Strategy for Revival and Growth of Indian Steel Industry

P Gupta, Associate Member

S Ghosh, Non-member
Dr R Datta, Non-member
D Singh, Non-member
Dr D Mukerjee, Non-member
A ‘smart’ metal that is completely recyclable, steel is a material common to all fields: energy, transportation,
housing, food, and recreation. With approximately 850 million Mt of steel produced annually worldwide, and
employing 859000 people, the steel industry has undergone numerous changes in the last few years. In
times of great uncertainty, an understanding of long-term industry trends can help to plot robust strategies.
Having winning strategies is very important for a company. Executing these strategies is the key to business.
The market has turned really to a buyers market, where ‘quality’ and ‘customer service’ are the keywords for
survival and steps towards revival of growth in the segment. Presently not only India but whole world is
experiencing the meltdown in economic recession while all industries had their ups and downs. Steel, being
a commodity, is prone to cyclical downturns and upturns. Changes in business environment call for periodical
review of both long and short term plans and setting of new goals by adoption of appropriate strategies.
These goals can be achieved by building sustainable competencies based on growth by exploiting fully the
potential of available assets, differentiation through quality and service, profitability by excellence in operations
and cost reduction, and leveraging the skill and knowledge base of the company’s human resources. The
challenges that confront Indian steel industry in the age of globalization are complex in nature. The secret of
sustainable turnaround lies in how Indian steel industry faces the challenges and develops combative and
anticipatory prowess. Problems and solutions may vary with organizations but there is more a commonality
than initially meets the eye. The survival strategy provides a foundation upon which a potent growth strategy
could be formulated. While the survival strategy would ensure the survival of the ailing steel industry, the
growth strategy would simultaneously take care of its total transformation towards a better future. Both
stages, to be implemented through an integrated plan, are essential to enable the industry overcome the
present imbroglio. The scenario presented in the paper aimed for both long and short term strategies to
achieve growth. The suitable diversified strategy and identified market segments with focus on value-added
products close to the core business will be key to success. The strategy for revival and growth of Indian
steel industries with a faster economic growth needs to unlock its full potential. This strength lies in low cost
and fairly skilled workforce coupled with faster technological improvement and operational efficiency through
better manpower planning, logistics and raw material sourcing along with government help to have cutting
edge in steel market at higher output and profit margins. The factors for revival of Indian steel industry are
buoyant global steel consumption, buoyant local steel consumption, lower cost of production and adequate
rise in price against hike in input costs together with backward integration, consolidation and branded product
sales, marketing alliances, etc. The article defines the strategic business processes to frame policy goal,
the feasibility of realizing this goal supported with past and projected growth figures of steel through tools
like SWOT, PEST etc. The supply side requirements to meet the anticipated demand in terms of availability
of critical inputs, infrastructure requirements and current limitations in the country and the need for foreign
investment to improve the scenario are highlighted in the article. 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 future concerns and measures regarding the steel price volatility, human resource requirements,
R&D requirements, environmental issues, government’s role, role of China etc have also been addressed to
achieve sustainable growth of Indian steel industry. Industry must develop new technology, improve energy
P Gupta, S Ghosh, Dr R Datta, D Singh and Dr D Mukerjee are with the Steel Authority of India Limited (SAIL), R&D Centre for Iron and
Steel (RDCIS), Ispat Bhawan, P O : Doranda, Ranchi 834 002, Jharkhand.

This paper was received the SAIL Award 2009, which was presented to the authors in the Twenty-fourth Indian Engineering Congress held at
Suratkal during December 10-13, 2009.

Volume 91, October 2010 15

 efficiency and unlock more challenging resources. Complete utilization of existing capacities, elimination of
bottlenecks in production, along with identification and starting of idle production capacities is also a great
challenge in the coming years as the exiting demand to be fulfilled by the existing capacities. The paper
discusses the accomplishment by executing successful growth strategies and providing the growth teams
with the skills, know-how, and tools to generate growth opportunities, evaluate these opportunities to create
a growth pipeline, and implement a growth strategy to deliver measurable business results.
Keywords : SWOT; PEST; Revival; Growth; Steel industry

INDIAN STEEL INDUSTRY : TODAY AND TOMORROW
‘We still have a number of persons in our country in SAIL,
TISCO and other big and small steel plants who have the
capabilities. They have the will to excel and transform the
country, given a long-term vision. We should be ready to
compete in outside market. If our steel industry gears up in
about three to four years, Indian steel can be both in Indian
and foreign markets. Our vision should be towards this’.
Indian 2020: A vision for the new millennium by APJ Adbul
Kalam and YS Rajan.
The Indian Steel industry is more than 100 years old now.
Till 1990, the Indian steel industry operated under a
regulated environment with insulated markets and large-
scale capacities reserved for the public sector. Production
and prices were determined and regulated by the
Government, while SAIL and Tata Steel were the main
producers, the latter being the only private player.
The industry took its first faltering steps in 1907 with the
setup of the first integrated steel plant in Jamshedpur by
TISCO. Since then the Indian steel industry has emerged
as one of the core sectors in the Indian economy with a
very significant impact on economic growth. As it traversed
its long history during the past 60 years, the Indian Steel
Industry has responded to the challenges of the highs and
lows of business cycles.
From a fledgling industry, steel in twenty-first century has
beckoned a virtual resurrection. After three decades of near
flat growth, steel industry has registered a buoyant growth
of 7.9 percent during 2001 to 2007. Crude steel production
which was 0.85 bt in 2001 crossed 1.3 bt in 2007. India's
steel production and consumption in 2009 is showing a
positive trend1.
In the era of planned economy, iron and steel, a core and
basic sector, received the full attention of the Government.
It became a key sector for public investment for the first
Five-Year Plan itself.
Sector Structure/Market Size
The Indian steel industry entered into a new development
stage from 2005 to 2006, resulting in India becoming the
5th largest producer of steel globally which is being moved
to third place as depicted in Figure 1. Producing about 55 Mt
of steel a year, today India accounts for over 7% of the
world's total production. India is the only country in the world
to post a positive overall growth in crude steel production
at 1.01% for the January to March period of 2009. The
recovery in steel production has been aided by the improved
sales performance of steel companies. The steel sector2- 4
grew by 5.3% in May 2009.
Production

The Indian steel industry can be divided into two distinct
producer groups:
í Major Producers : Also known as Integrated Steel
Producers (ISPs), this group includes large steel
producers with high levels of backward integration and
capacities of over 1 Mt. These include SAIL, TISCO,
RINL, ESSAR, ISPAT and JSW. Now many new steel
plants are coming up.
í Other Producers : This group consists of smaller
Steel production grew at 1.2% in the January to March
quarter of 2008 to 2009 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. Indian Steel industry has surpassed the negative
growth registered by rest of the countries other than China.
1351 1330
1400 1251
India
Crude steel production, Mt

1200 World
stand-alone steel plants that include producers and
processors of steel, such as, processors/ rerollers, 1000
January
Rank
stand alone units making pig iron and sponge iron 800 3
to May
2009
SAGA OF STEEL 600 Rank 448
Rank Rank
Since, the beginning of the twentieth century, the global 400 6
6 5
steel industry has witnessed a chequered history. Starting 200 49.4 53.1 55.1 22.7
from its role in construction and household sector to provide
0
the major inputs for arms and ammunition, steel industry 2006 2007 2008 2009
gradually became an integral part of the development and
growth of nations. Figure 1 Indian steel production at global level

16 IE(I) Journal–MM
The National Steel Policy has a target for taking steel
production up to 110 Mt by 2019 to 2020. Nonetheless,
with the current rate of ongoing green field and brown field
projects, the Ministry of Steel has projected India’s steel
capacity to touch 124.06 Mt by 2011 to 2012. In fact, based
on the status of Memoranda of Understanding (MOUs)
signed by the private producers with the various state
governments, India's steel capacity5,6 is likely to be 293 Mt
by 2020.
Consumption
India accounts for around 5% of the global steel
consumption. Almost 70% 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% during the first quarter of 2009
to 2010 as against 3.8% in the January to March quarter
last year. The production and consumption pattern is shown
in Table 1 and sector consuming steel is depicted5, 7 in
Figure 2.
A Credit Suisse Group study states that India’s steel
consumption will continue to grow by 16% annually till 2012,
fuelled by demand for construction projects worth US$ 1
trillion. The World Steel Association has forecast a 2%
growth in the country's steel consumption in 2009, 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%.
India is expected to consume 53.5 Mt of steel in 2009 and
demand-gap projections are shown in Figure 3.
Table 1 Production and consumption of steel
Period Production, Mt Consumption, Mt
2005 - 06 44.5 43.9
2006 - 07 50.1 49.7
2007 - 08 52.6 54.5
2008 - 09 e 53.1 56.0
Others 20%
Automotive
engineering 5%
Construction
43%
Mechanical
engineering 32%
Figure 2 Sector consuming steel in India
Volume 91, October 2010
1400 UAE – 1252
1200 Apparent steel
consumption of
kg/capita
1000 > 150 Mt, the
800 countries present gap
World
600
average
400
– 170
200 India – 33
0
Taiwan
South Korea
Germany
France
China
UAE
Hong Kong
Japan
Australia
USA
India
Countries
Figure 3 Steel demand projections
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.
Export, Import and Investments
India’s exports of finished steel have remained almost
stagnant in the range of 4 Mt to 5 Mt in the past six years.
But import of finished steel has grown from 1.5 Mt in
financial year 2003 to 6.5 Mt in financial year 08, registering
a CAGR of 33.8%. In financial year 2008, India turned into
a net importer of finished steel as country’s import rose by
almost 46% on YoY basis. Centre for Monitoring Indian
Economy (CMIE) expressed that India's export of steel
will fall by a whopping 35% to 3.2 Mt during the current
fiscal buoyed by healthy domestic demand.
India imported 40% more finished steel products in March
2009 than the previous month indicating that the booster
measures announced by the government to kickstart the
economy have started rejuvenating the infrastructure and
construction sectors. Against 3.4 lakh t in February, the
country imported 4.8 lakh t of finished steel goods in March
2009, according to the latest data released by the steel
ministry. On a broader level, the data showed that steel
imports slipped 18% to 5.77 lakh t in financial year 2009
against 6.83 lakh t in the previous fiscal4,7,8.
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 five years.
To sustain growth rate during global meltdown, the Indian
government is targeting an investment of US$ 20.38 Billion
over the next two years in the infrastructure sector9.
Economic Scenario and Future Outlook
According to the pre-budget economic survey 2008 to 2009
— a report on India's resilient economy-tabled in Parliament
on July 2, 2009 by Finance Minister Pranab Mukherjee,
India could grow up to 7.5% in 2009 to 2010 up from 6.7%
in 2008 to 2009, provided the global economic slowdown
17
bottomed out by September and the government was able
to implement significant economic policy reforms.
The economic survey estimates:
í GDP to grow to 7.5% in 2009 to 2010.
í Agriculture and rural demand continue to be strong
and agriculture production prospects are normal.
í A rise in multi-brand retail foreign direct investment
(FDI) cap.
í Despite the slowdown in growth, investment remained
relatively buoyant, growing at a rate higher than that
of GDP.
í The performance of six core industries comprising
crude oil, petroleum refinery products, coal, electricity,
cement and finished steel (carbon) grew at 2.7% as
compared to 5.9% in 2007 to 2008.
í The index of industrial production for the year 2008 to
2009 points towards a sharp slowdown with growth
being placed at 2.4%.
Growth in key sectors will drive the steel demand, the need
is to trigger the opportunities. Moreover, steel has major
contribution in the growth of GDP in India. In India, there is
enormous potential for growth in steel consumption. Heavy
investment in developing the country’s infrastructure, such
as, railways, ports, and roads will fuel growth in the steel-
intensive construction sector.
A future of steel in India is indeed very bright and demand-
gap assessment in Indian scenario is shown in Figure 4. It
is to be decided how best the expectations of our country
can be met in the rising level of demand 7,9,10.
INDIAN STEEL INDUSTRY : REVIVAL FACTORS AND
ANALYSIS
global steel consumption, buoyant local steel consumption,
lower cost of production and adequate rise in price against
hike in input costs. Apart from this, backward integration,
consolidation and branded product sales, marketing
alliances, etc, have led to the revival of the Indian steel
industry. Complete utilization of existing capacities,
elimination of bottlenecks in production, along with
identification and starting of idle production capacities is
also a great challenge in the coming years as the exiting
demand to be fulfilled by the existing capacities. The Metals
industry is highly capital intensive, therefore overall cost
efficiency in operations plays a very critical role. Steel
producers will need to operate at higher efficiency, low
breakdowns, low cost etc following which Indian Steel
Industry has registered a growth.
SWOT and PEST Analysis : Steel Industry a Practical
Approach
A number of business models and modern techniques are
there for analysis of business techniques, production
planning, cost etc, such as, SWOT, PEST and five factor
analysis etc.
SWOT Analysis
It is a useful summary technique for summarizing the key
issues arising from an assessment of a business’s ‘internal’
position and ‘external’ environmental influences. It helps in
identifying existing organizational strengths, weakness,
market opportunities to exploit and threats to the future
success.
Strengths
í Availability of iron ore;
í Availability of labour at low wage;
í Quality manpower.

Weakness
The factors for revival of Indian steel industry are buoyant
í Endemic deficiencies;
100
90
í Systemic deficiencies;
80
í High cost of capital;
65
Gap : ~ 20
60 to 25 Mnt í Low labour productivity;
42 í High cost of basic inputs and services;
40 34
í High rate of taxes;
20
í Quality issues and less expenditure on R&D.
0 Opportunities
Current Projected Capacity Current
demand demand addition (P) supply í Unexplored rural market and other sectors;
Demand side Supply side
í Export penetration and increase in demand;
All figure in Mt
Figure 4 Steel demand projections in India í Mergers and acquisition.

18 IE(I) Journal–MM
Threats
í Slow industry growth;
í Technological change;
í Price sensitivity and demand volatility;
í China factor.
PEST Analysis
It is an investigation of the important factors that are
changing which influence a business from the outside like
change in government and policies, economics, social
trends and living standard and technology.
After understanding the various issues arising after SWOT
and PEST analysis, revival factors and the kind of strategy
can be devised and followed. These will provide various
challenges and opportunities for developing a turnaround
by the Indian steel industry. The struggling of Indian steel
industry with high manufacturing costs, long production
cycles and capacity bottlenecks elaborate a detailed
technical blueprint that can show the required technical
improvements.
Challenges for Revival and Growth of Steel in India:
Suggested Ways
The growing self-confidence of our steel industry is
manifested by the fact that Indian producers are now
enlarging their global reach and presence.
The key drivers of steel demand and growth in India are:
í Industry driven economic growth;
í Infrastructure development;
í Raw material security through adoption of appropriate
policy;
í Growing population and low per capita steel
consumption;
í Housing and high degree urban development;
í Steel intensive products demand like high demand in
the auto sector;
í About 100000 MW new capacities (90% of present)
will be added in power sector in next seven years.
This should also act as strong driver of steel growth.
The Indian steel manufacturers are faced with some major
problems and concerns, which work as inhibiting factors to
their effort towards gaining the competitive edge and growth
of the sector.
Steel demand will grow and steel producers of India have
not only to bridge the gap in demand but also to feel their
presence globally. In order to meet this objective, various
planning and settlements/steps to be taken on urgent basis
Volume 91, October 2010
so as to catch the demand bus of steel in time to achieve
profit and business.
As the gap between domestic production and demand
grows in India, imports of steel will increase. But to meet
this supply challenge, the industry must develop new
technology, improve energy efficiency and unlock more
challenging resources. Contractors and suppliers must
increase their capacity to support the industry, reducing cost
and schedule uncertainty and improving productivity.
Governments can contribute by providing access to areas
that are currently off-limits to the industry and adopting
efficient and coordinated greenhouse gas emissions
regulations.
The certain areas of difficulties and the ways to face the
challenges of a growing demand for steel in India are
mentioned here.
Vertical and Backward Integration and Moving towards
Raw Material
Coking coal, iron ore and scrap shortage are responsible
for the increased cost of production, coupled with low
average prices of Rs 17000 to Rs 18000 TPA in the past.
Integrated players with their own captive mines for iron ore
and coal will find it an advantage as they will be shielded
from the fluctuating prices of raw materials. In steel, vertical
integration is still very valid and a very important supply
chain strategy.
De-integration of Process/Consolidation
Consolidation within the industry is the need of the hour as
it might generate benefits of economies of scale and
improve labor productivity. Also, a set-up of semi-finished
capacities near the place of availability of raw materials
and capacities for finished products near the place of
consumption will act as a major booster for the players
within the industry due to the savings in freight cost.
Consolidation of companies also means consolidation of
their supply chain, resulting in changes in distribution
network, transport consolidation and consolidation in
sourcing policy of raw materials.
Long Product Cycle and Product Differentiation
Increased focus on branded products could allow the
producers to charge a premium for their products and
improve their average per tone realizations. Also, increased
focus on value-added products will help improve revenues
for companies as cold rolled coils, galvanized steel and
color coated steel enjoy better per tonne realizations than
Hot Rolled (HR) coils.
Steel has very low barriers in terms of product differentiation
as it doesn't fall into the luxury or specialty goods and thus
does not have any substantial price difference. However,
certain companies like Tata Steel still enjoy a premium for
their products because of its quality and its brand value
created more than 100 years back.
19
 194263 Table 2 Cost competitiveness through benchmarking
200000
175000 Parameter Indian International
Outlay, Rs Crores
150000 Blast furnace, t/m3/d 1.3 – 2.2 2.5 – 3.5
Sinter plant, t/m2/h 1.2 – 1.5 > 1.8
125000
Coke rate, kg/ thm 450 – 610+ 350 – 400
100000 Steel making, blows/year/working converter 4K – 4.5K 6K – 10K+
72530
75000 BOF lining life (number of heats) 2K – 10K 5K – 10K+
43560
50000 Cont casting, m/min
25000 Slab 1.0 – 1.9 1.4 – 2.5
3315 1000
Billet 3.0 – 3.5 3.0 – 4.7
0
Civil Ports Shipping Roads Railways Bloom 0.5 – 0.9 0.5 – 1.0
aviation and Hot strip mill
bridges Mill utilization, % 70 – 78 85 – 90
Figure 5 Amount of expenditure in improving infrastructure Yield from slab, % 96.3 – 97.6 98.5
Cold rolling mill
Long Contracts/Marketing Alliance Mill utilization, % 56 – 64 90
Yield, % 92.7 – 94.3 95+
Players within the industry enter into long contracts for their
Specific energy consumption, GCal/tcs 6.45 – 8.5+ 4.5 – 5.5
finished products with automobile original equipment
CO2 emission, kg/tcs 2600 – 3300 1200 – 1800
manufacturers. This will mitigate demand risks, ensure high
product off-take and better capacity utilization. The
marketing alliance between TATA steel and SAIL through Table 3 Comparison of input costs
METAL-JUNCTION is an exemplary in this regard.
China India
Government Investments Power US cents/kWH 4.5 9.0
Freight US cents/t/km 0.96 1.6
Increased infrastructure spending by the Government of Finance Interest rate, % 6 10
India and development of roads could generate significant
savings in freight and transportation cost, making Indian
steel companies and other industries globally competitive. manufacturers went for technical tie ups with leading steel
producers of the world and technical universities in India
Government has very ambitious plans in the Eleventh Five- and abroad.
Year Plan as depicted in Figure 5 but the actual expenditure
and implementation to be brought in reality7. Cost Competitiveness of Indian Steel Industry

Impact of Liberalization The cost competitiveness of Indian steel industry in terms

The economic reforms initiated by the government in 1991
have added new dimensions to the industrial growth in
general and steel industry in particular. Some of the
important features due to liberalization are:
í Licensing requirement for capacity creation has been
abolished;
í Steel industry has been removed from the list of
industries reserved for the state sector;
í Restrictions on external trade, both in import and
export, have been removed;
of various process benchmarks can be seen in Tables 2
and 3. The cost of major raw materials like iron ore, coking
coal, and other raw materials is less in India among the
countries mentioned. The labor cost is low, but it is
neutralized by its low level of productivity. The financial cost
and the cost of power, oil and some other materials are
high. Energy accounts for about 35% to 40% of the cost of
steel production. The above is depicted11-13 in Figure 6.
Steel industry is a capital intensive business. It is estimated
that to set up 1 Mt/a capacity of integrated steel plant, it
requires between Rs 25 bn to Rs 30 bn depending upon
the location of the plant and technology used.

í Import tariff reduced from 105% in 1992 to 1993, to Economies of Scale

30% in 1996 to 1997;
í Other policy measures like convertibility of rupee on
trade account, permission to mobilize resources from
overseas financial markets, and rationalization of
existing tax structure.
There was expansion of the steel sector after the economic
reforms. The new entrants as well as the existing
As far as the sector forces go, scale of operation does
matter. Benefits of economies of scale are derived in the
form of lower costs, R& D expenses and better bargaining
power while sourcing raw materials. It may be noted that
those steel companies, which are integrated, have their own
mines for key raw materials such as iron ore and coal and
this protects them for the potential threat for new entrants
to a significant extent.

20 IE(I) Journal–MM
1000 Others Labour pose any significant threat to steel as the latter cannot be
Energy credit Energy
Raw materials replaced completely and the cost differential is also very
Depreciation and interest
high. In the domestic steel industry, demand still exceeds
800
171 the supply. India is a net importer of steel. However, a threat
157 from dumping of cheaper products does exist. Plastics and
160 143
600 155 composites pose a threat to Indian steel in one of its biggest
160 markets — automotive manufacture.
153 398
383
400 399 372 Utilization of Idle Assets
289
245
307 Steel industry is a capital intensive industry, in the process
200 123 98
77 57 35 89 of development a lot of idle assets have been generated
58 36 66 81 108 88 65 both in terms of physical and production. The companies
63 40 71
0 34 51 43 55 46 are in delima to choose and how to utilize them.
–72 –66 –79 –91 –102 –89 – 68
Upstream Supply Chain and Challenges of Remote
South Korea

China

Global average
Brazil

CIS

India

Japan

– 200 Logistics

Any supply chain will have its own bottlenecks and

challenges. In the case of steel, the upstream supply chain
is faced with a few major challenges. The supply chain, in
Figure 6 Cost of production of crude steel
the case of steel, starts from mining supplies.
Government Policy As Indian steel producers gear up for augmenting their
capacity and produce steel more cost efficiently, various
The government has a favourable policy for steel
inputs at competitive prices are required for steel making
manufacturers. However, there are certain discrepancies
like coal, power, fuel and oil. Although India has huge iron
involved in allocation of iron ore mines and land acquisitions.
ore reserves, development and exploitation of iron ore
Furthermore, the regulatory clearances and other issues
reserve would require huge infrastructural resources like
are some of the major problems for the new entrants.
roads and railway linkages with mine locations. Higher
The policies must now shift focus from protectionism to import of coking coal would involve development of ports,
competition and development, to break the vicious circle better transportation infrastructure to and from ports. The
of high prices and low demand. Indian steel industry has efficiency of Indian ports is affected by low productivity, high
by and large operated in an insulated environment with high costs, long vessel turnaround times, and lengthy customs
custom tariffs and non-tariff barriers. It must be realized delays. Shipment from India to the USA costs 20% more,
that the competition changes the entire work culture, than from Thailand and 35% more than from China.
objectives and the efficiency of an organization to achieve Expanding India's steel sector depends on lower port costs
global competitiveness and several industries in India have for handling key inputs such as coking coal which is
already achieved this objective. predominantly imported, as well as servicing potential steel
exports
Moreover, the lack of coordination between different
departments/ministries and state governments are also a Remote Logistics Management (RLM) is a process to
matter of concern. manage complex supply strategies for various supply
materials, spare parts and items of equipment which are
Bargaining Power of Suppliers required at remote locations, for example at the mine site.
The bargaining power of suppliers is low for the fully Any maintenance order will automatically trigger the correct
integrated steel plants mine, for example, SAIL, Tata Steel, replenishment orders based on the predefined business
as they have their own mines of key raw material like iron rules assigned to the supply materials, spare parts and items
ore, coal etc. However, those who are nonintegrated or semi of equipment for permitted supply strategies. Any required
integrated has to depend on suppliers. An example could material or items of equipment can be supplied by a central
be SAIL, which imports coking coal. Globally, the top three distribution center, or by a vendor via the distribution centre.
mining giants BHP billiton, CVRD and Rio Tinto supply
nearly two-thirds of the processed iron ore and command Challenges of Solid Waste Handling and Emission
very high bargaining power. In India, NMDC is a major Management — Green Supply Chain
supplier to stand-alone and nonintegrated steel mills. The iron and steel industry involves a myriad of operations
Threat of Substitutes which generate vast volumes of air emissions, liquid
effluents and solid wastes. Environmentally suitable means
Usage of aluminum has been rising continuously in the of disposal of this hazardous waste is a priority but
automobile and consumer durables sectors, it still does not unfortunately this area has not been addressed properly.

Volume 91, October 2010 21

There will be more regulations from both government and
society to arrest the emission and recycle the waste
generated in various processes.
Low Labour Productivity
In India the advantages of cheap labour gets offset by low
labour productivity; for example, at comparable capacities
labour productivity of SAIL and TISCO is 75 t/man year
and 100 t/man year, for POSCO, Korea and NIPPON, Japan
the values are 1345 t/man year and 980 t/man year14.
Cooperation Necessary for Development of Steel
Industry
All the eastern states of India should work together for the
steel industry to flourish. Emphasis shall be given on the
need for better cooperation among the states for proper
development of the steel industry in the region along with
the cooperation amongst steel makers. The various bottle
necks are discussed in operating and expert committee
meetings by major steel makers.
Implementation Challenges — Mobilization of Financial
Resources and Delays
Non-Completion of Infrastructural projects in the stipulated
time frame is going to pose a significant risk for the Indian
steel Industry. Many Fls have refused to offer loans to the
Indian Steel companies which have affected the expansion
programmes of all majors like JSW, ISPAT, TAT etc.
STRATEGY FORMULATION : UNDERSTANDING THE
PROCESS
Value Creation Strategies in the Steel Industry essentially
looks at the forecasted demand and supply of steel, the
value chain, future trends and company strategies. It
describes the opportunities and potential constraints for
steel companies to create additional value by taking
advantage of the ‘downstream space’.
Johnson and Scholes (exploring corporate strategy) define
strategy as follows 15:
‘Strategy is the direction and scope of an organization over
the long-term: which achieves advantage for the
organization through its configuration of resources within a
challenging environment, to meet the needs of markets and
to fulfil stakeholder expectations’.
í Understand the strategic context
ª Global supply demand balance market;
ª Technological and global forces;
ª Infrastructure constraints and opportunities;
í Plan for the range of scenarios for growth.
ª Any single forecast of production will be wrong;
22
ª Identify the possible scenarios and prepare
forecasts;
ª Forecast the infrastructure needs;
ª Identify the stages of development, lead times and
triggers.
í Be prepared means
ª Understanding the constraints to growth;
ª The cost of being ‘under prepared’ for rapid growth
can be much greater than the cost of being ‘over
prepared’ for slow growth;
ª Having strategic plans in place — is challenging
because the ‘industry’ is not a single body.
í The shape and timing of growth curves is hard to
predict
ª Timing may be affected by as yet unforeseen
economic, market and political events;
ª Timing is less important in enabling infrastructure
plans than;
ª The need always to be prepared for the next step.
Strategists, now facing the most profoundly uncertain times
in their careers, are creating disaster scenarios that would
have been unthinkable until recently and making the
preservation of cash integral to their strategies. Strategies
are developed at three levels, namely, corporate, business
and functional level and are integrated in order to achieve
sustained growth and turnaround. The points to be
considered while making strategies are15
í Be realistic about scenario planning;
í Intense monitoring;
í Looking beyond the crisis.
Whole process is shown in Figure 7.
Futures thinking
Corporate culture
Strategic intents
Types of strategy
Strategic planning
Business strategy
Evaluation
Analysis
Figure 7 Business strategic approach
IE(I) Journal–MM
Developing scenarios in greater depth, monitoring
strategies more rigorously, and remaining focused on the
long term will all help strategists boost the odds of creating
plans that can lead their companies through the turbulence
and revival of their business and growth towards excellence
and competitiveness.
Over and above the most important thing is to manage the
strategy through ‘strategic decisions’ that answer the
questions asked while formulating it.
Transforming growth of Indian Steel Industry :
Through Restructuring
Even the best change plan will not achieve sustainable
business results, unless it is directly tied to the company’s
organizational and business strategy. Restructuring evolve
with senior management and through internal teams, to
analyze the business, review its strategy and highlight the
challenges to a successful implementation. The need is to
understand capability and appetite for change so that steel
demand grows upon strengths and mitigates weaknesses.
í Strategies for growth
ª On the demand side
è Extensive promotional campaigns;
è Strengthening of rural delivery chain;
è Encouraging infrastructure development.
ª On supply side
è Creation of additional capacity;
è Removal of bottlenecks in the availability of raw
material;
è Encourage R&D;
è Invest to create professional and technical man
power.
Strategic Business Restructuring
The effect of globalization on steel industries in different
regions or countries has not been uniform. Each region is
unique in its own way in terms of raw materials availability,
technology adopted, market conditions, trading policies, etc.
The divergent strategies adopted for restructuring by steel
industries in different countries/regions provide the right
perspective for building a turnaround strategy for Indian
steel industry. Business restructuring is a process by which
companies are transformed into entities that are fighting
fit. The process includes rightsizing of manpower,
concentrating on core competency, hiving off of non-core
assets, prioritizing capital expenditure decisions and raising
self sufficient profit centers. Redesigning corporate key
processes is essential in this respect. Increase in vertical
integration through possibilities of strategic alliances and
Volume 91, October 2010
collaborative arrangements among competitors in mutually
beneficial areas could be explored.
Joint R&D may save a lot of investments and joint marketing
in noncompetitive areas will help in getting better results at
lower costs. However, as the Indian steel industry is
extremely fragmented, it will be more reasonable to expect
an evolutionary rather than a revolutionary consolidation.
Example: once SAIL was planning to change business
restructuring based on long and flat products and the
strategy of corus16 is shown in Figure 8.
Financial Restructuring
With steel and textiles being the two areas where most
Financial Institutions (FIs) have huge NPAs, the two areas
have been declared as no-go by the FIs.The restructuring
plan for companies like Jindal Vijaynagar Steel (JVSL) and
the Mittal-controlled Ispat Industries (IIL) have been again
stopped, albeit temporarily. Restructuring of high cost debt
is estimated to increase their competitiveness in the global
markets with better ability to manage the cyclicality of the
industry. The initiative by the steel companies to go for
External Commercial Borrowings (ECB) and FCCB for
replacing high cost debt is aimed at further reducing the
cost of debt. The companies should try to remain in black
and maintain sound financial health with focus at
repayments of borrowings and disinvestments.
The recent upturn in the sector enabled many companies
to pay off their long-term debts early and, in general, interest
payments have also come down. Essar Steel, for instance,
has come out of the purview of CDR (corporate debt
restructuring) by repaying its entire CDR debt of Rs 2800
crore. In the process, it has brought down the average
interest cost from 11.6% to 8% to 9% per annum. Mukand
has pumped in funds from the sale of land it owned in Kurla,
thereby reducing bank borrowings. And Bhushan Steel has
paid off a lot of its high-cost debt. There is thus a need to
The corus way
The future for corus
Corus
Objectives 2006 to 2007
Restoring success The corus way
More differentiated
Safety
Operational products
performance
Service
Continuous
Savings improvement
Strengthening the Access to low cost
balance sheet steel making
Growth
Invesments More selective
Organic growth business portfolio
Figure 8 Business strategic approach of CORUS
23
religiously monitor important parameters like sales, gross
margins, interest and depreciation, profit after tax, net worth,
total debt and debt equity ratio. The key feature of a financial
restructuring would be:
í Restructuring of asset values by writing down to the
extent of interest capitalised;
í Writing off loans and interests to the extent possible;
í Restructuring of capital and liabilities through reduction
of debts by financial institutions, to the extent possible;
í Reduction in plant inventory through just-in-time
procurement;
í Strategic partnership in non-core businesses;
í Outsourcing of non-core services.
Divestment is a form of retrenchment strategy used to
downsize the scope of business activities by selling, closing,
or spin-off a strategic business unit, major operating
division, or product line. This move often is the final decision
to eliminate unrelated, unprofitable, or unmanageable
operations.
The government is considering divesting some of its stake
in the country's largest steel producer SAIL and the same
may be discussed in the PSU's board meeting. The equity
sale could go along with the proposed public issue of the
PSU.
Financial restructuring will have a positive impact on the
profitability of the company through reduction of interest
and depreciation charges as well as efficient deployment
of capital.
Operational and Technological Restructuring
It is required by industry to benchmark productivity by
understanding the productivity gaps at the operational level
(for example, scale, organization) and adjusting for
differences in relative costs of labor and capital. Apart from
this human factor in understanding why managers do not
improve operations along with external environment for
improving and expanding operations.
Operational management has primarily focused on
improving current levels of efficiency and output in
incremental measures. Strategic management on the other
hand has been addressing the technological needs for
ensuring added edge to the competitiveness of the
company, by probing and keeping future market-product
linkage in perspective. Strategic technology management,
therefore, has involved quantum jump in technology status,
continually reducing the cost of production while improving
product quality. The Company's competitive edge depends
largely on how effectively strategic technology shifts are
managed and nurtured internally while encouraging
operational technological improvements. The operational
24
management shall highlight the benchmarked parameters
as shown in Table 2.
For example, if the demand in India or abroad becomes
less then capacity utilization will go down and in turn the
cost of production may go high. In this situation operation
decisions are taken in compliance with business objective,
and with the functional objectives of the market, finance
and human resource department for restructuring and
liquidity management. This is equally true for the acquired
and merged production units.
Technological restructuring towards latest technology to
improve productivity and reduce wastage for efficient
operations and continual improvement in best maintenance
practices are required to be followed. Moreover, strategic
timely decisions to upgrade and complete utilization of
existing capacities, elimination of bottlenecks in production,
along with identification and starting of idle production
capacities are key to revival.
Indian steel industry faces potential availability constraints
in high grade iron ore and coking coal inputs, as high grade
iron ores are generally earmarked for exports and
indigenous coals are having high ash content. Hence,
development of technological alternatives, such as, sponge
iron instead of pig iron, which can be produced with low
grade coal, the COREX process for pig iron manufacture,
again using low grade coal, and the Romelt process which
makes pig iron from even iron ore fines. POSCO is coming
with FINEX technology, which doesn’t require coking coal
and lump iron ores. Implementation of Dry-cleaned and
Agglomerated pre-compaction System (DAPS) allows use
of non or low coking coals. Preheating of coal before
charging enables use of 25% non-coking coal in coal blend.
Stamp-charging, in place of top-charging eliminates use of
prime coking coal (for example, TATA Steel). Non-coking
coal can also be used in Partial Briquetting of Coal Charge.
Further, natural gas can be used in Blast Furnace, which
reduces usage of coke by 30%. All the technologies talked
about must be equipped with latest state of art automation
and process models.
Infrastructural Restructuring
It aims to develop both internal and external infrastructures
to make the growth conducive, ie, enabling infrastructure
without which growth cannot occur and supporting
infrastructure which follows growth but is not fundamentally
scarcity of resources or barriers to implementation. When
growth accelerates then infrastructural restructuring based
on business strategies particularly for land at appropriate
location will become bottleneck and the factors affecting
demand picture is shown in Figure 9.
In 2005 to 2006, JSW commissioned a 100 MW captive
power plant in Vijayanagar, which helped reduce power
costs by nearly 25%. Earlier it used to buy the power from
outside and paid Rs 2.60 per unit. But now, this cost was
reduced to Rs 2 per unit. This will result in a benefit of
IE(I) Journal–MM
Identify
projects, Ports
lead times
Railways
Supporting Enabling
and trigger
Dams
volumes
Pipelines
Power
distribution
Identify Power generation
projects and
Airports
timing under Roads
different
growth
scenarios Macro
Develop scenarios for incremental population
impact as the fundamental driver of local
government and agency planning
Figure 9 Factors for infrastructural restructuring
close to Rs 100 crore. Bhushan Steel has captive power
plants in Khopoli and will set up a 2000 MW thermal power
plant in Orissa. Essar Steel has power supply agreements
with Essar Power and Bhander Power.
SAIL is already having dedicated power plants and is busy
with new proposals based on coal bed methane (CBM).
Further, JSW — which was dependent on the Goa port
earlier — has set up a dedicated jetty. Freight costs have
come down due to this. The company paid Rs 55 lakh
demurrage (charges levied if a vessel is berthed beyond
the time allowed or agreed upon) in 2004 to 2005. In 2005
to 2006, it didn’t pay any. Indian companies are also
engaged in backward integration to mitigate risks. For
instance, Bhushan Steel and Strips buy hot-rolled steel and
converts them to high-end cold rolled and galvanised steel
for auto and white good application. Today, it is setting up a
3 Mt steel making and hot rolling facility in Orissa.
Restructuring in Marketing Approach
Increasing and promoting the steel consumption could
prove to be a potent medium-term strategy for the Indian
steel manufacturing units. New avenues should be explored
and market expanded for steel companies to turnaround
specially thrust on rural marketing. The restructuring in the
aggressive market approaches will bring the image of the
steel companies. This includes alliance with the companies,
making of strategic business units and e-business. Despite
selling products at a reduced margin, the ultimate consumer
had not benefited because traders and other intermediaries
reaped high profits after judging the local demand-supply
situation, this is the place where real restructuring in
marketing-selling is to addressed.
The marketing strategy shall focus around:
í Development of a system so that company production
and customer specification can be met at the same
time or (customization);
í Giving quality and specification which is of world level;
í Creating competitive differentiation through focused
marketing approach.
Volume 91, October 2010
Data from sales, profit, etc must be used to evaluate the
progress and success of the strategy and to inform of
changes to the transformation and restructuring in the light
of it.
Skilled workers
Marketing approaches to brand products will not only
enhance customer acceptance and loyalty, but also allows
Dwellings steel companies to charge a premium. Accordingly, it is
Schools
Health being witnessed that companies like Tata Steel, SAIL, Essar,
Community JSW, Jindal Stainless, increasingly focusing on branding
steel. For Tata Steel, branded products accounted for 25%
Micro
share in flat products and 31% share in long products, sales
during H1 financial year 2005 (against 21% and 30%,
respectively, in H1 financial year 2004). Tata Tiscon, Tata
pipes, Tata agrico, Tata shakti are some of the brands from
Tata steel. SAIL is having SAILJYOTI for GP/GC plates/
sheets, SAIL-TMT rebars for construction, SAILCOR for
wagon and coaches, SAILMA for earthmovers and bridges,
SAIL-HITEN for ATM machines, SAIL KAVACH for bullet-
proof jackets. Innovative advertisements also add to brand
value17.
Restructuring in Government Policies and Review
System
The government to have a mineral policy in favour of Indian
companies as china will be a major competitor to overcome.
The fast decision for allotment of leases of mines etc to be
taken based on certain rules and regulations to promote
growth and expansion of Indian steel industry. Technology
policy is to be so designed by the government that it will
generate the thrust to update the technology by the steel
producers to have clean and healthy India. However, the
major restructuring is required in the method of review of
the policies and implementation of the same.
STRATEGIES FOR REVIVAL AND GROWTH ON
INDIAN STEEL INDUSTRY
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 strategies are based on time frame make the
companies ahead of competitors. These include short term,
medium term and long term formulation at corporate,
business and functional level to revive the demand and
attain growth.
Short Term Strategies : Quality Reinforcement
The short-term plan is aimed at providing a lease of life to
the ailing steel industry. It would also help it to withstand
the adverse pressures of the environment and move
25
towards growth and development. The short-term plan
would also provide it with a breathing time for working a
potent strategy for future.
These shall aim at the following issues:
í Cost reduction by minimizing maintenance and
operational cost;
í Focused marketing with shorter product cycle;
í Utilization of idle assets and maximization of revenues;
í Technological improvements;
í Lowering fixed costs-manpower reduction;
í Focusing on core competency.
According to analysts from Barclays Capital, the outlook
for steel demand in the short-term appears very weak, with
little foreseeable strengthening in consumer activity. With
the current market scenario, it would be very difficult to see
steel demand picking up before the second half of 2009.
Infrastructure sector is the biggest consumer of steel
industry, but the infrastructure projects could be put on hold
or delayed as tightness in credit markets restricts the
availability of finance with high borrowing costs have made
it difficult for companies to raise capital.
In order to utilize the existing raw material and process
technology certain temporary steps can bring operational
cost on lower side by using non-coking coal, natural gas in
blast furnace, use of by-products as input etc.
In order to arrest the recurring problems and quality issues
the concept of quality circles, six sigma teams and predictive
and preventive maintenance practices shall be followed to
improve effectiveness to achieve growth through cost
reduction.
In maintenance practices, the concept of zero defects has
been felt necessary for improving overall efficiency.
Availability of equipment is very important for production of
quality products at low cost. The maintenances are done
on predictive and condition based. The predictive
maintenance tools such as thermal imaging, mathematical
modeling etc are helpful in reducing cost and efficiency of
the plant and various linkages in the process are not
disturbed. Setting up an effective maintenance program
using condition based monitoring system (CBMS) boosts
the productivity of plant equipment by increasing its
availability through avoiding unplanned shutdowns and
decreasing the time needed to make repairs. Common
techniques used for condition monitoring are : vibration
analysis, shock pulse measurement analysis, wears debris
analysis and thermography.
The way out is to utilize the idle assets and maximize the
revenues by aggressive marketing and collection of
payments along with efforts to select products and markets
that give maximum net sales realization and return.
26
Strategic Decision to Promote Innovation
The Austrian economist Josef Schumpeter once declared
that economic downturns are ‘a good cold shower for the
economic system’. Economic downturns can have positive
effects; they force companies to increase their efficiency,
cut waste, and strive to do things in smarter ways.
All companies have to cut costs, and deciding what should
stay and what should go is the first challenge that faces
them. One of the early victims of downsizing is often
spending on innovation activities such as R&D, training, or
education budgets. Long-term projects are shelved, hiring
is frozen, and workers are made redundant. Worse, risk
capital evaporates. Unfortunately, this is akin to patients
deciding to reduce expenditure by not spending money on
medication (as, indeed, has been reported recently).
During economic downturns, innovation is the single most
important condition for transforming the crisis into an
opportunity. And while many businesses simply won't be
able to afford further investment in innovation, governments
should recognize that innovation systems, with all their
academic, industrial, and public components, are strategic
national assets that need to be protected, just like the
financial and housing sectors.
While operating efficiently in the present, one has to
constantly strive to innovate effectively for the future.
í Operational management of technology;
í Strategic management of technology;
í Fully exploiting existing technology;
í Implementing new technology to create competitive
advantage;
í Integrating technology strategy with business strategy.
Figure 10 shows the relationship between competitive
environment and technological innovation
There are two options for any steel player in the world to
have a competitive edge in this red-hot competitive steel
Cost curve having slow technological
High development
Production cost
The difference in cost
competitiveness due to
innovation
Cost curve having fast
Low technological development
Past (low) Future (high)
Time (intensity of competition)
Figure 10 Competitive environment and innovative technology
IE(I) Journal–MM
market — consolidation to control the price of steel by
controlling the supply. Examples: Mittal Steel’s acquisition
of its rival arcelor and Tata Steel’s acquisition of corus, the
second largest steel producer in Europe, reducing cost by
having control over the raw materials for a long term basis.
Major players in the steel industry to adopt a collaborative
and competitive approach to create distribution channels
in semi-urban and rural areas; share best practices to
become cost competitive; effectively tackle environment
issues; focus on development of skills of steel industry
personnel; and develop products that are best suited to the
needs of Indian steel users.
LONG AND MEDIUM TERM STRATEGIES : POLICY
AND ORGANIZATIONAL REINFORCEMENT
The key strategies which companies can adopt in this
scenario is to focus on value-added products, rationalize
cost structure through better manpower planning, logistics
and raw material sourcing. The companies with a focus on
the domestic market are likely to be more favorably placed,
given the relatively stronger demand from the local users.
Raw material security to drive merger and acquisition in
the long-term.
Larger Mines and Fragmented Small Players
Presently 300 mines produce 206.4 Mt of iron ore, where
mines of 2 MTPA and above are only few run by public
sectors, large private sectors and government undertakings.
It is the need of the hour to combine small mines and run
only large mines to get the following benefits :
í Larger mines have higher profitability to take care of
CSR, environment;
í Loss of ore in mine barriers will be minimized;
í Lower cut off ore can be mined with better technology.
It can be seen from Figure 11 that 39.6% of crude steel
production is by other small steel makers which required
attention as well11, 9.
Cost Competitiveness of Indian Steel Industry
A long term strategy is required to become cost effective
for sustainability. The reduction of the cost is another major
Others 39.6%
SAIL 26.6%
ESSAR, ISPAT
and JSWL 16.5% TISCO 10.2%
RINL 6.9%
Figure 11 Share of different steel plants in crude steel production
in India
Volume 91, October 2010
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:
í The reduction in the cost of operations;
í The reduction in the costs pertaining to the working
capital;
í The reduction in the costs pertaining to the production
inventory or stock that is not sold;
í The improvement in the economics operating in the
technological aspects of production;
í The transposition of basic materials of production;
í The sources of the procurement should be different.
Technology Transfer, Technology Adaptation and
Innovation
Indian companies lack experience in managing innovation
and there are no easy recipes to follow. Intellectual Property
Rights (IPRs) play an important role in protecting innovations
from being copied by others and companies now have to
formulate IPR strategies that complement their competitive
strategies.
Lack of expenditure in research and development can be
seen in the balance sheet of the Indian steel majors. There
is need of Technology push from the R&D for:
í From specific project requirements (user specs);
í Product development strategy and evolution (driver
approach);
í From competition analysis (follower approach);
í Tuning technology to business.
R&D which was considered to be a technology incubator
(in the past) but today it linked to the business process by
creating leading edge products and processes.
Lack of adoption of scientific mining methods, especially
by small players, leads to inefficient extraction of ores from
commercial mines. There is a need for ore miners, as well
as the state governments to focus upon adopting the latest
technology for ore mining for supply at pace and good
quality.
When additional capacity will come on-line, the oversupply
situation will become more dramatic with respect to the
product mix leading to cut-throat competition. Therefore,
focus on producing wider product-mix with emphasis on
value added products and improved product quality to be
made during technological plans for the projects.
Developing countries like India cannot always afford to
develop their own technologies. They need to import many
27
Table 4 Steel sector — investments looking good

Company Project Capacity addition, Mt Investment, Rs bn Expected completion, year

Tata Steel Jamshedpur exp, Phase II 2.9 45.5 2010

Tata Steel Orissa steel project 6.0 220.0 Phase I of 3 Mt, 2010
Tata Steel Jharkhand steel project 12.0 420.0 NA
Tata Steel Chattisgarh steel project 5.0 180.0 NA
SAIL Modernisation 10.4 530.0 2010
Rastriya Ispat Nigam Vishakapatnam exp 3.3 86.0 NA
JSW Steel Karnataka, Phase II 3.2 70.0 2010
JSW Steel Jharkhand steel project 10.0 350.0 NA
JSW Bengal Steel West Bengal 9.2 350.0 Phase I of 3 Mt, 2010
Arcelor Mittal India Orissa steel project 12.0 400.0 NA
Arcelor Mittal India Jharkhand steel project 12.0 400.0 NA
Posco India Orissa steel project 12.0 510.0 NA
Ispat Industries Maharashtra 1.4 20.0 2011
Ispat Industries Maharashtra 5.0 60.0 2015
Ispat Industries Jharkhand steel project 2.8 67.5 NA
Ispat Industries Karnataka 3.0 71.5 NA
Essar Steel Chattisgarh steel project 3.2 70.0 NA
Essar Steel Hazira SEZ 3.9 105.0

technologies from developed nations. Since late ‘50s, large
number of steel producers in India went for technical
collaborations with the world majors. Many public sector
steel plants were built with collaboration from countries like
United Kingdom, Germany and erstwhile USSR. In earlier
years, many of these plants faced problems in their
collaboration projects.
Export Market Penetration
It is estimated that world steel consumption will double in
next 25 years. Quality improvement of Indian steel
combined with its low cost advantages will definitely help in
substantial gain in export market. Signs of revival are being
witnessed in overseas markets. Iraq, for instance, is
committing more than $40 billion in reconstructing its entire
war ravaged cities. Iran and other countries in the Gulf are
likewise pumping in a lot of money in infrastructure.
Once the government accelerates investment in
infrastructure, steel consumption will go up manifold.
Construction of grain silos, roofing in rural sides,
construction of natural gas pipelines and changes from
bamboo scaffoldings to steel will spur domestic
consumption. Emphasis on these would be mutually
beneficial, besides arresting environment damage. While
the demand for steel will continue to grow in traditional
sectors such as infrastructure, construction, housing
automotive, steel tubes and pipes, consumer durables,
packaging, and ground transportation, specialized steel will
be increasingly used in hi-tech engineering industries such
as power generation, petrochemicals, fertilizers, etc. The
new airports and railway metro projects will require a large
amount of stainless steel.
According to an estimate, with the growing need for oil and
gas transportation infrastructure, a US$ 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% duty on
the exports of these products. According to a study by ICICI
Direct, Indian steel companies are likely to get 19% of the
total global demand in the years to come.
Therefore enhancing domestic capabilities to offer high end
products for the high end application segments in domestic
markets is the biggest challenge.
Capacity Expansion and Technology Upgradation :
Quality Issues and Project Management
Capacity enhancement through technology upgradation and
modernization is called by the demand in steel and the
stringent quality issues of the customer and some of the
capacity expansion programs are mentioned 5,6,20 in
Table 4.
The need for steels with superior performance capability at
lower cost has seen a steady increase over the last few
decades. This has been met through continuous
upgradation of Iron and steel making and rolling
technologies which require a regular attention. The various
hindrances in the path of modernization must be removed
and planning to mitigate the past problems as mentioned
below:
í As the project progresses, it may be found that the
scope of the project has changed which requires
adjustments to cost, time, quality, risk or other project
deliverables;

28 IE(I) Journal–MM
 í The ever-changing nature of our economies and
organizations creates uncertainty on organizational
priorities. One of the most frustrating experiences a
project manager can suffer is managing within this
environment — while the project is being implemented;
í A change in top management may be accompanied
by a change in priorities and even in the direction of
expansion and other efforts;
í A full project management-training curriculum has
been missing to address the ongoing development
needs of functional management, project sponsors,
project managers and team members. The various
aspects of project management like hands-on skills
and techniques that enhance the ability to manage all
elements of a project, risk management, knowledge
retention strategies and other important aspects of
project management success has been missing.
Probably this is true to all the major steel projects
carried till date in India.
Organizations have never linked their projects back to their
corporate strategies and plans, which have led, project
delays. One must understand how each project contributes
to achieving corporate goals.
The list below highlights some of the top project
management challenges in past faced by Indian Steel
Industry which may continue in future also which are
required to be addressed by the steel producers of India
for timely completion of the projects to meet the demand
are:
1. Unrealistic deadlines;
2. Communication deficit;
3. Scope changes due to lack of.
4. Resource competition projects usually compete for
resources (people, money, time) against other projects
and initiatives, putting the project manager in the
position of being in competition. Management of
project Portfolio to define and set priority across all
projects was really missing.
The new technology to be adopted with focus on the major
key technological areas mentioned below:
í 100% production of steel through BOF route or
alternate technology;
í 100% processing of steel through continuous cast
route;
í Provision of alternative fuel injection methods like coal
dust/tar injection in all the blast furnaces;
í State-of-the-art process control computerization /
automation;
Volume 91, October 2010
í State-of-the-art on-line testing and quality control
facilities;
í Envisaging Enterprise Resource Planning (ERP)
across its plants.
Many steel giants are coming with the technologies where
the dependencies on basic raw materials like coking coal,
Iron ore Lumps are not there. For example, POSCO is
coming with FINEX technology.
While the steel companies have enough resources to
finance these massive projects, major problems faced by
them are on the front of land acquisitions, forest clearances,
and iron ore mining leases for the Greenfield projects.
Despite all these problems, none of the steel companies
have made announcements to shelve their projects. This
can be attributed to the presence of significant amount of
high quality iron ore and coal reserves in India and the
potential opportunities in infrastructure, auto and
construction sectors. Thus, long term scenario looks
promising indeed.
Focusing on each project's challenges and learning from
them will help to build a more capable and successful project
management capability.
Focus on Reduction in Product Development Cycle
and Branding of Products with Customer Service
Increased focus on branded products could allow the
producers to charge a premium for their products and
improve their average per tonne realizations. Also,
increased focus on value-added products will help improve
revenues for companies as cold rolled coils, galvanized steel
and color coated steel enjoy better per tonne realizations
than HR coils.
Long Contracts/Marketing Alliance
Players within the industry enter into long contracts for their
finished products with automobile original equipment
manufacturers. This will mitigate demand risks, ensure high
product off-take and better capacity utilization.
Search of New Markets
Domestic steel demand would reach 70 Mt and steel supply
would touch 77 Mt by the end of the terminal year of 11th
Plan, ie, 2011 to 2012. These would represent 40% and
66% growth rates respectively as compared to 2007 to
2008, the first year of the Eleventh Plan period. The
Marketing Strategy shall focus around:
í Developing such a system so that company production
and customer specification can be met at the same
time or (Customization);
í Giving quality and specification which is of world level;
í To create competitive differentiation they are adopting
focused marketing approach;
29
 í Advertisement and Slogans (like, SAIL came out with
a new ad/slogan ‘there is a little bit of SAIL in
everybody’s life, Tata — ‘we also make steel’ and
ESSAR — 24 Carat Steel tag line).
Branding of Products with Customer Service
Science is eternal, whereas, technology and products have
nationality and branding like SAIL’s or TATA’s product. The
core, manufactured products today are so entwined with
services, that they have become indistinguishable.
Moreover, these services are expected by the customer as
an integral part of the product. In such a scenario, the
answer to gaining competitive advantage lies in providing
superior value to the customer, by providing customer
service with the product at a lower delivery cost. Using
customer service to retain and acquire customers could
provide a new strategic advantage for steel makers.
Value Creation Strategies
Steel industry essentially looks at the forecasted demand
and supply of steel, the value chain, future trends and
company strategies. It describes the opportunities and
potential constraints for steel companies to create additional
value by taking advantage of the ‘downstream space’
between the rolling mills on one hand, to the automotive
and construction assembly lines on the other.
The new market for the product mix has to be explored so
that the full capacity utilization of the plants can be made in
spite of less consumption in the targeted sectors and areas.
India is in search of a new market for its steel products
particularly in South-East Asian countries, which are
showing signs of economic revival. Attempts to explore
additional markets in the Middle East, Bangladesh,
Myanmar, South Africa, Mexico, Taiwan and some other
countries are required to be made. Till date no steel maker
has tried to the best to explore the rural market, hence the
unexplored rural market is needed to be explored. This new
focus- in essence, ‘going on offense’ — required a new
playbook, to be developed by examining the strengths,
weaknesses, opportunities and threats facing each market
sector and providing a plan to generate steel growth20.
Market development strategic plans to identify key
competitive issues, define best practices, and implement
steel solutions that meet customers’ needs and advance
steel’s competitive edge in the marketplace.
China Factor and Global Scenario
China has substantial reserves of Iron ore but is a large
steel user as well, has banned iron ore exports and in fact,
actively encourages its steel producers to secure and
develop iron ore deposits outside. Therefore, the
international trade of iron ore is driven by China. Moreover,
with their low labour costs and huge capacities, the Chinese
can compete on the price front in steel. An equally strong if
not stronger contender for the same is Korea. It is expected
that global capacity and overproduction due to mergers and
30
acquisitions will tend to drive prices down though it will
increase trade. For the next few years, the effect of mergers
on the industry would keep both prices and trade high and
keeping eye on these factors proved to be crucial for the
growth of business and production. China takes a good
amount (90 Mt) of Iron ore from India. Export duties and
traffic congestions from Australia and Brazil are turning
opportunities to India. Indian miners and steel producers
should put pressure on government to have a mineral policy
in favour of Indian companies as china will be a major
competitor to overcome.
Overcapacity is a challenge industry needs to tackle for
future growth.
Contingency Planning
The profitability of steel industry in India is strongly linked
to variations in business cycle. Steel companies register
heavy profits when there is boom in the economy and profits
decrease when there is depression. In the late 1990’s, the
Indian steel industry was experiencing a glut and this
affected the profit margins of players.
Contingency planning might actually be the most critical
aspect of overall strategic plan. Just think about all the
drivers. It shall be set to tone as to how rapid change in
technology, government regulation, globalization, change
in social and cultural aspects of consumers, pressure
groups, watchdogs and green marketing issues impact the
marketing of an organization. Early diagnosis of these
factors by managers of the company enables them to find
ways to boost their company's strategic flexibility and to
make proactive marketing strategy. To reduce its
dependence on external environment, a two-pronged
strategy can be involved for
í branding its products; and
í moving to high value products.
Survival Strategies
So what are companies doing for survival? Broadly, the
strategies can be divided followed by the companies into
four different categories.
The first one is to move up the value chain for delivering
high value-added products. In production terms this means
producing thinner, stronger steel as well as a greater
proportion of coated products, to add more value to
production. The idea is that higher value addition would be
able to offset high capital cost associated with expensive
modernization or greenfield plants put up earlier. Examples
can be given of CSN in Brazil, Anganag and Chongqing in
China, SAIL, Essar and Tisco in India.
The second visible trend is to scrap inefficient plants. By
reducing the capacity overhang, this eases supply
pressures and there is a likelihood of price rise which would
offset the mistakes of the past.
IE(I) Journal–MM
In the third week of March, four major EAF players in South
Korea, ie, Dungkuk Steel, Inchon Iron and Steel, Korea Iron
and Steel and Kangwon Industries — decided to band
together under a common holding company in an attempt
to reduce excess capacity. The excess capacity (according
to estimates, in the region of 4 Mt) would either be scrapped
or sold to outsiders. The same decision has been taken by
four major Japanese steel makers — NKK, Nippon Steel,
Sumitomo and Hitachi. They have agreed to a production
cut of 10 Mt and another 10 Mt of capacity would be phased
out of the system in the next fiscal.
The third visible trend is the strategy followed to pick up
scrapped plants at a bargain and then turn them around.
Ispat International has become the world’s largest EAF steel
producer by picking up inexpensive steel assets at
throwaway prices and then reworking the plant to make it
operationally efficient. The company also derives a lot of
incentives from the government which also has an effect
on the cost structure of the final product. This strategy has
so far paid rich dividends for Ispat International. But such
companies are more the exception rather than the rule.
The fourth visible trend is to try to look inwards into the
local market rather than exports or imports. This is clearly
seen in the synergy between the strategies pursued by
China and Japan. Construction activity has reached a
saturation point in Japan. Accordingly, Japanese
manufacturers are selling plants which are into long
products (mostly used in the construction sector).
Simultaneously China, which is in a different stage of
economic development, has shown keen interest in picking
up the Japanese plants.
At the end of day, the strategy to scrap inefficient plants to
cut down losses might well clinch the deal for players in the
Asian region.
Potential Utilization through Information
Technology (IT)
The advantage of a proper IT-based information system is
that accurate information can be obtained at a much faster
rate, reducing downtime and speeding up decision-making
process. Since, time is more than money, it would have
direct impact on cost. The objective would be to implement
IT in all operations and to integrate these with day-to-day
decision-making process. IT applications will help in
streamlining both process chain and supply chain and would
thereby result in cost reduction and increase in productivity.
Therefore, the need to train the manpower to make them
acquaintance with the new IT tools has to be the part of
strategic planning for successful implementation of the
project. There is a need to adopt the usage of IT to harness
its potential for project management at appropriate places
for monitoring and control even during project execution.
Steel plants in India are still using legacy software in India.
They are unable to take advantage of IT in order to attract
global customers. IT applications to achieve customer
Volume 91, October 2010
centric processes, cost effectiveness, enhanced profitability,
product quality and stake holder satisfaction. The plan
envisages strengthening of IT communication network,
establishing Production, Planning and Control (PPC)
computerization and implementation of Enterprise
Resource Planning (ERP) and Manufacturing Execution
System (MES) to avail the benefit of transparency in
negotiations and purchasing at best available market price.
The software vendors should come up with specific
solutions for the steel plants as they have for other verticals.
There is a need for lot of automation in the industry. The IT
applications can help them streamline both supply and
process chains that will ultimately help them reduce cost
and increase productivity. Moreover steel companies need
to adapt ‘business models’ for volume market and changing
business scenario and marketing for branding the products.
The introduction of SAP solutions within Tata Steel has led
to efficient business processes, enhanced customer
service, reduced costs, improved productivity, accelerated
transaction time, workflow management and reduction in
the number of credit management errors.
‘Post the introduction of the SAP solution, the results have
been terrific. The company has spent close to Rs 40 crore
on SAP implementation, and has already saved Rs 33
crore’, said by Mr R C Nadrajog, Vice President (Finance),
TATA Steel. The manpower cost has reduced from over
$ 200/t two years ago, to about $140/t in 2000. The overdue
outstanding has been brought down from Rs 5170 millions
in 1999 to Rs 4033 millions by June 2000. The inventory
carrying cost has drastically deflated from Rs 190/t to
Rs 155/t . To add to this, there have been significant costs
savings through management of resources with the
implementation of SAP.
Competent Workforce and Manpower
Many contractors do not have appropriate staffing levels to
supply planners and schedulers to large projects. When a
number of projects will come for execution at a time,
manpower availability will be a real constraint. One of the
major innovative HR practices is the use of work teams
with multi-skill training and responsibility. In particular, the
use of production workers for routine maintenance reduces
the need for specialized maintenance workers, who are
often underutilized. The use of multi-skilled workers and
fewer job classifications is critical to a high-performance
workplace in the steel industry.
In order to execute successful growth strategies and provide
the growth teams with the skills, know-how, and tools to
generate growth opportunities, evaluate these opportunities
to create a growth pipeline, and implement a growth strategy
to deliver measurable business results shall be part of the
strategies to achieve sustainability.
The methods that are adopted for the creation of wealth in
the Indian steel industry are also supposed to act as
31
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.
The assignment of respective jobs as per the merit and
expertise available within the organization will be a real
challenge for smooth execution of the project. Hence faster
planning and shaping of projects is required to take the
services of available resources. This is to be clearly
understood that the so-called big advantage of low labour
cost in India is more or less a myth for two reasons. It has
widely seen that more man hours utilized often neutralizes
low wage rates. Also, low wage rates are the root causes
of poor labour productivity.
Government Policies and Directives
The Ministry of Steel is expected to play a crucial role in
ensuring harmonious and integrated growth of the steel
sector in India. Steel being a core sector, its sustained
growth is a prerequisite for attaining the level of GDP growth
envisaged in the Eleventh Five-Year Plan. The Ministry of
Steel is expected to play the role of a facilitator to remove
bottlenecks faced by Indian steel sector. This includes
ensuring the availability of raw materials, development of
infrastructure, constant interaction with Financial Institutions
for making provision of the needed capital and also
interacting with other concerned Ministries and Departments
of the Government for appropriate policy responses.
Boosting Demand in the Steel Consuming Sectors
To boost the demand and consumption of steel an Institute
for Steel Development and Growth (INSDAG) has been
set up in Kolkata with leading steel producers in the country
as its members. The Development Commissioner for Iron
and Steel (DCI&S) has launched a National Campaign for
increasing the demand for steel, in nontraditional sectors,
particularly in the construction, rural and agro-based
industrial sector. Moreover, interest rates will have to come
down to enable a common man to buy a house and other
utilities
Duty on Project Imports
To enhance the consumption of steel in the country, the
Finance Ministry has been urged to provide a level playing
field to domestic steel producers for steel supply against
International Competitive Bidding (ICB) under 'project
imports' in the fertilizer, power, oil sectors by exempting
them for excise and sales tax.
Reduction in Power and Rail Tariffs
The Ministry of Steel has been interacting with State
Governments to provide power at reduced/ concessional
tariffs especially to mini steel plants all over the country.
Similarly, the freight rates adopted by the Railways have
been rationalized after inter action with the Railway Board
32
and freight cost on raw material transportation for steel
producers is reduced.
Reduction in Input Costs
The Ministry of Steel has also been able to rationalize the
classification of coking coal in consultation with the Coal
Ministry so as to reduce the impact of royalty payable on
this basic raw material. Import duties on several raw
materials, such as, scrap, ships for breaking, coke, non-
coking coal etc. used by the steel industry has been reduced
steadily over the past four to five years.
Import Duty
In the last budget, imports duties on finished steel items
have been increased as a result of rationalization of tax
structure.
Excise Duty
The Finance Ministry was requested not to resort to further
increase in Excise Duties on iron and steel materials, in
the last few budgets. On the other hand, a case has been
made to reduce the excise duty levels on all finished steel
items, especially long products (which are consumed by
the construction sector) by at least 10%, as the construction
sector cannot avail of MODVAT benefit.
Strengthening of Anti Dumping Mechanism
To check the increasing trend of cheap imports in certain
categories of flat products especially from CIS and South
East Asian countries, the Ministry of Steel has urged the
Commerce Ministry and the Finance Ministry to strengthen
anti dumping mechanism so that fast decision on dumping
can be taken.
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:
í The reduction in the cost of operations;
í The reduction in the costs pertaining to the working
capital;
í The reduction in the costs pertaining to the production
inventory or stock that is not sold;
IE(I) Journal–MM
 BF top-pressure
recovery turbine BOF gas boiler
Steam recovery
Sensible heat recovery
Coking

Gas
coal Electricity recovery

Gas
Coke oven gas

Fuel saving

Continuous
caster Continuous
Hot charge rolling annealing line
Hot rolled steel
products
Hot direct
rolling
Coke dry
quenching Cold rolled steel
products
Basic oxygen
furnace
Hot Cold Batch
Blast rolling rolling annealing
Reheating
furnace furnace
furnace
Sintering machine
Hot charge rolling

Figure 12 Energy saving measures

í The improvement in the economics operating in the Baosteel China Merger or acquisition with
technological aspects of production; Magang Group [Ma'anshan]
and with Handan Steel to
í The transposition of basic materials of production. create world’s second
largest steelmaker behind
Future Strategies — use of Alternate Energy Sources
Arcelor Mittal
Scientists are of the view that use of coal has to be phase Blue Scope
out quickly or risk an uninhabitable planet. Controlling the
Steel Australia Disposal of downstream
emissions of carbon dioxide (CO2) as a measure against
cold rolling / coating
global warming is one of the crucial environmental issues
ventures [Asia Coated
that the steel industry must undertake. If steel industry does
Product Operations] in
not abled to take care of these factors, a day may come
Thailand and Indonesia;
when production is required to stop. This may lead to
perhaps also of North Star
stoppage of many steel plants affecting the supply-demand
joint venture in the USA to a
gap. Moreover, the cost of energy will be very significant in
large CIS steel group
driving the steel industry, calling for saving of energy at
different levels of production. A schematic of potential areas Bohler
of saving energy14,19,20 is shown in Figure 12. Uddeholm Austria Special steels opportunities
Case Studies : Strategy for Revival and Growth in Eastern Europe
Cleveland
Company Country Strategic
Cliffs USA Corporate governance
ArcelorMittal Luxembourg Sale of selected Central issues
European steel assets. Mine Corus UK Long term exit from UK
safety improvements in steelmaking including
Eastern Europe. Longer- Teesside
term downstream pursuit of
GSHL Nigeria Long-term start-up of
construction markets,
Ajaokuta driven by medium-
including building design /
term ramp up of
fabrication / distribution /
downstream production
erection jv’s in Asia
Mittal Steel
Azovstal Ukraine Leverage of cost advantage/ Krivoy Rog
strategic localization through [formerly
regional M&A Krivorozhstal] Ukraine Switch (perhaps just partial

Volume 91, October 2010 33

 initially) from long to flat hot
rolled products, making use
of local iron ore for the
production of higher quality
steels
Mittal Steel
Termitau
[formerly
Karmet] Kazakhstan The priority need seems to
be mining health and safety
improvements
Nippon Steel Japan Consolidation with JFE
followed by facility
rationalization and internal
restructuring along lines of
the British Steel turnaround
seen in the late 1970s
Nucor United States Upstream emphasis on iron
unit sourcing.Downstream
continuation of pursuit of
opportunities in construction
POSCO Korea Pursuit of international
ventures especially in
Vietnam, Laos, Cambodia;
acquisition of [or much
closer production oriented
collaboration with] the
Vietnamese Steel
Corporation
Severstal Russia Sale of Severcorr and other
North American assets [for
example, to CSN] to help
with debt repayment
Sumitomo Japan Shift from technical
cooperation to international
manufacturing jv and
cooperation agreements
System
Capital
Management Ukraine Iron ore price control through
dominance (through
MetInvest / Smart) of
Ukrainian supply
Tata Group India Development of global
assets, capabilities and
brands. Much deeper
integration of Corus with
slab sourcing from
Jamshedpur plant in India
and / or from new Greenfield
steelmaking facilities in
African continent [for
34
example, Liberia] fed by
local iron ore and low cost
local gas
Thyssen Krupp Germany Joint ventures / partnerships
looking East
TISCO China Melt shop upgrade and
capacity expansion;
reorientation to special
steels
US Steel USA Acquisition led business
growth and / or Greenfield
investment in South America
Voestalpine Austria Growth beyond 500 km
hinterland — development
of larger scale through
Greenfield Central or East
European CSP Plant,
possibly in the Black Sea
region
SAIL India Focusing on core
competency and restricting
of business, man power
reduction, selling of idle
assets and improved cost
measures in operations
CONCLUSION
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. Production and production
capacities should be increased through expansion and
installation of new plants using secondary steel making
routes that are more cost effective and quality conscious.
At the same time, productivity of our steel plants must be
maintained at levels close to international standards. Indian
steel industry must try to derive benefit from enormous
economies of scale in production, distribution, marketing
and management.
For the Indian steel industry to revive and grow technological
innovations are vital. For a running steel plant, the approach
has to be such that a delicate balance is struck between
introducing operational improvements and at the same time
planning for strategic technology shifts.
All in all, in order for the steel industry to become globally
competitive it is important that strategies have to be made
so that bottlenecks in the growth of this sector are removed
and the companies are more responsive to change. As
Charles Darwin once said, ‘It is not the strongest of the
species that survive, or the most intelligent, but the ones
most responsive to change’. Those that respond without
delay will be the success stories of the future.
The following suggestions are given to rejuvenate the Indian
IE(I) Journal–MM
steel industry:
í Technology policy is to be so designed by the
government that it will generate the thrust to update
the technology by the steel producers;
í Further liberalization towards tariff structure, full
convertibility of Indian currency, more equity
participation by foreign partners, rationalization of tax
structure etc. will be required;
í Steel companies must assess their core competency
and realign their strategy to cope with the internal and
global competition;
í R&D focus is to be increased substantially.
Expenditure on R&D by steel plants should be
increased. With a strong R&D base, organizations will
be able to assimilate the technology faster;
í Organizational adjustments must be made while
adopting newer technologies. Effective human
resource policy will help speedier technology adoption.
Socio-economic aspects should be dovetailed while
selecting a technology;
í Training and retraining with updated inputs should be
a continuous process in steel plants. Training
programmers should be designed for people from
different hierarchy including top level management;
í As economy is becoming more and more market-
driven, steel sector should also tune to it;
í Technology transfer plans are to be worked out more
carefully. Indian firms must select appropriate
technology with proper scope of adoption;
í Firms must do technological forecasting, which is not
common in Indian steel industry, to take better
decisions on product mix and investment proposals;
í Resource utilization must be more effective to improve
on the productivity.
The suitable diversified strategy and identified market
segments with focus on value-added products close to the
core business will be key to success. The strategy for revival
and growth of Indian steel industries with a faster economic
growth needs to unlock its full potential. This strength lies
in low cost and fairly skilled workforce coupled with faster
technological improvement and operational efficiency
through better manpower planning, logistics and raw
material sourcing along with government help to have
cutting edge in steel market at higher output and profit
margins.
Volume 91, October 2010
The factors for revival of Indian steel industry are buoyant
global steel consumption, buoyant local steel consumption,
lower cost of production and adequate rise in price against
hike in input costs together with backward integration,
consolidation and branded product sales, marketing
alliances, etc.
Even in these tumultuous times, strategic planning doesn't
have to be an exercise in anxiety-or futility.
ACKNOWLEDGEMENT
Authors are grateful to the colleagues of SAIL for sharing
their thoughts for the problems and various strategies/
solutions for the revival and growth of Indian Steel Industry.
Authors are highly obliged to the management of RDCIS
for their valuable supports extended to them in bringing
this paper.
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35