industry.3-4
1.4
Contribution of countries to
Industry....3-4

steel
Steel
In

Steel

Global

Steel

2. Steel Industry In India ...57

2.1
Future Prospects of Steel industry in India
.5-6
2.2
SWOT
Analysis
Of
Indian
Steel
industry...6-7
2.3
Tata
Steel
Industry...7-7

3. Environmental Analysis and illustration..

8-10
3.1
Economic
.8-8
3.2
Political
.9-9
3.3
Social
..
.9-10
3.4
Legal
10-10

4. Future
outlook
of
Steel
industry...10-11
5. Conclusion..1111
6. References1212

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INTRODUCTION
Steel is crucial to the development of any modern economy and is
considered to be the backbone of human civilization. The level of per capita
consumption of steel is treated as an important index of the level of
socioeconomic development and living standards of the people in any
country. It is a product of a large and technologically complex industry
having strong forward and backward linkages in terms of material flows and
income generation. All major industrial economies are characterized by the
existence of a strong steel industry and the growth of many of these
economies has been largely shaped by the strength of their steel industries
in their initial stages of development. Steel industry was in the vanguard in
the liberalization of the industrial Sector and has made rapid strides since
then. The new Greenfield plants represent the latest in technology. Output
has increased, the industry has moved up i n the value chain and exports
have raised consequent to a greater integration with the global economy.
The new plants have also brought about a greater regional dispersion easing
the domestic supply position notably in the western region. At the same
time, the domestic steel industry faces new challenges. Some of these relate
to the trade barriers in developed markets and certain structural problems of
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the domestic industry notably due to the high cost of commissioning of new
projects. The domestic demand too has not improved to significant levels.
The litmus test of the steel industry will be to surmount these difficulties and
remain globally competitive.

HISTORY OF STEEL:
Steel was discovered by the Chinese under the reign of Han dynasty in 202
BC till 220 AD. Prior to steel, iron was a very popular metal and it was used
all over the globe. Even the time period of around 2 to 3 thousand years
before Christ is termed as Iron Age as iron was vastly used in that period in
each and every part of life. But, with the change in time and technology,
people were able to find an even stronger and harder material than iron that
was steel. Using iron had some disadvantages but this alloy of iron and
carbon fulfilled all that iron couldnt do. The Chinese people invented steel as
it was harder than iron and it could serve better if it is used in making
weapons. One legend says that the sword of the first Han emperor was made
of steel only. From China, the process of making steel from iron spread to its
south and reached India. High quality steel was being produced in southern
India in as early as 300 BC. Most of the steel then was exported from Asia
only. Around 9th century AD, the smiths in the Middle East developed
techniques to produce sharp and flexible steel 26 blades. In the 17th
century, smiths in Europe came to know about a new process of cementation
to produce steel. Also, other new and improved technologies were gradually
developed and steel soon became the key factor on which most of the
economies of the world started depending.

THE GLOBAL STEEL INDUSTRY:

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The current global steel industry is in its best position in comparing to last
decades. The price has been rising continuously. The demand expectations
for steel products are rapidly growing for coming years. The shares of steel
industries are also in a high pace. The steel industry is enjoying its 6th
consecutive years of growth in supply and demand. And there is many more
merger and acquisitions which overall buoyed the industry and showed some
good results. The supreme crisis has lead to the recession in economy of
different countries, which may lead to have a negative effect on whole steel
industry in coming years. However steel production and consumption will be
supported by continuous economic growth.

CURRENT GLOBAL SCENARIO IN STEEL INDUSTRY:

Globally steel output trends remained on a firm upward path. The rising
demand has primarily been fueled by the increased demand from China. The
favourable trends in the international markets promise to continue for some
more time as the US and some of the leading European economies are
showing early signs of recovery. In May 2004 ten new nations joined the
European Union (EU), making it the worlds largest trading block. For the
global steel industry, this is an important development since the new
member countries are expected to add about 15% to the enlarged EUs total
crude steel output. The per capita consumption level is low in most of the
new member countries, leaving much room for growth. Steel demand in EU
therefore has likelihood of recording growth in the days to come and may
very well spruce up global steel demand in a world reliant on China to show
the way. World crude steel production for the 62 countries reporting to the
International Iron and Steel Institute stands at 763.0 million tonnes for the
first nine months of 2004 (i.e. Jan to Sept). This is 8.7% higher than the
corresponding period of 2003. The world production of crude steel in 2003
was 965 million metric tonnes, which was almost 7% higher than that of the
previous year. China continued to remain the largest consumer (262.48
million metric tonnes) as well as the largest producer (220.1 million tmetric
tonnes) of crude steel. India was the 8th largest producer of crude steel in
2003 with a production of 31.8 million metric tonnes. Among other significant
developments in the global scenario was the commencement of Market
Access negotiations on Non-agricultural Products in the World Trade
Organisation (WTO) following the mandate given by the Fourth WTO
Ministerial Conference held in Doha in November, 2001. The aim of the
negotiations was to reduce or eliminate tariffs in particular on products of
export interest to developing countries. All steel items are bound at 40%
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level. Ministry of Steel has suggested that while arriving at new bound rates
through application of a formula, the high price elasticity of import in case of
steel should be kept in view and maximum possible value of the coefficient,
to be adopted, should be taken. The Ministry also suggested that in order to
implement the Doha mandate of less than full reciprocity for the developing
countries in letter and spirit, it would be best if a separate formula could be
proposed for the developing countries. In the meeting of the General Council
of WTO held in Geneva during July 27-29, 2004, Members agreed that special
and differential treatment for developing Members would be an integral part
of all elements in the negotiations. They also agreed that tariff 10 reductions
be made through a tiered formula that would take into account the different
tariff structures of the developed and developing countries. The
deliberations, being held under the aegis of OECD, for a proposed Steel
Subsidy Agreement (SSA) to strengthen disciplines in world steel trade,
continued and the last meeting of the OECD High Level Group on Steel was
held in June 2004. The main objective of the meeting was to take stock of the
ongoing SSA negotiations and to provide guidance for future work. The
participants agreed that more time was needed to explore ways to resolve
their differences on various provisions of the SSA.

CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL

INDUSTRY:
The countries like China, Japan, India and South Korea are in the top of the
above in steel production in Asian countries. China accounts for one third of
total production i.e. 419m ton, Japan accounts for 9% i.e. 118 m ton, India
accounts for 53m ton and South Korea is accounted for 49m ton, which all
totally becomes more than 50% of global production. Apart from this USA,
BRAZIL, UK accounts for the major chunk of the whole growth.

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STEEL INDUSTRY IN INDIA

Steel has been the key material with which the world has reached to a
developed position. All the engineering machines, mechanical tools and most
importantly building and construction structures like bars, rods, channels,
wires, angles etc are made of steel for its feature being hard and adaptable.
Earlier when the alloy of steel was not discovered, iron was used for the said
purposes but iron is usually prone to rust and is not so strong. Steel is a
highly wanted alloy over the world. All the countries need steel for the
infrastructural development and overall growth. Steel has a variety of grades
i.e. above 2000 but is mainly categorized in divisions steel flat and steel
long, depending on the shape of steel manufactured. Steel flat includes steel
products in flat, plate, sheet or strip shapes. The plate shaped steel products
are usually 10 to 200 mm and thin rolled strip products are of 1 to 10 mm in
dimension. Steel flat is mostly used in construction, shipbuilding, pipes and
boiler applications. Steel long Category includes steel products in long, bar or
rod shape like reinforced rods made of sponge iron. The steel long products
are required to produce concrete, blocks, bars, tools, gears and engineering
products. After independence, successive governments placed great
emphasis on the development of an Indian steel industry. In Financial Year
1991, the six major plants, of which five were in the public sector, produced
10 million tons. The rest of India steel production, 4.7 million tons, came from
180 small 29 plants, almost all of which were in the private sector. India's
Steel production more than doubled during the 1980s but still did not meet
the demand in the mid-1990s, the government was seeking private-sector
investment in new steel plants. Production was projected to increase
substantially as the result of plans to set up a 1 million ton steel plant and
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three pigiron plants totaling 600,000 tons capacity in West Bengal, with
Chinese technical assistance and financial investment. The commissioning of
Tata Iron & Steel Company's production unit at Jamshedpur, Bihar in 1911-12
heralded the beginning of modern steel industry in India. At the time of
Independence in 1947 India's steel production was only 1.25 Mt of crude
steel. Following independence and the commencement of five year plans,
the Government of India decided to set up four integrated steel plants at
Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant was commissioned
in 1972. The most recent addition is a 3 Mt integrated steel plant with
modern technology at Visakhapatnam. Steel Authority of India (SAIL)
accounts for over 40% of India's crude steel production. SAIL comprises of
nine plants, including five integrated and four special steel plants. Of these
one was nationalized and two were acquired; several were set up in
collaboration with foreign companies. SAIL also owns mines and subsidiary
companies.

Future Prospects:
With the liberalisation and globalisation of Indian economy, the steel industry
has to gear-up, not only to domestic competition, but also to global
competition in terms of product range, quality and rice. The growth of the
steel sector is intricately linked with the growth of the Indian economy and
especially the growth of the steel consuming sectors. India has become selfsufficient in iron and steel materials in the last 3-4 years. Exports have been
rising. Production and production capacities are increasing. The position
needs to be further consolidated and issues affecting production and
consumption need to be resolved on a continued basis. At the same time,
productivity of our steel plants must be maintained at levels close to
international standards. The Ministry of Steel continues to play a proactive
role in helping the steel industry to overcome bottlenecks in the growth of
this sector.

SWOT Analysis Of Indian Steel industry:

SWOT analysis is done for a company, to find out its overall
Strengths,Weaknesses,Threats and opportunities leading to gauging the
competitive potential of the company. The SWOT Analysis enables a
company to recognize its market standing and adopt strategies accordingly.
Here SWOT analysis of ICICI bank is made to understand the positioning of
the bank better:
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External Environmental Analysis

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.
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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

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

Economical 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
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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, 40 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.
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

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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:
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.
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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 43 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.

Future outlook
Currently, the global steel industry is going through unprecedented times.
The steel demand is strong with over 6% growth year on year over the last
seven years unseen in the last several decades, primarily driven by robust
growth in China, India, South East Asia, Middle East, Russia and Brazil. The
iron ore and coking coal prices are at a record high both due to insufficient
capacity creation for these and the heavy consolidation of minerals
companies. Oil prices and ocean freight rates are at an all-time high. The
combined effect of all these have driven steel prices to a level higher than
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ever before though there is increasing pressure on margins of steel
companies due to very high input costs.The new scenario both external,
due to high raw material and freight costs and internal, called for a new
Vision, strategies and action plans. The Company has co-created a shared
Vision with its employees of becoming a global benchmark in Value Creation
and Corporate Citizenship. Company has set goals for 2012 in terms of
Returns on Invested Capital, Safety, Carbon dioxide emissions and of
becoming the employer of choice in the industry. The integration with Corus
is proceeding smoothly and is yielding better
than the predicted results. Continuous improvement projects are being given
focus in all companies sites and businesses. Greenfield projects in India are
progressing, though somewhat slower than planned. Companys effort to
enhance their raw material security has yielded positive results in Ivory
Coast for iron ore, in Mozambique for coal and in Oman for limestone. There
is greater emphasis on safety. They have well laid out plans to reduce CO2
emissions to benchmark levels. The Tata Steel Group will pursue strategic
growth through capacity expansions and securing access to raw materials.
The Group is expanding its capacity in India through the expansion of its
operations in Jamshedpur to 10 million tons per annum and through the
construction of a 6 million tons per annum greenfield site in Orissa. Other
Greenfield opportunities in India and across Asia are being assessed. The
Group is also looking at further integration upstream in raw materials with an
ambition to achieve 100% self-sufficiency in India and around 50% selfsufficiency in Europe over time. Agreements for the exploration of iron ore in
the Ivory Coast, coal in Mozambique and limestone in Oman have already
been signed and opportunities are under review in India to support the Indian
Greenfield projects; and in Africa and South America, primarily to support its
European steelmaking assets Climate change is probably the biggest
challenge ever to confront the steel industry. In response to this
challenge, the Tata Steel Group will be part of the solution and is committed
to minimising the environmental impact of its operations and its products. It
has a goal to reduce its CO2 footprint by at least 20% by 2020 compared to
1990. To meet this objective, the Group will, for example, continue to
improve its current processes, invest in breakthrough technologies and
develop new products and services that reduce the environmental impact
over the product lifecycle. To improve its processes, priority is given to
energy conservation schemes; in technology break-through such as Ultra

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Low Carbon Steel making and in other innovative projects where the Group
has proprietary technology.

CONCLUSION
Today Indian steel industrys prospects are primarily determined by market
forces but given the structural constraints faced by the sector (need for raw
material access , infrastructure support etc.) Ministry of Steel will continue to
play an important role as a facilitator. With global relocation and world-wide
restructuring the focus of the industry has now shifted to countries like India
which have the key raw materials, low cost labour, the requisite technical
manpower, a high potential for technology absorption and last but not least a
rapidly growing domestic market. India therefore has the potential to emerge
as a global steel player if the inherent advantages available are leveraged
properly and special attention given to areas where achievements are likely
to fall short of expectations. This is the basic premise on which the strategy
options for the sector will have to be explored and finalised before
implementation.

References
1. http://www.ehow.com/facts_7621882_swot-analysis-tata-steel.html
2. http://www.tatasteel.com/
3. http://en.wikipedia.org/wiki/Tata

4. http://www.tatasteel100.com/story-of-steel/index6.asp
5. http://steel.gov.in/Performance%20Budget%20(2005-06)/English/chap2.PDF
6. http://shodhganga.inflibnet.ac.in/bitstream/10603/723/7/07_chapter2.pdf

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