Acknowledgements

This project would not have been possible without the help of some people. I
would like to take this opportunity to thank them for their invaluable inputs and
support.

Mr. Arvind Mishra , Deputy General Manager(Marketing), Durgapur Steel

Plant for having the faith in me and giving me this opportunity to work in the
organization.

My sincere thanks to my project guide Mr. Mahendra Kumar Sahu, Deputy

Manager(Marketing) Durgapur Steel Plant & Mr. D V Jha, Assistant Manager
(Marketing) Central Marketing Organization (SAIL) for helping me in all possible
way to make my learning experience at Steel Authority of India Limited a success.

My deep gratitude to my project mentor members, Prof. Supriyo Chatterjee

and Prof. Debraj Datta of Globsyn Business School for always extending their
humble support.

I would also like to thank all staff and employees of Durgapur Steel Plant &
Central Marketing Organization (SAIL) ,who have come forward with their
helping hands whenever any assistance has been sought.

I’m thankful to all my family members and friends who have constantly
encouraged me and been there to help even without having to ask.
 DECLARATION

I,SUDIP KANTI HATI, student of GLOBSYN BUSINESS SCHOOL state that I

have completed my 8 week internship at DURGAPUR STEEL PLANT (SAIL),
and that my project topic is stated as under:

A Study on the Growth of Indian Steel Industry

I had the opportunity to interact and gain knowledge from various sources. I have
used the valuable inputs from them in my project report.

All the information that I have provided are true and fair to the best of my
knowledge

(Sudip Kanti Hati)

 As far as iron ore is concerned, the Government has taken policy measures
to discourage avoidable exports and consequently raise domestic availability by
increasing export duty on lump ores to 15 per cent having a 5 per cent duty on
fines. Although it will have some marginal impact on the export, the Government
will have to look at the question of exports differently by bringing in definitive
deterrence. This may be in the form of either prohibitive duty or quantitative
restrictions. But, such measures can be brought in only in a phased manner with a
clear long term plan.

The other major challenge for the Indian steel and mining industries is the
inadequate development of supportive infrastructure. The problem looks more
serious in the areas with greater mining potential. The Government has launched
infrastructure development plans in unprecedented scale in areas such as power,
road, ports, railways, communication and human resource development. However,
whether it is a sole Government project or one in the PPP model, progress in
implementation is being hit by difficulties in land acquisition, extremist violence
and skill shortage. The conditions will change in the course of time to allow for
completion of the projects in hand.

The Government is doing its bit, a large responsibility also lies with the
industry and the industry associations. It is the synergy between what the
Government does and how the private sector or the industry responds to it that will
determine the success of all our efforts, the Minister added.

The Joint Plant Committee (JPC) of the Steel Ministry has undertake a
massive exercise of mapping out the infrastructure requirements of the steel
companies in terms of augmentation of new railway line and development of
highways. FICCI to commission a study for taking the JPC report forward with
specific projects that need to be undertaken so that these could be taken up with the
ministries concerned and the appropriate authorities.

As regards forest and environment clearances for steel projects, the

Ministry of Environment & Forests has been very cooperative in addressing the
issues. The steel ministry have urged companies come up with specific issues so
that these could be put on the fast track for clearance. While land acquisition for
steel projects continues to pose a major challenge, the Steel Secretary asked
industry players to consider using the large land mass that is currently available
with the closed units. “I have asked the Ministry of Heavy Industry to map out
such land masses and put the information on their website for the benefit of the
prospective investor. I hope FICCI will coordinate with the Ministry of Heavy
Industry to take the process forward,’’ he said.
Market Share of SAIL and other Producers (Period : April 08 – March 09)
Category SAIL RINL TISCO Sec. Imports
Producers
A: Pig Iron 4.1 6.2 89.4 0.2
(5.4%) (2.8%) (91.7%) (0.2%)
B: Saleable
Steel ------ -------- --------- --------
1: Semis 5.8 0.7 0.8 90.2 2.4
(6.3%) (0.9%) (0.2%) (91.3%) (1.4%)
2: Finished
Steel ------- --------- --------- ---------- ----------
Bars & Rods 7.9 9.8 6.6 73.7 1.9
(7.8%) (11.0%) (5.8%) (73.4%) (1.9%)
Structural’s 13.8 4.5 0.0 80.7 1.0
(12.4%) (5.3%) (0.0%) (81.1%) (1.2%)
Rly Material 86.8 0.0 11.1 2.1
(87.4%) --------- (0.0%) (11.4%) (1.2%)
Total Long 12.1 8.5 5.1 72.6 1.8
Product (11.7%) (9.5%) (4.5%) (72.6%) (1.7%)
Plates 41.2 2.7 38.1 18.0
(44.5%) --------- (3.2%) (27.2%) (25.2%)
HR 27.0 7.2 44.4 21.3
Coils/Skelps (25.9%) ---------- (6.0%) (45.5%) (22.6%)
H R Sheets 22.7 3.7 65.4 8.1
(23.1%) -------- (5.0%) (68.6%) (3.3%)
CR 12.1 17.3 58.1 12.5
Sheets/Coils (17.0%) --------- (21.0%) (47.1%) (15.0%)
GP/GC 11.0 16.6 58.6 13.8
Sheets/Coils (10.4%) --------- (15.9%) (63.1%) (10.6%)
Total Flat 25.2 9.3 48.1 17.5
Product (26.7%) ---------- (9.2%) (44.1%) (20.0%)
Elec steel 20.1 0.0 20.2 59.7
sheets (20.9%) ---------- (0.0%) (24.6%) (54.5%)
Tin Plates 6.3 36.5 57.1
(5.6%) ----------- (32.3%) (62.1%)
Pipes 6.3 89.8 3.9
(4.7%) --------- (85.2%) (10.2%)
Total Net 9.2 66.3 24.5
Product (7.6%) --------- (67.8%) (24.6%)
Total 17.6 4.5 6.8 61.7 9.4
Finished
Steel (18.3%) (4.1%) (6.4%) (59.5%) (11.2%)
 Introduction

Though Iron and Steel have been used by men for almost 6000 years, yet the

modern form of iron and steel industry came into being only during the 19 th

century. The growth and development of iron and steel industry in the world until

the Second World War was comparatively slower. World production of steel,

which was only 28.3 million tonnes (MT) in 1900, rose to 695 MT by 1992. The

oil crisis of the seventies affected the entire economy of the world including the

steel industry. The position started improving after 1983 and peaked at 780 MT in

1989. World Steel production is around 1322 MT in 2007.

 Global Scenario
International steel sector is reflecting the global trends in business
environment. The early years of the 21st century have set the pattern for the future.
Asia has increased its share of production. Although consumption of steel is likely
to increase in most regions of the world in the medium term, growth in industrial
nation is likely to be much slower than the average growth in demand across the
world. Developing countries and the emerging economies are likely to have the
fastest rate of growth in steel demand in the future.
In the developed world, the EU is expected to experience stagnant demand
in the medium term, while the NAFTA block is likely to see low positive growth in
consumption. In Japan, demand for steel has steadily declined in the resent years
due to restrictions on Government spending in construction projects as well as
weak consumer demand. A modest growth is anticipated in the manufacturing and
building sector as the economic performances improves. However the medium
term projection is for a reduction in overall steel consumption in Japan.
Among the developed economies, China requires special mention. China
apparent consumption of finished steel during 1996 was 97 million tones, which
amount to around 15% of world finished steel consumption. However, by the year
2007, China’s consumption figure reached a staggering 310 million tones,
accounting for around 30% of the total world finished steel consumption. China’s
steel consumption is still growing at a fast pace and as per IISI estimates; the figure
may touch 650 million tones during 2008-2009. The rapid rise in Chinese steel
consumption is attributed mainly to sterling economic growth and construction
activity in the build-up for the 2008 Olympics as well as the trade exposition
planned in 2010.
According to a preliminary medium term forecast by the IISI, finished steel
consumption in the world is expected to cross a billion tones by the 2008.
However, despite the growth in consumption there are apprehensions of excess
production as compared to global demand. As per the estimates by the WSD, world
crude steel productions, stands today more than 1 billion tones a year and is
expected to cross 1.130 billion tones by 2010.
As the trend in the world is towards producing low cost steel by using more
environmental friendly means, steel producers worldwide are adopting new
technologies like Corex and Compact Strip Casting, adapting alternate route like
Electric Arc Furnace instead of traditional Blast Furnace-Basic Oxygen Furnace
route, as well as importing raw material like coke.
Growth of Indian Steel Sector
India is among the cheapest producers of hot metal in the world. The cost
advantage mainly arises from the abundant availability of cheap and good quality
iron ore. Besides, overall manpower cost is also low. However, these advantages
are nullified to some extent due to low labor productivity, high energy and power
cost and high finance charges. The expansion plans of steel majors are likely to put
tremendous pressure on the availability of inputs and infrastructure resources
within the country. The nation is endowed with large iron ore reserves, but their
development and exploitation would require huge resources. Besides, the effects
on the environment where virgin areas are being exploited need to be addressed.
Availability of coking coal is expected to remain a serious constraint. Coking coal
supplies from public sector coal companies have been declining over the years,
leading to higher imports. Traditional coking coal and coke suppliers such as China
have also curtailed exports in order to feed their expanding iron and steel industry.
The steel industry needs to remain competitive by improving efficiency
across the entire value chain in an integrated manner. Hence, logistic would be an
important area of concern for the steel industry. This involves development of
ports, smoother transportation to and from ports, rationalization of inland freight
charges as well as better road movement facilities. During the early 90s, the
Sponge Iron industry was especially promoted to provide an alternative material to
steel melting scrap, which at that time was increasingly becoming scare. Since then
India has emerged as one of the largest producer of Sponge Iron. This provides
good opportunities to steel industry as a substitute of scrap.
 Considering the erratic power supply position in the country as well as high
power tariffs, rising scrap prices and plentiful indigenous iron ore reserves would
mean that the most suitable steel making technology for India would be the
integrated route.

Outlook for Indian Economy

After witnessing rapid strides during the years after the liberalization process
was set in motion, India’s GDP grew at an average rate of 5.2 % during the period
1998-99 to 2002-03. However, there was a break from the trend in 2003-04, during
which the economy is estimated to have grown at more than 8 %. The economy is
expected to continue on a high growth path with continued macroeconomic
stability. Over the years there has been a downward trend in interest rates
accompanied by moderate inflation and adequate liquidity in the economy.
Infrastructure development has been a focus area for the Govt. in recent years. In
the road and highway network, India is witnessing development of multiple-lane,
safe and well designed inter state highways. Recently the Govt. has announced a
planned outlay for the rural road and highway network development.

The Golden Quadrilateral Project is an ambitious project that would connect

the four major metros via state of the art highways. The East-West and North-
South corridors would link up the remotest parts of the country. The Govt. is also
planning to facilitate investments in sea-ports and airports in a major way.

Concessions in the form of tax rebates etc. to boost investment in the

housing sector, as well as falling interest rates have made available cheap home
finance loans and have given a thrust to the housing sector. A rise in depreciation
rates for vehicles, excise duty reduction and low interest rates has given a major
boost to the automobile sector. From a negative production growth rate of 2%
during 2000-01, the automobile sector has recorded a growth of 18% during 2002-
03 and 15% during 2003-04. The capital Goods sector which had shown a
declining trend from the year 1998-99, came back strongly during 2002-03,
growing at the rate of 10.6%. The strong growth of the capital goods sector has
continued in 2003-04. Given the strong fundamentals and stability in key
macroeconomic aggregates, the average GDP growth during the year 2004- 05 to
2007-08 is about 8%.
 TATA STEEL

Tata Steel’s Indian operations are one of the most competitive assets in the
global steel industry and therefore, capacity expansion in India is one of the key
strategies for Tata Steel. The Indian operations draws its greatest strength and its
competitive position as one of the lowest cost producers of steel in the world from
the quality and yield of its raw material units. The mines have successfully offered
raw material security and have partially insulated Tata Steel from the volatility of
the global markets. The Company has, therefore, continuously modernised and
expanded its raw material facilities right from the 1950s, when it had launched its
two million tonne expansion programme.

In the financial year 2008-09, the Company commissioned its 1.8 million
tonnes of crude steel making capacity at Jamshedpur, which will be further
augmented by 3 million tonnes through the ongoing brownfield expansion, by
2011. The 3-mtpa expansion at Jamshedpur will enable Tata Steel to strengthen its
market share in the Flat Products segment and simultaneously reduce the operating
costs over a large volume of production. The long-term strategy is to continue to
pursue capacity expansion in India through Greenfield projects as well.

Therefore the India growth strategy remains a fundamental part of the

long-term strategy of the Tata Steel Group.
 Major plans of TATA Steel in the near future are :

 Seraikela Plant , Jharkhand (Greenfield Project) :

Project Highlights:

 Setting up a 12 million tonnes per annum Greenfield integrated steel plant in

the state.
 The Greenfield project is to be set up in two phases. The first phase of 6
mtpa is likely to be set up within 36 months to 54 months from the date of
obtaining all statutory clearances.

Capacity: 12 mtpa integrated steel plant.

Project Update: Tata Steel is awaiting the R&R Policy from the State Government
for its Greenfield project.

Press Releases

 Telemedicine centre inaugurated at Tata Main Hospital.

 Tribal cultural centre, Tata Steel organised the award ceremony for Jyoti
Fellowship and Moodie Endowment.
 Graduation ceremony of trainees at Tata Steel’s technical training centre in
Seraikela.
 Jharkhand honours Tata Steel Sports Persons.
  Jamshedpur Plant ,Jharkhand (Brownfield project)

Project Highlights

MoUs with the Government of Jharkhand was signed in 2005 for –

 Expansion of Tata Steel's existing plant at Jamshedpur from 5 mtpa to 10

mtpa.
 Co-operation in the area of Human Resource Development through
Industrial Training Institutes.
 The project includes the development of iron ore mines and other raw
materials sources including coal and logistic linkages for this plant.

Project Update: The first phase which entails reaching a crude steel capacity of
6.8 mtpa has essentially been completed. The capacity of the Jamshedpur plant is
expected to become 10 mtpa by December 2011.

Commissioning of Coated Steel Manufacturing Plant

Project Highlights: The manufacturing facility for coated steel of Tata Bluescope
Steel Ltd. is under construction at Jamshedpur and is expected to be completed by
March 2010. Tata Bluescope Steel Ltd. is a 50:50 joint venture between Tata Steel
Ltd. and Bluescope Steel Australia.
 

 Jagdalpur Plant , Chhattisgarh

Project Highlights

 MoU with the Chattisgarh government was signed on June 04, 2005.
 The integrated steel plant will have an ultimate capacity of 5 mtpa of steel
with 2 mtpa in the first phase.
 The project also includes development of captive iron ore mines to meet the
iron ore requirements of this plant.

Capacity: 5 mtpa Greenfield integrated steel plant.

Project Updates: The process of acquiring land is under progress. The Company
has also applied for environmental clearances and other licenses.
  Kalinganagar , Orissa ( Greenfield Project) :

Project Update: Preliminary work focusing on land acquisition, rehabilitation and

resettlement work is in progress. The order for equipment and services has been
placed in accordance to the stipulations in the MoU signed with the Orissa State
Government. A grant for the mining lease of iron ore has been sought.

Capacity: Greenfield Steel Plant of capacity 6mtpa.

Port Project at Dhamra

The Dhamra Port Company Ltd. is a 50:50 joint venture between Tata Steel
Ltd. and Larsen and Toubro for the development of a deep water port in Dhamra,
Orissa.

  Haldia Plant , West Bengal

Project Highlights: Hoogly Met Coke and Power Company Ltd. (incorporated in
2005), is a 100% subsidiary of Tata Steel. The Company was set up to produce low
ash metallurgical coke primarily to meet Tata Steel’s requirement at its
Jamshedpur plant and also to supply hot gases to Tata Power for electricity
generation by adopting heat recovery route.

Capacity: 1.2 mpta of coke.

Project Update: Capacity of plant likely to be increased to 1.6 mtpa in 2009.

  Tuticorin Mines , Tamil Nadu

Project Highlights

 MoU with the Government of Tamil Nadu signed on June 27, 2002.
 Titania project involves mining, mineral separation and value addition i.e.
pigments production in phases subject to techno- economic viability.
 Prospecting license over 80 sq.km area granted by the Government of Tamil
Nadu in the districts of Tirunelveli and Tuticorin with due approval from
Government of India.
 The feasibility study conducted with the help of Consortium Partners
comprising Outokumpu Finland's physical separation division based in USA,
Outokumpu-Lurgi, Germany, Pincock Allen and Holt, USA, a resource and
mining consulting company and L&T.
 Environmental Impact Assessment of the project carried out and
Environmental Management Plan drawn with the assistance of MIN-MEC
Consultancy.

Capacity: 60,000 tonnes per annum of titanium di-oxide.

 
 JINDAL STEEL

JSPL firmly believes that CHANGE is the only constant in life and it has
endeavors to continuously upgrade its existing technologies, embrace new
technologies, motivate its personnel and uplift the living standards of those around.
Adhering to these values, major expansion plans are being executed:

 Raigarh :

 2 MTPA cement plant.

 Additional power generation of 540 MW.
 Medium and light structural mills.
 Pipe conveyor from mines to plant.
 Mini blast furnace up-gradation.
 Fabrication unit in the industrial estate.

An MOU has been signed between JSPL and the Government of Chhattisgarh
for setting up an additional 7.0 MTPA steel plant in phases and a 1600 MW power
plant with an investment of over US $ 5.20 billion (Rs. 26,000 crore).
  Jharkhand :

An 11 million tonne integrated steel plant and 2600 MW captive power plant
in phases, with an investment of US $ 6.00 billion (Rs. 30,000 crore).

 Orissa :

A 12.5 million tonne integrated steel plant and 2600 MW captive power
plant in phases, with an investment of US $ 8.00 billion (Rs. 40,000 crore). The
first phase of 3 million tonne is expected to be commissioned by 2011.

 Coal to Liquid Petroleum Project :

Jindal Steel & Power has been allotted the Ramchandi Promotional Coal
Block in Orissa for the proposed Coal to Liquid (CTL) project by the Union Coal
Ministry, Government of India. The project cost estimated to be around US $ 8.4
billion (Rs. 42,000 crore) includes CTL plant, coal mining and power plant. The
project to be located in Tehsil Kishore Nagar, Distt. Angul, Orissa will produce
80,000 barrels per day (4.0 MMTPA) crude using environment friendly Indirect
Coal Liquefaction Technology developed by M/S Lurgi of Germany for the first
time in India.
The prestigious CTL project is yet another feather in JSPL’s cap.
  Jindal Petroleum Limited :

As part of its diversification process, JSPL has recently forayed into the oil
and gas sector, operating under the banner of Jindal Petroleum Limited.
The company has acquired 7 Oil & Gas blocks in different parts of the
world, including 5 in Georgia, 1 in Bolivia and 1 in India. Mr. Naveen Jindal
recently led a delegation to Georgia to sign contracts with the Government of
Georgia for the exploration and production of the blocks, signifying the importance
the company is giving to its petroleum business. The company has so far
committed an investment of US $ 200 million (Rs. 1000 crore) and is working on
several other projects in the sector.

 Bolivia :

JSPL plans to invest US $ 2.1 billion (Rs. 10,500 crore) in Bolivia, South America,
in the coming years for mining and setting up of an integrated 1.7 MT steel plant,
450 MW power plant, 6 MT sponge iron and 10 MT iron ore pellet plant.
Through fruitful business expansions, we envision a new India and work towards
creating a bright future by giving the best to our customers, employees,
shareholders, associates, and to the community at large.
 SAIL

SAIL, is in the process of modernizing and expanding its production units,

raw material resources and other facilities to maintain its dominant position in the
Indian steel market. The objective is to achieve a production capacity of 26.2
MTPA of Hot Metal from the base level production of 14.6 MTPA (2006-07 –
Actual).

Orders for all major packages of ISP & SSP and part packages of BSL, BSP,
RSP & DSP Expansion have been placed and these packages are in various stages
of implementation.

Objective of Expansion Plan

 100% production of steel through Basic Oxygen Furnace (BOF) route

 100% processing of steel through continuous casting
 Value addition by reduction of semi-finished steel
 Auxiliary fuel injection system in all the Blast Furnaces
 State-of-art process control computerization / automation
 State-of-art online testing and quality control
 Energy saving schemes
 Secondary refining
 Adherence to environment norms
Production Target

The production target of hot metal, crude steel and saleable steel after
Expansion is indicated below:

(Million tonne per annum)

Item Base After
Case Expansion
(2006-07)
Actual
Hot Metal 14.6 26.2 (23.5)
Crude Steel 13.5 24.6 (21.4)
Saleable 12.6 23.1 (20.2)
Steel

Figures in bracket indicate capacity after implementation of ongoing phase of

modernisation and expansion to be completed by 2012-2013

Capital Expenditure
Amount spent on Expansion Plan and other Capital Schemes of SAIL (incl.
subsidiary) during last 3 years are as follows:

Year Total
(Rs./Crore)
2007-08 2181
2008-09 5233
2009-10 10606
 GROWTH EXPECTATION

Most steel companies believe steel demand in India is on an upward

trajectory and expect double-digit growth in FY11E, led by infrastructure and
autos. Majority of the steel expansion projects are running behind schedule –
constrained by land acquisition and procedural hurdles. In my view, with no major
capacity expected to commission in 2010, I estimate Indian net imports to reach an
all time high of 6.5 mn tonnes.

Most steelmakers expect the additional input costs to be passed through in

the form of higher prices and to maintain a strong EBITDA spread – with limited
push back from consumers and government.In order to leverage their captive
thermal coal resources, metals / steel companies are now diversifying into power
generation, driven by attractive IRRs and ROEs.

JSW Steel

JSW Steel’s management expects higher steel prices in the near term,
primarily led by cost push. While they expect steel prices to rise by US$60-
US$80/tonne in April (already announced), in their view, these prices may not be
sustainable into 2QFY11, on account of a slow down in activity during monsoons.
Demand-supply mismatch in the domestic market prevails – Primary/integrated
steel producers have benefited the most. Higher raw material prices would not be
sustainable in the medium term. The company is confident that it would be able to
sustain strong margins (EBITDA/tonne) and is making strong efforts to improve
upstream integration.

Tata Steel

Tata Steel’s management is bullish on domestic steel prices in the near term
and expects Rs3000-4000/tonne increase in prices in April. They expect Indian
operations to maintain robust margins in the coming quarters. In its European
operations, after the earnings turnaround in 3QFY10, the company expects to
consolidate the position over time. Corridor work at Tata Steel’s greenfield steel
project at Kalinganagar, Orissa has started. Corus is operating at 90% capacity
utilization.

SAIL

SAIL’s management is bullish on domestic steel prices in the near term and
expect the steel industry to pass on the input costs, they do not expect the prices to
reach peak levels seen in 2008. Steel prices at US$700/tonne are sustainable, as per
management. SAIL is targeting production growth of 5%-6% in FY11E. The
expansion plans will propel the next phase of growth for SAIL starting from
FY2012.
 SWOT analysis of the steel industry

Strengths Weaknesses

I. Availability of Iron ore & Coal. I. Unscientific mining.

II. Low labor wage rate. II. Low productivity.

III. Abundance of quality manpower. III. Coking coal import dependence.

IV. Mature production base. IV. Low R&D investment.

V. High cost of debt.

VI. Inadequate infrastructure.

Opportunities Threats

I. Unexplored rural market. I. China becoming net exporter.

II. Growing domestic demand. II. Protectionism in the west.

III. Exports. III. Dumping by competitors.

IV. Consolidation.
 

LOW CONSUMPTION OF STEEL

 Urban Demand :

The present steel consumption per capita per annum is about 30 kg in India,
compared to 150 kg in the world, and 350 kg in the developed world. The
estimated urban consumption per capita per annum is around 77 kg in the country,
expected to reach approximately 165 kg in 2019-20, implying a CAGR of 5
percent. Apart from the anticipated growth in the construction, automobile, oil and
gas transportation and infrastructure sectors of the economy, conscious promotion
of steel usage among architects, engineers and students by the Institute of Steel
Development and Growth (INSDAG) and the large producers will drive the
additional consumption. Steps would be taken to encourage usage of steel in
bridges, crash barriers, flyovers and building construction. Benefits of steel usage
would be added to the technical education curricula in the country.

 Rural Demand :

The rural consumption of steel in India remains at around 2 kg per capita per
annum, primarily because steel is perceived to be expensive among the village
folks. Based on the promotional efforts mentioned above, and an active focus on
opening new block level rural stock points, a target is set for raising the per capita
rural consumption of steel to 4 kg per annum by 2019-20, implying a CAGR of 4.4
percent.
 BHUSHAN STEEL

Bhushan Power & Steel Limited, a fully integrated 1.5 Million TPA Steel
making Company with turnover of INR3873 Crores (USD 950 Million) and 7
World Class ISO 9000 Certified State of the Art Plants at Chandigarh, Derabassi,
Kolkata and Orissa in India.

A leading manufacturer of flat, rounds and long products including value

added products with total steel value chain right from Coal Mining, Billets, HR
Coils, Pig Iron, CR Coils, GP/GC, Precision Tubes, Black Pipe/GI Pipe, Cable
Tapes, Tor Steel, Wire Rod and Special Alloy Steel.

Future Plans of Bhushan Steel :

Bhushan Power and Steel Ltd (BPSL) announced its plans to set up a cold
rolling mill complex with a capacity of three lakh tonnes in the western region of
the country at an initial investment of Rs 800-1,000 crore.

The company said it will set up a cold rolling mill complex that will have a
production capacity of three lakh tonnes per annum of hot roll coils, either in
Gujarat or Maharashtra. The company is in talks with both state governments for
acquiring land. As soon as the land is acquired, it will start construction. The initial
investment will be around Rs 800-1,000 crore.
 The plant will be commissioned by 2012. The final product (hot roll coils)
from the plant would be supplied to automotive and construction industries.

The complex, to be set up over 100 acres, will house a cold rolling mill, a
pickling line, a galvanising line and other equipment.

The steel major has signed a memorandum of understanding (MoU) with

Belgium-based engineering group CMI FPE for design and supply.

CMI FPE has also designed BPSL's cold rolling mill unit in Orissa's
Jharsuguda district, which has a capacity of 1.5 million tonnes per annum.

The company will be expanding the capacity of the Orissa plant to 2.5
million tonnes by March next at a further investment of Rs 3,000 crore.

BPSL is also mulling an initial public offering (IPO) next year.

 ArcelorMittal

Describing India as one of the "most interesting places" for ArcelorMittal,

its billionaire chief L N Mittal has said the steel behemoth will focus on
developing economies, mainly India, for its new factory plans.

Mittal had said the company is "anxious" to start work on its proposed new
projects in India, which entail an estimated investment of Rs 1.30 lakh crore.

 ArcelorMittal has planned to set up three steel projects in India,

including one each in Jharkhand and Orissa, at a cost of Rs 50,000
crore each.

 ArcelorMittal has also proposed a Rs 30,000-crore project in

Karnataka for a 6 MTPA plant.

However, these projects have been facing regulatory hurdles and land
acquisition problems, for the past four years.
 Essar Steel Ltd.
Essar Steel Ltd., part of the diversified conglomerate Essar Global Ltd., is
going ahead with the expansion of its Hazira plant in western India, but is putting
on hold all of its greenfield expansion plans due to slowing global demand, the
company's chief executive officer said Wednesday.

 The company is expanding capacity at Hazira to 10 million metric

tons a year from the current 4.6 million tons.

The expanded capacity is likely to come on stream by June 2010, after

investment of $2.7 billion to $2.8 billion.

 Essar Steel has put on hold plans to build manufacturing capacity in

Vietnam, Trinidad and Tobago, and the U.S. state of Minnesota.

Essar is also planning to open retail outlets to expand its reach to rural markets.
 RINL

Rashtriya Ispat Nigam Ltd (RINL), the holding company of Visakhapatnam

Steel Plant, has announced major plans for expanding its capacity from the existing
3.6 million tonnes to 16 million tonnes in the next decade involving an expenditure
of Rs. 25,000 crores.

To begin with, the company will expand its capacity to 6.8 million tonnes by
the end of financial year 2008-09 with an investment of Rs. 5,500 crores, bids for
which will be finalised by the end of March.

This will be followed by creation of additional capacity in the next fiscal

with an outlay of Rs. 2,500 crores and the VSP is planning to submit proposals for
expansion to the Union Steel Ministry for necessary approvals shortly.

Rashtriya Ispat Nigam Limited (RINL) has sought the acquisition of the
Bird Group of Companies (BGC), including Orissa Mining Development
Corporation (OMDC), for securing iron ore reserves for expansion. According to
RINL, it is willing to invest Rs500 crore to revamp OMDC’s operations.
 Demand from Automobile Industry

Bright future for Automobile sector in India in 2010

Japanese steel major JFE Steel and Sajjan Jindal-controlled JSW Steel will
join hands with JSW steel and Bhushan Steel to produce automotive steel products
in 2010. As per the Japanese companies India will soon prove to be a big market in
the automobile sector.

India has always been strong in making small cars and in 2010 soon it will
prove to be a big hub for small cars. And this will be a good chance for the
domestic steel makers to supply automotive steels. The automakers in India on an
average imports 75% of high-grade automotive steel for outer panels of cars and
other vehicles. An import duty of 5% puts pricing pressure on the companies. If
these Japanese companies come into an alliance with the local partners in India,
this will help India to produce high grades of auto steel locally.
 Steel sector to grow 6-9 % in 2010

Steel sector is expected to grow 6-9 per cent in 2010 on higher demand from
the real estate, construction and automobile sectors, the finance ministry said in a
report on Thursday.

Steel demand in India has risen 8 percent so far this fiscal year, powered by
reviving consumption from housing, auto and infrastructure.

"Indian steel outlook for 2010 continues to be positive, since Indian steel
consumption is expected to be rising at 6-9 per cent during the current year," it said
in its annual survey of the economy for fiscal year 2009/10.

Finished steel production grew 3.8 percent in April-December 2009, the

survey showed while real consumption rose 7.7 percent in the period. Also,
imports grew 16.6 percent while exports fell 36 percent in the period, according to
the survey.

Foreigners are turning to India, forging ties with Indian companies to set
their footprints in Asia's second fastest growing major economy. Besides, local
players are moving to rural areas to sell their produce as demand in urban regions
falters.

The Indian steel industry, that went into a tailspin in the second half of
2008-09 following a global economic downturn, has smartly recovered in the
current fiscal year.
 The growth is underscored by the fact that global steel production fell 8
percent in 2009 as demand from key industries shrank in a global downturn.

Following the economic downturn and in order to help the domestic steel
industry, the government had removed the export duty on all steel items,
reintroduced import duty of 5 per cent and cut excise duty to 8 per cent from 10 per
cent.

However, steel makers have reiterated their demand for a curb on imports to
protect the local industry in the federal budget 2010, which will be presented on
Friday.

STEEL IN INFRASTRUCTURE
 Infrastructure development’ is one of the oldest priorities of mankind.
Probably it started with the efforts of bush cleaning and shelter building by Adam
and Eve, and continued its efforts over the past thousands of years to justify its role
in the modern world. Starting from the ancient landmarks like the massive
Pyramids, the Great Wall of China or the Grand Trunk Road between Calcutta and
Peshawar during the period of Sher Shah; to the recent marvels like the Lincoln
Highway (USA), Trans-Siberian Railway (Russia), Patronas Tower (Malaysia) or
Akashi Kaikyo Bridge (Japan), ‘Infrastructure’ has always been the lifeline of
human prosperity.

Technical breakthroughs, global opportunities and private funding have

revolutionized the modern ‘infrastructure development’. Indian economy, with a
growth rate of 6-6.8% and a growth potential of 7-8% in coming years is one of the
emerging mega powers in today’s world. At the same time, attracting precious
foreign direct investment and ‘fast track infrastructure development’ remain the
most challenging task before the country, given the changed techno-economic
scenario, liberalization of economy and the global competition.
The approach towards ‘infrastructure development’ has become more professional
and modern concepts of steel- intensive construction are the subject of interest in
India nowadays. Greatly influenced by: BOT/ BOOT mode of contracts; FDI and
private funding; fast track buildability; availability of modern equipment; quality-
driven output; social and environmental accountability, infrastructure construction
will never be the same again. And under the changed scenario steel with its
immense potential is becoming the preferred material of construction to most of
the Indian designers, architects, builders and owners.
 Steel members with their design flexibility, easy buildability, factory-made
quality, ductility, upgrade-ability and broader architectural possibility have
immense potential as the preferred construction material in modern India. Meeting
serviceability requirements, restoration after disaster damage/ accidents,
upgradation of structure due to revised loading standards and replacement of
structures at the end of service life are much easier with steel. While steel
construction has dominated in the early years, other modes of construction have
taken over in the past few years in some sectors. But, steel is still dominant in
almost all the industrial structures and construction in remote areas. For longer
span construction also, steel is the only alternative. Fortunately, some of the new
urban constructions in India have followed the steel route too. The ICICI building
(Mumbai), VSNL Tower (Calcutta), some of the flyovers at Calcutta, Mumbai and
Delhi are only a few examples, while a lot more are in the pipeline.

FACTORS HOLDING BACK THE INDIAN STEEL INDUSTRY

  Insufficient energy supply

700 Mega Watt electricity is required which is expected to be

provided by 2020

 Land Acquisition Problems

For example, Posco is doing rethink on its mega investment in

Orissa, after delays occurred in the handing over of the mines and
land.

 Inefficient transport system

Excessive freight charges & difficulty in reaching all places

 Substitution of steel

Steel is getting substituted by lighter materials like aluminium

and plastic

Steel Industry Expectations

The steel industry in India is progressing with every passing year and has
gradually emerged as the fourth biggest steel producer in the world besides being
the second biggest manufacturer of crude steel. In the year 2009, the government
owned Steel Authority of India (SAIL) outshined its international counterparts like
Posco, Nippon and ArcelorMittal by registering a net revenue of USD571 million.

The production of steel in India touched 27.49 million tonne in 2009 to

meet the growing demand for total steel utilized in kitchen appliances, airports,
retail stores, trains, etc. The demand for steel and its consumption is predicted to
grow by 17% per annum till 2012. The increase in demand will be triggered by
construction schemes valued around US$ 1 trillion.

Indian steel industry features among the world's largest iron-ore producers
and saw a massive rise in its iron ore exports in 2009 by more than 20%. The sharp
expansion of the industry has attracted an astounding FDI of over USD 237 billion.

2010 Budget Steel Industry Expectations of entrepreneurs and common

man are higher tax exemptions in home loans where the purchasers is entitled for
tax exemption upto Rs 1,50,000 under Section 80C. Such measures would
indirectly have a positive impact on steel industry which is associated with realty
business.

CONCLUSION
 The National Steel Policy 2005 had estimated an average consumption
growth of 6.9%. However, over the last five years, between 2004-05 and
2008-09, steel consumption growth in India has been 9.6% per annum.
During 2007-08, the steel consumption growth in the country has touched a figure
of nearly 13&percnt.

Therefore, the average growth of steel consumption in India, for the next five
years, can be estimated to be higher than 10% per annum. The demand will
mainly be driven by construction, real estate and infrastructure sectors.
Automobile, household goods and capital goods industry also contribute
substantially to the steel consumption growth in India.

The only way to bridge the demand-supply gap is to increase the steel production
in the country, which is possible only through addition of steel production capacity
in the country. The present steel capacity in the country is nearly 65 million tonnes.
In terms of current rate of demand growth, the steel requirement in the country
would double within five to six years. Therefore, we must double our capacity
within two years to fulfil the domestic demand.

Company Profile
Formation of Steel Authority of India Limited (SAIL)

The Committee of Public Undertaking of the Fifth Lok Sabha was the first
Parliamentary Committee to undertake a significant review of the question of
setting up a Holding Company for steel. It was first considered in the Department
of Steel in 1971 with the following two objectives:

• Rapid growth of the industrial sector, of the economy, of the state as a

leading agent of the growth process; and

• Ability of the Government to divert investment into areas which are

strategic from the point of view of future development.

In this context, it was recognized that the Public Sector had to be made more
efficient in order that it might be able to contribute far more than it had to the
common pool of investible surplus in the economy.

Present Status of SAIL

Steel Authority of India Limited (SAIL) through its five integrated steel plants at
Bhilai, Bokaro, Burnpur, Durgapur and Rourkela accounts for major steel
production capacity of India.

Three special steel plants at Bhadravati, Durgapur and Salem produce a wide
range of special steels, special alloy steels and stainless steel. MEL, Chandrapur, a
subsidiary company, is one of the largest producers of bulk Ferro Alloys in the
country. There is a proposal to merge it with SAIL.

Today, SAIL is one of the largest corporate entities. Its innate strength lies in
its technologists and professionals and a trained manpower of over 1.34 Lakh
including subsidiary. It had a sales turnover of over Rs. 45,555 crores during 2007-
08.

BIBLIOGRAPHY
BOOKS & JOURNALS

1. Marketing Management by Philip Kotler.

2. National Steel Policy 2005
3. Ispat Sambad (SAIL)

WEBSITES

1. www.tatasteel.com
2. www.jindalsteelpower.com
3. www.sail.co.in
4. www.business-standard.com
5. www.hinduonnet.com
6. www.ibtimes.com
7. www.ibef.org
8. www.jpcindiansteel.nic.in
9. www.dalalstreet.biz
10. www.technospot.in

OBJECTIVE
 The objective of this project is to find out different demand opportunities of
steel in India and how the India steel industries namely SAIL, TATA Steel , Jindal
Steel, RINL etc. are planning to increase their capacity to met this huge demand of
steel in the future . In this project I also found out the hindrances which are taking
place in the expansion program of the different steel plant. In this project I have
cited the responsibility of both the Government and the Steel Industry to make the
Indian steel industry as one of the best with respect to production and quality.

CONTENTS
 TOPICS
 Acknowledgement
 Declaration
 Introduction
 Company Profile
 Global Scenario
 Growth of Indian Steel Sector
 SWOT analysis of Indian Steel Industry
 Demand Opportunities
 Growth expectation
 Low consumption of Steel
 Demand from Automobile Industry
 Steel in Infrastructure
 Company plans to match this demand
 TATA Steel
 JINDAL Steel
 SAIL
 BHUSHAN Steel
 ARCELORMITTAL
 ESSAR Steel
 RINL
 Factors Holding Back the Indian Steel Industry
  Steel Industry Expectation
 Conclusion
 Bibliography

List of Tables
 Market Share of SAIL and other Producers
 Market Expansion Analysis
 Availability of Steel for home sales

List of Diagrams
 Country wise Steel production
 Major Consumer of Steel Industry