Executive Summary

The Indian Steel Industry

‘Steel has been and will be, the basic foundation material for national growth and the
industry will continue to be an important ingredient in a global economic recovery’
- Ratan N. Tata, Chairman, Tata Steel Ltd.

Steel is manufactured as a globally tradable product with no major trade barriers across national
boundaries to be seen currently. There is also no inherent resource related constraints which
may significantly affect production of the same or its capacity creation to respond to demand
increases in the global market. Global crude steel production reached 1220 million tonne in
2009, a decline of 8 per cent over 2008. India once again emerged as the fifth largest
producer in 2009 as against the eighth position in 2003 and recorded a growth of 2.7 per
cent as compared to 2008, the only other country in the top 10 bracket to register a
positive growth during 2009. India also emerged as the largest sponge iron producing
country in the world in 2009, a rank it has held on since 2002. If proposed expansions
plans are implemented as per schedule, India may become the second largest crude steel
producer in the world by 2015-16.

Worldwide Crude Steel Production in 2009

Rank Country Production

(million tonnes)
1 China 567.8
2 Japan 87.5
3 Russia 59.9
4 USA 58.1
5 India 56.6
6 South Korea 48.6
7 Germany 32.7

Led by strong demand for automobile industry, engineering services, real estate and
infrastructure projects (private and government), the domestic steel demand in India remains
robust and grew by 9.8 per cent to 29.82 MT during April-September 2010 over the year-ago
period. As per the provisional data from the Ministry of Steel, consumption was at 27.15 MT in the
same period a year ago. In September 2010, steel consumption rose 4.1 per cent to 4.72 MT,
against 4.53 MT in the year-ago period.

The first steel industry was established in the year 1953 in Rourkela in Orissa with a
production capacity of one million tonnes per annum.
The organization structure of Indian Steel Industry can be categorized in the following
manner :-

• Main Producer of steel

• Other major producers of steel
• Secondary Producer

The third category, namely, Secondary Producer, include :-Producers of sponge iron,
Furnaces meant for induction, Furnaces meant for energy optimization, Electric Arc
Furnace, Mini Blast Furnace, Re-rolling Firms

Key Players in the Indian Steel Industry

Private Sector Public Sector

Tata Steel Ltd Steel Authority of India Ltd

Essar Steel Ltd Rashtriya Ispat Nigam Ltd

JSW Steel Ltd MSTC Ltd

Jindal Steel and Power Ltd Ferro Scrap Nigam Ltd

ISPAT Industries Limited Hindustan Steelworks

Construction Limited (HSCL)

Indian Steel Industry has some advantages that give it the extra sought after mileage over
its peers from other countries which can be summed up as follows :-

• The wage rate of the laborers working in the steel industries are low
• The base for production of steel is a matured one
• The automobile industry in India, one of the main demander of steel, has a steep
upward moving slope.
• The construction as well as the infrastructure industry, big demander of steel, are
also on an upward slope due to the government policy regarding emphasis on
developmental works.
• The workforce associated with the Indian Steel Industry are highly knowledgeable
and experienced
. Some of the relevant and striking facts about Indian Steel Industry are :-
• Capital base of Indian Steel Industry revolves around a whooping ninety thousand
crore rupees.
 • The contribution of this industry to GNP of India is almost six percent.
• The weightage assigned to Indian Steel Industry in the Industrial Production is 5.13.

According to the 11th Five Year Plan (2007-2008 to 2011-2012), some of the projections
related to Indian Steel Industry are mentioned below :-

• Domestic Supply of steel would reach a whooping target of seventy seven million
tonnes which is approximately 66 % higher from 2007-08.
• Domestic demand for steel would touch a milestone of seventy million tonnes which
is approximately 4 % higher from 2007-08.

Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the infrastructure
sector and has increased the allocation for road transport by 13 per cent to US$ 4.3 billion which will further
promote the steel industry.

It has been noticed as well as observed that the correlation between the growth of Indian
Steel Industry and the economy is very high. As the Indian economy is regularly reaching
new highs, so the steel industry is also expected to reach new production levels.

Company Overview : TATA Steel

The brand name TATA doesn’t needs introduction to any Indian. The TATA group is
almost 150 years old ands comprise of 96 companies which produce a wide variety of
goods and services. Tata Steel, formerly known as TISCO (Tata Iron and Steel Company
Limited) was formed in 1907 as a materialisation of its founder’s dream of a prosperous
and independent India. Jamsetji Nusserwanji Tata’s vision helped Tata Steel to overcome
several periods of adversity and strive to improve against all odds. Completing hundred
years in 2007, the Company continues on its journey of growth and globalistaion through
organic and inorganic strategies. Driven as much by its commitment to society as by its
performance and profits the Tata Steel Vision today aspires to make the Group the global
steel industry benchmark for both value creation and corporate citizenship which is the
vision of the company. The Company manufactures rails, fishplates, bars, light
structurals, heavy structurals, plates, black sheets, galvanized sheets, tin bars, sleeper
bars, sleepers, blooms, billets, sheet bars, wheels, tyres and axles, skelp and strip, and
special steels tools such as picks, beaters, hammers and shovels and red-oxide, coal tar,
sulphate of ammonia, etc. Tata Steel is currently the world’s tenth largest steel company
and world’s second most geographically diversified company with an employee strength
of above 81,000 across five continents. The company has a balanced global presence in
50 markets and manufacturing operations in 26 countries. With a shareholder base of
over 8,00,000 people, Tata steel is one of the lowest-cost steel producer.
Tata Steel has not limited its operations and businesses within India but has built an
imposing presence around the globe as well.

The most significant news regarding Indian Steel Industry is TATA Steel's acquisition of
the Corus group after going through a strenuous bidding. Ultimately, TATA Steel was
able to buy Corus at eight billion US dollars which makes the deal to be fixed at 455
pence per share which are needed to be paid in cash by the TATA Steel to the
shareholders of Corus (now Tata Steel Europe). This deal is a highly expensive one and
comes only after the Mittal-Arcelor deal of thirty eight billion US Dollars. The
finalization of TATA-Corus deal has catapulted TATA Steel from 65th position to 5th
position in terms of productive capacity. This has not only strengthened the Indian Steel
Industry's position in the Asian market but also on the productive capacity of the whole
world. During the financial year 2009-10, the Group recorded deliveries of 24 million
tonnes against 28 million tonnes in the previous year, the decline being a reflection of the
global economic slowdown mainly in the UK and European operations. The Group
recorded a turnover of Rs.102, 393 Crores in 2009 - 2010. The Company has always had
significant impact on the economic development in India and now seeks to strengthen its
position of pre-eminence in international domain by continuing to lead by example of
responsibility and trust.

Tata Steel’s overseas ventures and investments in global companies have helped the
Company create a manufacturing and marketing network in Europe, South East Asia and
the Pacific-rim. Some of the other acquisitions are :

• In August 2004, Tata Steel entered into definitive agreements with Singapore
based NatSteel Ltd to acquire its steel business for Singapore $486.4 million
(approximately Rs 1,313 crore) in an all cash transaction.
• In 2005, Tata Steel acquired 40% Stake in Millennium Steel based in Thailand for
$130 million (approx. Rs 600 crore).
• In 2007 Tata Steel through its wholly owned Singapore subsidiary, NatSteel Asia
Pte Ltd acquired controlling stake in two rolling mills: SSE Steel Ltd, Vinausteel
Ltd located in Vietnam.

Tata Steel has set an ambitious target to achieve a capacity of 100 million tonne by 2015.
Managing Director B. Muthuraman stated that of the 100 million tonne, Tata Steel is planning a
50-50 balance between greenfield facilities and acquisitions. For capacity expansion, Tata Steel
has lined up a series of greenfield projects in India and outside which includes 6 million tonne
plant in Orissa, 12 million tonne plant in Jharkhand, 5 million tonne plant in Chhattisgarh, 3-million
tonne plant in Iran, 2.4-million tonne plant in Bangladesh, 5 million tonne capacity expansion at
Jamshedpur, 4.5 million tonne plant in Vietnam.

Sources:

Annual Report (2009-10) by the Ministry of Steel, Govt. of India on www.steel.nic.in

www.tatasteel.com

Annual Report of Tata Steel Ltd

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