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INTRODUCTION

The steel sector is one of the most significant and pivotal sectors in the prominence and growth
of a nation. It has been considered as the spine of civilization in the universe. The level of per
capita consumption of steel is an important determinant of the socio-economic growth of a
nation. This research Study focuses growth and development of Steel industries in India. The
Steel industry in India is growing in a rapid speed with demand increment and opportunity
creation and attraction to the international players.

India is the worlds third-largest producer of crude steel (up from eighth in 2003) and is expected
to become the second-largest producer by 2016. The growth in the Indian steel sector has been
driven by domestic availability of raw materials such as iron ore and cost-effective labour.
Consequently, the steel sector has been a major contributor to Indias manufacturing output. The
Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for
continuous modernization and up-gradation of older plants and higher energy efficiency levels.
Indias Iron & Steel industry is more than a century old. More than 3500 different varieties of
steel industry are available in the steel industry of India. These can, however, be classified into
two broad categories, Flat Products and Long Products. Flat Products include plates and hot
rolled sheets such as coils. There are derived from slabs. One of the major uses of steel plates is
in ship building. Long Products include bars, rods, wires, ropes and piers. These are called long
due to their shape. Long products are made from billets and blooms. These are mostly used in
housing and construction and also in railway tracks. It is a basic industry. Steel is the backbone
for any economy. The experience of the developed as well as the developing countries has shown
that the important role played by the iron and steel industry in the economic growth. It is a core
industry. For many industries, such as engineering, machine tools, ship buildings, railways,
transport, equipments, electrical and many others, Iron and Steel industry is a basis industry.
These all industry increased consumption of iron and steel. In a sense it may be said that the iron
and steel industry is the mother industry. There is a close correlation between the level of
economic growth of GDP of a country and the quantum of steel consumption. It means that the
direct relation between investment in the economy and the growth of steel industry. Therefore,
rapid industrialization and economic development of a country depends on a very great extent on
the development of iron and steel industry
Global Scenario
The outlook for the global economy is mostly positive with growth picking up in the US, India
and Southeast Asia, while several emerging markets are experiencing a deceleration in growth.
However, the structural shift in the transitioning Chinese economy could cap this momentum.

Countries and businesses are becoming increasingly interdependent through trade, investment
and financial systems across the world.

The risks and opportunities in the steel business are getting larger in scale and impact, with their
sources becoming more diverse and global.

Real growth is in being a truly international player

To survive and thrive, in a sector in constant transition, steelmakers need to transform


themselves.

Globalization is no longer a matter of choice; steel businesses long-term success depends on it.

The businesses that ride the next wave of growth will be those that understand the trends and
refine their strategies, business models and portfolios according to a truly global mindset.
The steel producers must find the right balance between globalization and customization

Opportunity to embrace globalization

While the Chinese steel sector turns introspective over the next decade to deal with its excess
capacity, pollution, low market concentration and lack of profitability, this is the window of
opportunity to build competitive advantage now before supersized, more efficient Chinese
steelmakers emerge in the global market.

Steel companies that embrace globalization (in their strategy, supply chains, knowledge and
information, processes, talent and financial flows) while balancing with customization (of their
products, marketing, stakeholder relationships) will emerge as sector leaders in the long term.

Drivers of globalization

Below are some of the key drivers of globalization that are putting increasing pressure on the
steel sector. Pressure to globalize will drive the need for stronger global policy coordination
among nations and resilient supply chains for companies operating in this environment.
Indian Scenario

The Indian steel industry has entered into a new development stage from 2007-08, riding high
on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 3 rd largest producer of crude steel
in 2015 and the country continues to be the largest producer of sponge iron or DRI in the world.

As per the report of the Working Group on Steel for the 12 th Five Year Plan, there exist many
factors which carry the potential of raising the per capita steel consumption in the country. These
include among others, an estimated infrastructure investment of nearly a trillion dollars, a
projected growth of manufacturing from current 8% to 11-12%, increase in urban population to
600 million by 2030 from the current level of 400 million, emergence of the rural market for
steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman,
Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.

At the time of its release, the National Steel Policy 2005 had envisaged steel production to
reach 110 million tonnes (mt) by 2019-20. However, based on the assessment of the current
ongoing projects, both in greenfield and brownfield, the Working Group on Steel for the 12 th
Five Year Plan has projected that domestic crude steel capacity in the county is likely to be 140
mt by 2016-17 and has the potential to reach 149 mt if all requirements are adequately met.

The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid
developments in the domestic steel industry (both on the supply and demand sides) as well as the
stable growth of the Indian economy since the release of the Policy in 2005
Make in India cannot have its full impact without making steel in
India: NCAER study

The National Council of Applied Economic Research (NCARE) has released its latest study on
the Indian steel industry in New Delhi. The study, The Indian Steel Industry: Key Reforms for a
Brighter Future, was launched by Dr V K Saraswat, Member, NITI Aayog.

Chanakya Chaudhary, Group Director for Corporate Communication & Regulatory Affairs, Tata
Steel said, The Indian Steel Industry is slated to play a key role in the countrys growth story
and the Make in India programme provides the industry the opportunity to achieve this
potential. In this context, NCAERs new research reveals that the steel industry is currently
constrained by both supply-side factors such as availability of raw materials, as well as demand-
side macroeconomic factors, including imports from steel surplus countries.

The report points out that with steel accounting for about 2% of Indias GDP and 16% of its
industrial share, a healthy steel sector is vital for the Indian economy, particularly for
manufacturing and construction.

The findings of the study further suggest that the steel sector in India has a very high potential.
While the steel industry in other major economies is aging, with little prospect of high growth,
Indias steel industry is young. While many old steel producers are struggling with the difficult
task of retrofitting, India as a late-comer has the advantage of leapfrogging to the latest
technology that is efficient and environmentally friendly. If Indias economic growth accelerates,
the production of steel should increase by several hundred million tons over the next few
decades.

But the new NCAER study finds that the enthusiasm about Make in India appears to be
bypassing the steel industry. The current condition of the Indian steel industry is dismal, with
low profits, low capacity utilization and dim prospects for new private investment, either foreign
or domestic. The August 2015 devaluation of the Chinese yuan is further fueling fears about
China dumping of steel into the Indian market.
The NCAER studys principal author, Dr Ramgopal Agarwala remarked, There is just no room
for complacency about the Indian steel industry. We are in a harsh international environment and
still on the downside of an economic cycle without clear indications of a decided upturn. Many
of the investments made during the last upturn are coming on stream just when the demand for
steel remains weak because of the yet uncertain investment climate in India and globally.

The NCAER study emphasizes that under a business-as-usual scenario, Indian steel is unlikely to
meet either the goals of the 12th Five-Year Plan or the goal of some 300 million tonnes of
production by 2025 as proposed in the Governments Draft Steel Policy 2012.
Production

Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.

Today, India is the 3 rd largest producer of crude steel in the world.

In 2014-15, production for sale of total finished steel (alloy + non alloy) was 91.46 mt, a
growth of 4.3% over 2013-14.

Production for sale of Pig Iron in 2014-15 was 9.7 mt, a growth of 22% over 2013-14.

India is the largest producer of sponge iron in the world with the coal based route accounting
for 90% of total sponge iron production in the country.

Data on production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy)
are given below for last five years:
Table 1

Indian Steel Industry : Production For Sale (In Million Tonnes)

Category 2010-11 2011-12 2012-13 2013-14 2014-15

Pig Iron 5.68 5.371 6.870 7.950 9.694

Sponge Iron 25.08 19.63 14.33 18.20 20.38

Total Finished Steel (alloy


68.62 75.70 81.68 87.67 91.46
+ non alloy)

Source: Joint Plant Committee


Demand - Availability Projection

Demand availability of iron and steel in the coun try is projected by Ministry of Steel
in its Five Yearly Plan documents.
Gaps in availability are met mostly through imports.
Interface with consumers by way of a Steel Consumers Council exists, which is
conducted on regular basis.
Interface helps in redressing availability problems, complaints related to quality.
Steel Prices

Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are
determined by the interplay of market forces.
Domestic steel prices are influenced by trends in raw material prices, demand supply
conditions in t he market, international price trends among others.
An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel, under the
Chairmanship of Secretary (Steel) to monitor and coordinate major steel investments in
the country.
As a facilitator, the Government monitors the steel market conditions and adopts fiscal
and other policy measures based on its assessment. Currently, basic excise duty for steel
is set at 12.5% and there is no export duty on steel items. The government has also
imposed export duty of 30% on all forms of iron ore except low grades which carry a
duty of 10% while iron ore pellets have a export duty of 5% in order to control ad-
hoc exports of the items and conserve them for long term requirement of the domestic
steel industry. It has also raised import duty on most steel imports by 2.5%, taking the
import duty on carbon steel flat products to 10% and that on long products to 7.5%.
For ensuring quality of steel several items have been brought under a quality control
order issued by the Government.
Imports

Iron & steel are freely importable as per the extant policy.

Data on import of total finished steel (alloy + non alloy) is given below for last five years:

Table 2

Indian Steel Industry: Imports (In Million Tonnes)


Category 2010-11 2011-12 2012-13 2013-14 2014-15

Total Finished
Steel (alloy + 6.66 6.86 7.93 5.45 9.32
non alloy)

Source: Joint Plant Committee

Figure:2
Exports

Iron & steel are freely exportable.

Data on export of total finished steel (alloy + non alloy) is given below for last five
years:
Top Steel Industries IN India

1. JSW STEEL : JSW Steel is one of the leading manufacturers of the steel of the
country. The journey started in the year 1982 when the organization started functioning
with a single mill at Vasind in Mumbai. The subsequent period witnessed an expansion of
the company to the extent which a few might have imagined. This particular phase saw several
acquisitions by the company after the merger of Jindal Iron and Steel Company and the Jindal
Vijaynagar Steel Ltd in 2005.

Manufacturing Units: The operations propelled in volume and currently the organization
boasts of six plants at different places which are Salem in Tamil Nadu, Vijayanagar in Karnataka
and Vasind,Dolvi, Tarapur and Kalmeshwar in Maharashtra. The manufacturing units have
bolstered the production capacity of the firm over the years and the current capacity is around 15
million tons per annum. The goals of the company are pretty high and it wishes to touch the 40
million tons capacity mark over the next decade. The goals are backed by planning of expansion
of the current units and setting up new plants in states like West Bengal and Jharkhand.

Success Mantra of JSW Steel: Similar to any other big organization, the company has
achieved success on the backdrop of strong administration, technology, manufacturing, supply
chain and marketing. The fact that the company has not compromised with quality has made the
unprecedented success possible. One of the key attribute has definitely been its land acquisition
policy which has indeed been emulated by many other manufacturing giants.

Products: The bracket of the products that the company produces is quite large. It includes
almost everything from the family of the steel. The hot rolled and the cold rolled coils, the
corrosion resistant durable galvanized steel, the TMT bars branded as the JSW Neosteel and
many other products which cater to many industries. Almost all the products of the company
have found its market outside the country which accounts for the stupendous success of the firm.
Awards and recognitions: The great efforts of this esteem organization reflect in the
cabinet of awards it possesses. The list virtually does not seem to terminate. Some of the most
eminent are Commendation Certificate for significant Achievement towards Business
Excellence, Golden Peacock Eco-Innovation Award for the year 2013, The Industry
leadership award, National sustainability Award 2008, Golden Peacock Award for the
Corporate Social Responsibility, Award for Good Green Governance by SRISHTI.

Technical Analysis of JSW STEEL

The trend of the chart is positive, despite the poor relative strength. Despite the
weakness in the attributes the trend chart is currently on a buy signal, a short term
positive. Next resistance on the chart is at 780.000 and support is at 700.000. This
is not a stock we would consider here. Instead look for those which have a stronger
technical attribute reading and good reward to risk ratios. his report identifies
technically sound stocks that have pulled back close to their bullish support lines
providing a good entry point. JSW is in a positive trend, however it has fewer than
3 positive technical attributes and we would not be buyers here.
JSW Steel Ltd(500228)- continued higher and broke a Double Top, a buy signal on
the chart. Although the trend is positive the stock has a poor technical attribute

The next area of support on the chart is at 700 and resistance is at 78O. The first
sign of trouble will be a move to 690, a sell signal on the chart. That sell signal can
be used as the stop loss point. Next significant support at 710, the bullish support
line and resistance is at 780.

JSWSTEEL has a strong technical attribute. The trend chart is currently a buy
signal. The reward to risk ratio of 2.56 is strong and positions can be considered
here. Next significant support at 700., the bullish support line and resistance at 790.

2. RASHTRIYA ISPAT NIGAM LTD/VIZAG STEEL :

Very few organizations earn the respect and fetch the numerical success at the same time.
Rashtriya Ispat Nigam Ltd is one of those companies. It started its journey in 1982 and since
then

It has scripted stories of success.This is also known as the Vizag steel and is currently an
ownership of the Government of India. It was conferred to the Navaratna status by the
government in the year 2010, an award for its achievements over a very small span of time. The
Organization was a result of the collaboration it had with USSR and Germany. The organization
is not only counted as one of the best steel producers in the country but it definitely features in
the top list of the integrated steel producers of the world. The story was a bit different in the
beginning though.

The initial journey was a little rough where the organization suffered huge losses in the initial
years. The complete turnaround saw the firm registering increase in the profits by about 200%.
The production capacity has also gone up to almost 7 million tons which is a prolific figure. The
company has great plans of expansion, where the annual quantity of the liquid steel may scale up
to 16 million tons by 2020.
Head quartered at Visakhapatnam, the steel reaches out to every nook and corner of the country
in different forms of steel. The marketing arm of the company has also affixed a lot of
responsibilities and they are channelized through the rural dealers as well as the urban and the
high profile city dealers. E-Auction has also become a very important tool for the company to
procure Orders. The export orders have ensured a great dominance of the Organization in the
foreign markets as well.

Products : The company offers a variety of products to the market from the family of the steel.
It produces and markets the forged rounds, the steel angles, and wire rods of various steel grades.
Another product of the organization which has scaled great levels of popularity is the
reinforcement bars in straight lengths or coiled form. There is a wide range in the length
available as well. There are the presence of the nested and the interlocked bars as well. All these
products have found a secured market in other countries making the success of the company very
much a possibility.

Awards and recognitions : There is no denial to the fact this esteem Organization features
among the top notch companies and more so when it comes to awards. It received many awards
the most prestigious of it being conferred to the Navaratna status. It is also bestowed upon some
other eminent awards such as the Corporate vigilance excellence award, National vigilance
excellence award and the Star performer in Exports award. The list is pretty much non
exhaustive.
3. TATA STEEL : Tata Steel: is certainly one amongst them. The organization was
the brain child of the greatest entrepreneur of the nation Mr Jamsetji Nusserwanji Tata
who believed that steel would bring a revolution and an economic independence to the
country. It came into existence in the year 1907 after years of research which was
conducted prior to the setting up of this esteem organization.

The company works on the values it imbibed from its founder that every stakeholder of the
company should be benefitted which as a synergic effect makes the society a better place to live.
The Tata Code of conduct often referred to as the code guides all its employees who are spread
all over the world and reminds them of the values, ethics and the corporate principles. The
company has also a set of active policies at place in various areas of operations which defines the
approach in a vivid way. Moving into the figures, the performance of the company seems a fairy
tale.

Tata Steel Limited Presence : The organization currently has a presence in more than 50
countries and employs workers in excess of 80,000.

Manufacturing Units and Production Capacity : The capacity of steel production is


around 30 million tons per annum which is few notches above its closest competitor. The
turnover for the last financial year was a staggering 140,000 crores. It has manufacturing
operations in different continents as well. The annual production capacity of the companys arm
in Europe is 18 million tons per annum. The organization has also achieved great success in
production in the south East Asia region. The manufacturing presence of the firm is there in
countries like Thailand, Singapore, Australia, China and Vietnam. The company has always
worked on the principle of innovation and is continuing to do so.

Innovative Technology : The superlative technical arm has ensured that the company
comes up with new innovated products rather sporadically. No mention of this esteem
organization is complete without mentioning about its CSR activities. They have indeed bettered
the world of many.
Products : The Organization has a wide platter of products which are used in various
industries. It specializes in the hot rolled coils, the wire rods, the construction bars, plates,
sections wide variety of bearings, auto assemblies and many more. It specially takes care of the
agricultural sector which includes the manufacturing of the sickles, shovels, crowbars, hammers
and axes. The company caters to more than 5000 customers and 2 million consumers annually.

Awards and recognitions : It is almost impossible to mention all the awards and the
recognition this stalwart has been able to fetch over a century. Some of the most prestigious are
Worlds most ethical company, Prime Ministers Best performing Integrated Steel Plant,
Golden peacock Environment management award. The list obviously doesnt end here.

Technical Analysis of TATA STEEL


Tata Steel Ltd has formed Bearish Engulfing in the Candlestick chart. For last three days, the

stock was forming Green Candle body in the chart, but in today's single day's trade
Tata steel engulfed last three day's positive close. The stock also had significant
volume, which makes the Bearish Engulfing more meaningful.

For last eight months, Tata steel is trading in a down trend, which makes lower
lows & lower highs. The sideways range bound market breaks the 10, 20, 50 and
100 days moving averages. The other important thing is, the stock is already
trading below 200 days moving average.

In the spot market the price went down by -13.40 points or -3.32%. The drop in
underlying price and rise in Open Interest indicates the possible Short Build Up.

The current month (November) Future have added 557500 shares in Open Interest.
Currently it has 15187500 shares in Open Interest. The near month (December)
Future have added 143000 shares in Open Interest. Currently it has 458500 shares
in Open Interest. In today's intraday trade Tata Steel went onto make 408.75 as
day's high and 385.50 as day's low. The stock went down by -13.40 points or -
3.32% and closed at 390.55.

4. SAIL

Steel Authority of India Limited(SAIL) is a leading Public Sector Undertaking(PSU) in


which the Government of India owns about 86 percent of equity. It is a fully integrated iron
and steel maker, producing both basis and special steels for domestic construction,
engineering, power, railway, automotive ad defense industries and for sale in export markets.
It is ranked amongst the top ten public sector companies in India in terms of turnover.

They manufacturers and sells a broad range of steel products, including hot and cold rolled
sheets and coils, galvanized sheets, electrical sheets, structural`s, railway products, plates,
bars and rods, stainless steel and other alloy steels.
SAIL have five integrated plants and three special steel plants, located principally in the
eastern and central regions of India and situated close to domestic sources of raw materials,
including the company`s iron ore, lime-stone, and dolomite mines. The company has the
distinction of being India`s largest producer of iron ore and of having the country`s second
largest mines network. This gives them a competitive edge in terms of captive availability of
iron-ore, limestone, and dolomite which are inputs for steel making.

Technical Analysis of SAIL

SAIL has a poor technical attribute. The trend is negative and the trend chart is
currently on a sell signal. It would take a move to 85 to move the chart to a buy
signal. We would not consider positions in SAIL here. There is significant
resistance at 88.00, the bearish resistance line and support at 77.00.

The company said it produced 8.2 million tonnes of saleable steel during April-
November 2012, up 2.3 per cent over the corresponding period in the previous
fiscal. "Major techno-economic parameters during April-November 2012 period
fared better, with 2 per cent improvement in coke rate and energy consumption.
The rally is done in metal stocks and SAIL has been a distinct under performer. It
is surprising that it is at Rs 85 now because it was at Rs 250 three years ago. Here,
there is a long-term bear market in effect. We want to go with that bear market. It
has failed at its resistance levels just as Jain Irrigation did and it is now sliding
down.

SAIL can touch Rs 85 and even Rs 90 in the six months. That does not mean that
SAIL is a good buying opportunity. Once the investor reaches these targets he/she
must get out at these levels because SAIL is a distinct underperformer otherwise

5. VISA STEEL
This steel company is Flagship Company of giant VISA group. With its corporate office
at Kolkata, they have three manufacturing plants, two branch offices and PAN India
network of dealers and distributors. Their manufacturing lants are located strategically
nearer to raw material producing belt of country. Their two plants are located at Odissha
and one at Chattisgarh. They are planning to setup one more steel plant of 1.25 million
TPA at Madhya-Pradesh.
Type - Private
Head office Kolkata, West Bengal
Establishment 2003

6. BHUSHAN STEEL:

Bhushan Steel is placed at sixth position. Bhushan Steel was founded in the year 1987 with its
manufacturing plant at Sahibabad. They are Indias 3rd largest secondary steel producer.
Headquartered in Delhi, they have their factories at UP, Odisha and Maharashtra which are
equipped with modern machineries and skilled workforce. They have strong focus on R&D
department and constantly strive for newer and better products. They have Indias prestigious
industrial group as their clients such as Maruti, Godrej, LG Electronics, Mahindra & Mahindra,
Eicher Tractors, Ashok Leyland, Hitachi ACs and many more.
Type - Private
Head office New Delhi, India
Establishment 1987

7. ESSAR STEEL :

Essar Steel is placed at seventh position. Essar Steel founded in the year 1998, this ESSAR
Group Company is leading name in steel industry in India and abroad. They have their steel
manufacturing operations in four countries India, Canada, USA and Indonesia. In India, they
have manufacturing factories located at Hazira Bailadilla, Dabuna,, Pune, Paradip and
Visakhapatnam. All of their facilities have various quality certifications such as ISO: 9001:2000,
OHSAS 18001:1999, ISO 9002, etc. Type - Public company Head office Mumbai,
Maharashtra Establishment 1998

8. THE FERRO ALLOYS CORPORATION LIMITED

The Ferro Alloys Corporation Limited was established in 1955 and has head office in Nagpur. It
is ISO 9001:2000 certified company that works to delivery best in quality steel. Presently
company has more than 18000 employees that work passionately for the success of company.

Head office Nagpur, Maharashtra


Establishment 1955
Type Public
Employees - 18,000
9. MAHINDRA UGINE STEEL

Jhgvn Mahindra Ugine Steel is a leading steel production company of India. Founded in the year
1962 at Mumbai, MUSCO is a part of Mahindra Group. They are known for manufacturing of
rings, specialty steel and stampings. They were the first Indian steel company to get ISO
certification. They have been awarded several recognitions and awards by various national and
international bodies. They have setup residential colonies for their workers in 41.94 hectares
with play area and school facilities.

Corporate office Mumbai, Maharashtra


Establishment 1962

10. AHMEDABAD STEELCRAFT LTD

Ahmedabad Steelcraft Ltd is counted among the famous steel producing companies of India that
was started in
1972 and has net profit was Rs. 18.10732 Million by March 2014.Company has presence
including countries like US,Canada, UK, Europe, Australia, New Zealand, South East Asia,
Caribbean countries, Mauritius, Israel and Guyana.
Establishment: 1972 | Revenue : 1.97312 ( USD in Millions )
11.AHMEDABAD STEELCRAFT LTD

Ahmedabad Steelcraft Ltd is counted among the famous steel producing companies of India that
was started in 1972 and has net profit was Rs. 18.10732 Million by March 2014.Company has
presence including countries like US, Canada, UK, Europe, Australia, New Zealand, South East
Asia, Caribbean countries, Mauritius, Israel and Guyana. Establishment: 1972 | Revenue :
1.97312 ( USD in Millions)

12.AKASHANA GLOBAL STEEL LTD

Akashna Global Steel Ltd was started in 1985 and has becoming a prominent player of steel
industry. Company has annual income of Rs Rs. 1.149166 Million by 2012. Establishment: 1985
| Revenue : 0.0109825 ( USD in Millions )

13.ANIL SPECIAL STEEL INDS.

LTD Anil Special Steel Inds Ltd was started in 1968 and has market capitalization of Rs
94.35989772 Million. Company is ISO 9001:2000 certified and has more than 9 branches across
PAN India. Company manufacture products like Cold Rolled and Spheriodized Annealed Steel
Strips Hardened and Tempered steel strips.
Establishment: 1968 |Revenue : 50.8327 ( USD in Millions ) | Market Cap: 94.35989772 ( Rs. in
Millions ) | Total Income : Rs. 3149.493433 Million | Net Profit - Rs. 49.090863 Million |.
14. ASHIRWAD STEEL & INDS.LTD

ASHIRWAD STEEL & INDS.LTD was started in 1986 and has more than 28 years of
experience of steel industry. Company was achieved remarkable achievements under the
leadership of Puranmal Agarwal. It has Total Income - Rs. 179.111864 Million & Net Profit of
Rs. 3.722874 Million Establishment: 1986 | Revenue : 2.80356 ( USD in Millions ) | Market Cap
: 62.625 ( Rs. in Millions )

15. BAJAJ STEEL INDS.LTD

Bajaj Steel Inds. Ltd is a famous steel manufacturing company that was established in 1961 and
has been in the industry from last 50 years. Company launched its IPO in 1985 and has market
capitalization of Rs 500 millions. Company has huge production units across India that
manufacture high quality steels like Cotton Baling Press, Double Roller Co.Establishment: 1961
| Revenue: 74.6733 ( USD in Millions ) | Market Cap: 500.08 ( Rs. in Millions )

BANGA LAXMI STEEL TRADING COMPANY LTD

Banga Laxmi Steel Trading Company Ltd. is a famous steel manufacturing company based out in west
bengal. Company was setup in 1973 and has been growing at incredible rate. Establishment: 1973
Market Size

Indias crude steel production grew by 9.4 per cent year-on-year to at8.1Million Tonnes (MT) in
August 2016.! During April-August 2016, crude steel production in the country grew by 7 per
cent year-on-year to 39.98 MT.

Over April-August 2016, steel imports fell 34.5 per cent year-on-year to 3.01 MT, while steel
exports rose 23.6 per cent year-on-year to 2.38 MT.

Steel consumption in the country is expected to grow 5.3 per cent year-on-year to 85.8 MT
during FY2016-17, led by growth in the construction and capital goods sector.
Investments

Steel industry and its associated mining and metallurgy sectors have seen a number of major
investments and developments in the recent past.
According to the data released by Department of Industrial Policy and Promotion (DIPP), the
Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$
8.89 billion, respectively, in the period April 2000March2016.
Some of the major investments in the Indian steel industry are as follows:

Tidfore Heavy Equipment Group, the China-based infrastructure giant, is looking to enter
the Indian market by signing an investment agreement worth US$ 150 million with Uttam
Galva Metallics, to expand its Wardha unit along with South Korean steel major Posco.
ArcelorMittal SA is looking to set up a joint venture (JV) factory in India with state-owned
Steel Authority of India Ltd (SAIL), to manufacture high-end steel products which could
be used in defence and satellite industries.
JSW Group plans to invest around Rs 10,000 crore (US$ 1.49 billion) at Salboni in West
Bengal to set up 1,320 Megawatt (MW) coal-based power plant, 4.8 million tonne cement
plant and paints factory over a period of next five to seven years.
National Mineral Development Corporation (NMDC) has planned toinvest Rs 40,000 crore
(US$ 5.96 billion) in the next eight years to achieve mining capacity of 75 Million Tonnes
Per Annum (MTPA) by FY2018-19 and 100 MTPA by FY2021-22, compared to 48 MTPA
current capacity.
Posco Korea, the multinational Korean steel company, has signed an agreement with Shree
Uttam Steel and Power (part of Uttam Galva Group) to set up a steel plant at Satarda in
Maharashtra.
ArcelorMittal, worlds leading steel maker, has agreed a joint venture with Steel Authority
of India Ltd (SAIL) to set up an automotive steel manufacturing facility in India.
Iran has evinced interest in strengthening ties with India in the steel and mines sector, said
ambassador of the Islamic Republic of Iran, Mr Gholamreza Ansari in his conversation
with Minister of Steel and Mines, Mr Narendra Singh Tomar.
Public sector mining giant NMDC Ltd will set up a greenfield 3-million tonne per annum
steel mill in Karnataka jointly with the state government at an estimated investment of Rs
18,000 crore (US$ 2.67 billion).
JSW Steel has announced to add capacity to make its plant in Karnataka the largest at 20
MT by 2022.
Government Initiatives

Some of the other recent government initiatives in this sector are as follows:

The Government of India has approved a joint venture (JV) between MSTC Ltd and
Mahindra Intertrade Ltd, for setting up India's first greenfield auto shredding and
recycling facility, which will aide in saving of foreign currency, as a result of import
substitution of scrap.
Mr Narendra Singh Tomar, Union Minister of Steel, Mines, Labour and Employment, has
launched the National Mineral Exploration Policy (NMEP), which will help to adopt
comprehensive exploration of non-fuel and non-coal mineral resources that would give a
major boost to the economy.
Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have jointly
launched an e-platform called 'MSTC Metal Mandi' under the 'Digital India' initiative,
which will facilitate sale of finished and semi-finished steel products.
The Parliament of India has cleared amendments to the Mines and Minerals Development
and Regulation (MMDR) Act, which will enable companies to transfer captive mines
leases similar to mines won through an auction, and which is expected to lead to
increased Mergers and Acquisitions (M&A) of steel and cement companies.
The Ministry of Steel has announced to invest in modernisation and expansion of steel
plants of Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited
(RINL) in various states to enhance the crude steel production capacity in the current
phase from 12.8 MTPA to 21.4 MTPA and from 3.0 MTPA to 6.3 MTPA respectively.
The Minister of Steel & Mines, Mr Narendra Singh Tomar, has reiterated commitment of
Central Government to support the steel industry to reach a production target of 300
Million Tonne Per Annum (MTPA) in 2025.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and
Technology Mission of India (SRTMI) in association with the public and private sector
steel companies to spearhead research and development activities in the iron and steel
industry at an initial corpus of Rs 200 crore (US$ 29.65 million).
The Central Board of Excise and Customs (CBEC) has issued a notification announcing
zero export duty on iron ore pellets, which will help the domestic industry to become
more competitive in the international market.
Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich states
i.e., Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up plants having capacity
between 3 to 6 MTPA.
SAIL plans to invest US$ 23.8 billion for increasing its production to 50 MTPA by 2025.
SAIL is currently expanding its capacity from 13 MTPA to 23 MTPA, at an investment
of US$ 9.6 billion.
Steel manufacturing process

Steel is one of the most important and widely used products in the world. Currently, the steel
industry is undergoing a process of change. As a result of ongoing technical and economic
developments, the production and use of electric arc furnace steel is, beneath the steel production
in a blast furnace, becoming increasingly important, continuously gaining share of world-wide
steel production over the past 30 years.

Blast Furnace method

The figure shows a flowchart of the integrated manufacturing process for iron and steel using the
blast furnace and basic oxygen furnace (denoted BF and BOF hereinafter, respectively), which is
presently the most commonly used method (51% of world steel production). After the BF-BOF
process, molten steel is controlled to a target composition and temperature and is then cast by
continuous casting machine to produce slabs, blooms, and billets. These castings are rolled to the
required dimensions by the rolling mill to produce steel products. The smelting and refining
process for iron and steel in the BF-BOF process involves the carbon reduction of iron ore
(Fe2O3) in the BF to make molten iron, and decarburization of molten iron in the BOF to make
molten steel.
Major reducing agent in the BF is the carbon monoxide gas(CO) generated by the oxidation of
the carbon(C) in coke. Consequently, carburization takes place at the same time as reduction,
producing hot metal(molten iron) containing about 4% carbon. The hot metal is decarburized to
the required carbon content in the BOF. The main reaction in this process is the oxidization of
the carbon in the hot metal by both pure oxygen gas (O2) and iron oxide (Fe2O3). The residual
oxygen, after contributing to this decarburization reaction, remains in the molten steel. This
oxygen is fixed and removed by deoxidizing reagents such as silicon and aluminum as SiO2 and
Al2O3 or is removed as carbon monoxide gas in the subsequent vacuum degassing process.

Electric Arc Furnace(EAF)

In addition to the BF-BOF process, there is another process which utilizes mainly scrap as an
iron source, with some direct reduced iron whenever necessary. The direct reduced iron is
produced by reducing iron ore with reformed natural gas, whose principal components are
hydrogen, carbon monoxide, and methane. The scrap, along with direct reduced iron, is then
melted in an electric arc furnace (denoted EAF hereinafter) to produce molten steel which is
subsequently processed by the continuous casting machine, as mentioned above.
The molten steel from the BOF and EAF is then deoxidized and alloying elements are added in
the prescribed amounts. The molten steel is then held at the target temperature and continuously
cast, and the castings obtained are cut to the prescribed length. After heating to the rolling
temperature in a reheating furnace, these castings are hot-worked to the required products. Steel
shapes, bars, and wire rods are worked on section and bar mills and wire-rod mills equipped with
caliber rolls, plates are worked on reversing mills, and hot-rolled steel sheets are worked on hot
strip mills. After pickling to remove scale from the surface, the hot-rolled steel sheets are worked
to cold-rolled steel sheets on reversing mills or tandem rolling mills, and the cold-rolled steel
sheets are tinned or galvanized as required to produce various surface-treated steel sheet
products. Steel pipe is produced by forming and welding steel sheets or plates, or by piercing a
billet and rolling to the final dimensions without a seam.

Presently, there are 38 Electric Arc Furnace based steel plants working in the country with an
aggregate capacity of 18.041 million tonnes per annum. Apart from the working units, there is
one unit, which is closed. Production of Ingots/Concast Billets by EAF units, which have been
reporting their production to Joint Plant Committee, during 2009-10 (prov.) was 15.48 million
tonnes as compared to 14.15 million tonnes during 2008-09, registering a growth of 9.4%. This
sector continued to be under constraint of rising cost of inputs, increasing power tariffs, shortage
of power & resource crunch.
COREX or Cipcor Process

COREX is an advance process of making steel. Though few use this process, it is possible to use
non-coking coal directly in smelting work and it also makes it possible to use lump ore and
pellets as inputs. These two advantages allow steel producers to eliminated coking plants and
sinter plants. Purpose of coking plant is to convert non-coking coal into more efficient fuel and
purpose of sinter plant is purify lump ore or pellets for further processing. Basic inputs to
COREX are iron-ore and coal. Jindal Iron & Steel Company (JISCO) uses COREX technology
to produce finished steel.

Induction Arc Furnace (IAF)

IAF is one of the most advance processes of making steel. Like EAF it uses electricity as its
main fuel. IAF is most environment friendly and efficient way of producing steel. However, its
lack of refining capacity requires clean products as its inputs. Large numbers of small steel
companies use this technology. The high weight of the product significantly pushes up transport
and movement costs. Therefore large integrated plants are the norm for cost efficient production.
For specialized steel and alloys efficient production by smaller plants is possible.
During 2009-10 (prov.), it is estimated that 1114 units with a capacity of 24.40 million tonnes
were in operation. The total production of induction furnace units registered a growth of 10%
during 2009-10, producing 19.86 million tonnes against a production of 18.05 million tonnes in
2008-09, as reported to Joint Plant Committee.

Merits & Demerits:

Players using the BOF route enjoy higher profitability as compared to players using the IF route,
as steel made in a blast furnace is more refined and fetches higher realizations. Higher
profitability and economies of scale in the BOF route help players earn better returns on
investments. Cash accruals and debt-servicing indicators are also better as compared to
steelmakers who use the IF route. However, the BF-BOF process entails higher investments and
only large players are present in this category. On the other hand, in the IF route, investment
requirements are lower.

EAF allows steel to be made from a 100% scrap metal feedstock. This greatly reduces the energy
required to make steel when compared with primary steelmaking from ores. Another benefit is
flexibility: while blast furnaces cannot vary their production by much and are never stopped for
years at a time, EAFs can be rapidly started and stopped, allowing the steel mill to vary
production according to demand. Although steelmaking arc furnaces generally use scrap as their
primary feedstock, if hot metal from a blast furnace or direct-reduced iron is available
economically, these can also be used as furnace feed.
A typical steelmaking arc furnace is the source of steel for a mini-mill, which may make bars or
strip product. Mini-mills can be sited relatively near to the markets for steel products, and the
transport requirements are less than for an integrated mill, which would commonly be sited near
a harbor for access to shipping.

Steel capacity additions in India have risen at a CAGR of 10 per cent over 2005-06 to 2009-10.
Of the major steelmaking routes (Basic Oxygen Furnace (BOF), electric arc furnace (EAF) and
induction furnace (IF)) capacity additions have been the most in the IF route. The dependence of
producers using the IF route on non-coking coal -- whose prices have been stable so far -- gives
them a cost advantage over players using the BOF route.
However, this trend is expected to change in 2012-13 as non-coking coal prices increase.
Meanwhile, a fall in coking coal prices has reduced costs for players using the BOF route.
Raw Materials

Coal
Coal is a family name for a variety of solid organic fuels and refers to a range of combustible
sedimentary rock materials spanning a continuous quality range. For convenience, this
continuous series is divided into four categories:
1) Anthracite,
2) Bituminous coal (metallurgical coal),
3) Sub-bituminous coal,
4) Lignite.
Coal is the primary fuel used by integrated iron and steel producers.

The process of coal block allocation is discussed in detail in Appendix c.

Coke
A solid carbon based product derived from baking bituminous coal at high temperature to
remove volatile constituents.
Metallurgical coke ('met coke') is used as the main fuel in the smelting of iron ore in a blast
furnace. The quality of coke has a significant influence on furnace productivity and iron
production costs.

Iron Ore
Iron ore is formed of rocks, minerals or meteorites from which metallic iron can be extracted.
Typically, the iron is in the form of iron oxide, which varies in colour from dark grey, bright
yellow and deep purple to rusty red. Iron ore can have up to 65% ferrous content, but is often
lower and needs to be refined before use.
Iron ore is the raw material used to make pig iron, which is one of the main raw materials for
making steel. 98% of mined iron ore is used to make steel.
Pig Iron
A key intermediate material in the integrated (converter-based) steelmaking process, pig iron is
the product of smelting iron ore, coke and limestone in a blast furnace.
Pig Iron is used directly in the manufacture of steel. Merchant pig iron is sometimes used as a
substitute for scrap in EAF steelmaking, when there is a need to control residuals.

DRI
Direct Reduced Iron (DRI) or sponge iron is processed iron ore that is iron-rich enough to be
used as a scrap substitute in electric furnace steelmaking. It is made by the reduction (removal of
oxygen) of iron oxide (iron ore) at temperatures below the fusion point of iron.
As mini-mills expand their product abilities to sheet steel, they require much higher grades of
scrap to approach the quality of output from integrated mills. DRI enables mini-mills to use iron
ore without having a blast furnace. It serves as a low residual raw material and alleviates the
mini-mills dependence on cleaner, higher priced scrap.

HBI
Hot Briquetted Iron (HBI) is Direct Reduced Iron that has been processed into briquettes. Instead
of using a blast furnace, the oxygen is removed from the ore using natural gas and results in a
substance that is 91%94% iron. Because DRI may spontaneously combust during
transportation, HBI is preferred when the metallic material must be stored or moved.
Because of its high iron content and low residual levels, HBI can be used in almost every type of
steelmaking operation. It has advantages over steel scrap due to its high bulk density and the
very low content of undesirable chemical elements.

Ferro-Alloys
Alloys of iron, with a high proportion of added elements - such as silicon, nickel, chromium,
molybdenum, vanadium and manganese are used to improve properties in the production of
special steels.
As part of the steel production process, ferro-alloys are added to the usual mix of raw materials
to alter the chemistry as required for certain specific end uses. The added elements determine
whether the steel will end up as paper clips, a car body, the undercarriage of a jumbo jet, or a
beam in a high-rise building.
Scrap
Steel can be recycled almost indefinitely without losing its properties. Obsolete ferrous scrap is
derived from steel-containing goods at the end of their useful lives (e.g. a drinks can, a 15-year-
old car, a 50-year-old building). Revert scrap is steel waste produced and recycled within a
steelworks. New production scrap is generated when steel is cut and formed during the
manufacturing of finished products or components. The scrap is returned to steelworks and
foundries.
Ferrous scrap is mainly used in electric arc furnace steelmaking. About 500 million tonnes of
scrap are melted each year.

Manganese
Manganese is used in steel alloys to increase many favourable characteristics such as strength,
hardness and durability. In fact steel cannot be produced without manganese; it is an essential
ingredient in the process.
Steel becomes harder when it is alloyed with manganese. It has similar applications when
alloyed with aluminium and copper. Hardened steel is important in the manufacture of
construction materials like L-beams (24% of manganese consumption), machinery (14% of
manganese consumption) and transportation products (13% of manganese consumption).

Raw material Primary process Secondary process

Iron ore
DRI(Sponge iron)
Coal
Coke
Ferro-alloys
Scrap
Manganese
Oxygen
Electricity
-used in small proportion

Scrap and DRI (Sponge iron) move in opposite direction as they can be used as substitute for
other.
Issues in Indian Steel Industries

Raw Materials

India is endowed with abundant Iron ore resources, the basic input for steel making. Of late,
large scale exports of iron ore have raised concerns about future availability of iron ore resources
to meet the fast rising domestic steel demand. Large quantities of iron ore fines are exported due
to mismatch between domestic production and consumption and also lack of adequate sintering
and pelletisation facilities for steel making. Steel industry confronts the problem of depletion of
high grade ore deposits and lack of domestic technological capabilities to process low grade iron
ores. In the larger national interest of conservation of natural resources and environment, efforts
are being made to preserve and utilize the precious Iron ore fines for domestic production of steel
and at the same time the Ministry has taken measures to discourage export by imposing higher
tariffs and special levies etc.

The domestic availability of Coking coal, a critical raw material required by steel industry is
limited and therefore the Indian Steel industry has to depend heavily on imported coking coal to
meet its needs. Currently, domestic steel makers meet 70% of their coking coal requirement
through imports. The quantum of imports may go up significantly in the 12th plan as steel
production in a large number of new projects is likely to be through the BF-BOF route. To
ensure raw material security and minimize the impact of volatility in coal prices, it is desirable to
acquire overseas coking coal assets. International Coal Ventures Limited (ICVL), a Joint Venture
company promoted by SAIL in 2008-09 and consisting of RINL, NMDC, CIL and NTPC to
achieve the above objective has not made much progress so far but it is imperative to make this
venture more effective.

In view of the limited availability of coking coal in the global market and the fact that its supply
is controlled by a few large companies, it will be extremely important to increase the domestic
production of coking coal and upgrade its quality to meet the requirements of steel making.
Technologies which require less of coking coal and lower grades of it will need to be
encouraged.
Non-coking coal used for production of sponge iron is also increasingly becoming scarce in the
country. With the demand for non-coking coal from priority sectors like power, Fertilizers etc
going up further, its availability for steel making is likely to be limited during the 12th plan.
While sponge iron producers may opt for import of coal, the economic viability of this sector
may be under pressure due to higher prices of imported coal. Moreover, the gas based DRI units
face restricted supply of CNG, largely due to priority allocation of gas to power and fertilizer
sectors. Supply of CNG to this sector is a major concern for its growth and these units may have
to depend more on imported source of fuel supply. Many existing and new producers propose to
create additional capacity manifold under gas based route in Twelfth plan period.

Infrastructure

Development and growth of Infrastructure sector is critical for rapid growth of domestic steel
industry in the country. Steel industry is a major user of infrastructural facilities especially of
Railways, roads, power, and ports. Besides, the competitiveness of domestic steel industry
depends heavily on the expansion and provision of efficient infrastructural facilities. As per the
working group projections, the steel production in the country will nearly double within the next
five years. This requires rapid growth of railways, roads, ports and power facilities. The existing
infrastructural facilities are not adequate. The domestic steel industry meets 70% of its coking
coal requirement from imported sources and if the same trend is maintained, nearly 50 million
tonnes of coking coal will have to be imported by 2016-17. There is urgent need for expansion of
port capacity to handle the raw materials and finished goods of steel sector. The steel plants
which are likely to come on stream in Twelfth plan period will need to transport 85 to 90 million
tonnes of iron ore from the mines and also deliver 45 to 50 million tonnes of finished steel from
steel plants to distribution centres. Therefore, there is immediate need for substantial up
gradation of infrastructural facilities to meet the increasing steel requirements of the steel
industry.
Investments to the tune of US $ 1 Trillion are proposed in the infrastructure sector in the 12th
plan. An investment of this scale and size is likely to generate higher domestic demand for steel
and at the same time help build necessary infrastructure required for the steel industry. Large
investments of this nature suffer from gestation lags, constraints in mobilization of financial
resources, land acquisition issues and hurdles in obtaining statutory clearances in case of mega
infrastructural projects. These need to be sorted out since the development of infrastructure
sector has strong forward and backward linkages and contributes significantly to overall growth
and development of the economy.

Investment

Requirement of financial resources to support an additional capacity creation of about 60 million


will be approximately 2.5 lakh crores during the 12th Plan and securing such large investible
funds at reasonable cost will be a challenging task. FDI in the steel sector has been lagging
behind, despite massive investment intentions by some major global steel majors. In order to
ensure sufficient availability of financial resources for the growth of Indian steel industry, it is
imperative to review steel related sectoral caps of the banking sector. Government may also
consider easing of norms connected with external borrowings (ECBs). Special purpose long term
financing facility may be created to finance huge investment in new steel plants.

Technology and Research & Development

A cursory examination of the present status of Performance Indices shows that the technological
performance of Indian Steel Plants in terms of specific consumption of raw material /
consumables, specific energy / power consumption, environmental and pollution norms is
significantly lower than those in the advanced countries. The poor performance standards of the
domestic industry are primarily attributable to poor quality of raw materials / inputs, prevalence
of obsolete technology and lack of R&D to overcome the technological gaps. Major areas where
focus /attention of Industry and Government are required in the 12th Plan are as follows:
i) Iron ore quality in terms of high alumina content and high alumina to silica ratio is a serious
concern.
ii) There is a need to reduce the coal ash substantially to make our coals suitable for coke making
and iron making operations.
iii) It is suggested that the improvement in raw materials be achieved through selection of
appropriate beneficiation process and improvement in operational practices of ore beneficiation /
coal washing circuit.
iv) Above 20% of the ROM (run of mine) which is known as slime has low percentage of iron
(less than 55%). The size of slimes is lower than 150 micron and further beneficiation is difficult
and not economical. There is an immediate need to find out solutions for the realization of iron
value from slimes. Alternative iron making process such as FASTMELT or ITmk3 may be
useful to realize the iron value efficiently.
v) Use of mine wastes such as Jharia coal in Iron and Steel production will be helpful to increase
the mine life. Coal gasification of non coking coals and recovery & utilization of CBM are some
of the steps to address issues such as coal / coke shortage and CO2 emissions.
vi)Large size Blast Furnaces with the state of the facilities have done well in terms of
productivity, consumption norms and hot metal quality. With installation of such furnaces in
future, the need for agglomerated burden (sinter + pellet) is likely to increase. The improvement
in burden quality will facilitate higher injection of coal fines and thereby reduction in
metallurgical coke requirement and overall fuel rate.
vii) The units that have adopted DRI HM EAF and DRI IF routes for iron making are
suffering due to non availability of hard iron ore lump, high cost of natural Gas, non availability
of good quality coal, absence of good scrap and rising prices of raw material inputs for BF. To
alleviate the shortages of iron ore lump, there is a need to put up pellet plants. Coal gasification
is believed to be a good option to replace natural gas for the production of synthesis gas
(reducing gas in shaft kiln process).
viii) Large quantity of slag is produced in BOF / EAF. It is not easy to dispose of the steel
making slag due to the presence of free lime and high percentage of iron oxide. Technologies
have been developed (ORP, MURC) in Japan to reduce the generation of slag and reduce the
Phosphorous level below 0.010%. Some of the technologies for reuse in the form of brick for
pavement / construction of dykes, flux / iron bearing material in cupola and construction
material after sufficient aging can be adopted to gainfully utilize the slag. There is also a
possibility to recover the iron values through smelting reduction.
ix) DRI EIF route suffers from lack of refining capacities. The steel melted by the process has
higher percentages of Phosphorus and Nitrogen. Rotary kiln DRI-EIF route needs to improve its
technology substantially to avoid obsolescence, market acceptability due to poor quality and to
reduce its adverse impact on the environment. There is a dire need for Technology Up gradation
in Secondary Steel Sector in general and the EIF sector in particular to make them competitive in
terms of Productivity, Quality and Environment friendliness. .
x) Dynamic soft reduction and Near net shape casting will result in quality improvement and
energy saving respectively and these emerging technologies are likely to be adopted in the
coming years by the Steel Industry.
xi) Due to increasing demand for High Strength Steel, current BAF (Batch Annealing Furnace)
technology may get replaced with Continuous Annealing Technology.
xii) Environmental concerns would be a major criterion for the selection / adoption of new
technology in near future. Therefore the steel industry may have to carry out research in the areas
of carbon foot print, CO2 absorption and sequestration.
xiii) There is a need to develop sound indigenous capacity to develop technologies to a) suit
indigenous raw materials, b) improve energy input norms through energy-efficient technologies
and c) meet national norms for emission per ton of products and comply with global
responsibilities for carbon foot print.
xiv) The Research and Development systems should also match the composite structure of the
steel industry in the country. While some large corporate houses which could afford in-house
R&D and acquire plants overseas could adopt global approaches for developing and acquiring
technologies, R&D and technology needs of several small units engaged in manufacturing
remain unaddressed. Small enterprises are not able to leverage the benefits of improved
technologies and this explains their poor performance standards when compared to national and
international benchmarks.
xv) Pre-competitive research in steel related technologies for a) energy-efficiency, b) emission
control, c) solid waste minimization, d) more efficient use of Indian coal resources and e) value
addition to indigenous raw materials in public and private sector R&D would need to be
promoted through a Challenge Award Scheme. International Science & Technology cooperation
in the area of steel making technologies would be necessary considering that the number of
Indian experts engaged in R&D in steel making is significantly low. Synergies within the
country and through international cooperation may need to be developed for growing industry-
relevant R&D activities.

Environmental Management and Pollution Control

i) The Indian steel industry currently is at a crucial stage with challenges of climate change.
While the industry is expected to accelerate ramp up steel production to meet the needs of its
population by infusion of additional capacity, global issues like Climate change necessitate
guided growth through low carbon intensive routes for steel production. It is therefore imperative
that all the steel makers across the country adopt energy efficient and environment friendly
technologies in all areas of iron and steel making in line with SOACT and BAT guidelines.
ii) It is also necessary that all protection measures are adopted at the planning stage itself, as the
cost of correction at a later date will be very high. Existing plants need to evolve short term and
long term action plan to phase out the old and obsolete facilities by state-of-art clean and green
technologies with an aim not only to achieve higher standards of productivity but also to harness
all waste energy with minimized damage to the environment.
iii) Since the cost of measures for energy and environment management is expected to be high, it
is imperative that Government evolve suitable measures in the form of capital subsidy or
incentives to promote adoption of such measures.
Safety Measures

i) The safety policy adopted in the Iron and Steel Industry in India is comparable to the policy
followed internationally. However, implementation and monitoring of these policy guidelines on
the ground leave much to be desired. As a result, the number of accidents, casualties, disabilities,
loss to plant and machinery and consequential loss of man-days and production is quite
significant. It calls for an introspection and review of the whole situation.
ii) It has been observed that adherence to safety measures and policy is lacking due to many
factors, viz. Indifference on the part of management and workers, financial problems, lack of
awareness, complicated and slack legal machinery and lack of adequate statutory provisions.
iii) Use of many out-dated technologies still prevalent in India exacerbates the hazards and risks
in the plant.
Five trends in India's steel industry

Growth for India's steel industry has been hampered by regulatory and environmental hurdles,
land acquisition delays and social opposition.
But players are finding ways to expand capacities as demand for steel races in one of the fastest
growing economies of the world. India targets 120 million tonnes of domestic steel output at the
end of 2012 from nearly 70 million tonnes in 2009/10.
Following are five trends seen in the industry:

Consolidation

Analysts say buyouts could be an easy way of getting hold of land and regulatory approvals by
companies seeking growth.
Over the next couple of years, there could be mergers and acquisitions, particularly in the sponge
iron sector, it refers to the hundreds of small units, many of which are unviable.
In December, JSW Steel agreed to buy a controlling stake in loss-making rival Ispat Industries
that would push its capacity to the top most position. It also agreed to buy Bellary Steel.

Doggedness of foreign firms

South Korean POSCO got an approval for its 12 million tonne plant in eastern Orissa state last
month after waiting since 2005, and its plans for another plant in Karnataka and a joint venture
with Steel Authority of India (SAIL) in Jharkhand remain.
The world's top steelmaker ArcelorMittal has also waited years to build plants in Jharkand,
Orissa and Karnataka and has a stake in Uttam Galva Steel.
Foreign players have taken the difficulties in their stride. As the industry expands, there will be
opportunities for them to come in as joint venture partners, technology partners or on their own.
The delays have not discouraged the industry and other foreign players who have set foot in
India are:
- Japan's Nippon Steel in joint venture with Tata Steel for making cold rolled sheets.
- Japan's JFE Holdings in talks with JSW for a stake buy.
- Japan's Kobe Steel and SAIL in talks for a joint venture.
- Russia's Severstal and NMDC in joint venture to a build steel plant.

Relocation, smaller plants

ArcelorMittal, POSCO, Bhushan Steel and JSW have chosen Karnataka state in the south for
making new steel plants, away from east India that is mineral rich, but fraught with social and
land-acquisition problems.
If we can't get your steel plant simply because we can't get the land, it doesn't matter whether we
have got an iron ore deposit nearby.
Bristow said investors may even look to the west coast that has less iron ore, but is closer to
Africa from where coking coal is imported.
ArcelorMittal has also spoken about a shift towards smaller modular sites as against mega
projects.

Use of low grade raw materials

Traditional steel blast furnaces can take only iron ore lumps and coking coal. But now, industry
members are looking at technology that will enable them to use iron ore fines and non coking
coal as they are abundantly available in India.
A big part of India's over 200-million tonne iron ore output is the powdery iron ore fines while
coal production of over 500 million tonnes is mostly non coking coal.
Raw material costs account for 50% to 55% of the total cost of steel production. We need to
utilize low grade raw materials available locally.
SAIL's joint venture plan with POSCO is for using the Finex technology that can use iron ore
fines directly in the blast furnace.
Environmental awareness

With stricter implementation of environmental rules, and a new mining bill that seeks to have
companies pay 26 of their profits to displaced locals, companies are expected to spend more on
environment and society.
We expect the industry to be more cognizant towards social responsibility.
Understanding the Steel industry using Michael Porters
Five Forces Model

Backed by robust volumes as well as realizations, steel Industry has registered a phenomenal
growth across the world over the past few years. The situation in the domestic industry was no
exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy.
However, the current liquidity crisis seems to have created medium term hiccups. In this article,
we have analyzed the domestic steel sector through Michael Porters five force model so as to
understand the competitiveness of the sector.
Entry barriers: High

Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set
up 1 MTPA capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn
depending upon thelocation of the plant and technology used.
Economies of scale: 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.

Government Policy: The government has a favorable policy for steel manufacturers.
However, there are certain discrepancies involved in allocation of iron ore mines and land
acquisitions. Furthermore, the regulatory clearances and other issues are some of the major
problems for the new entrants.

Product differentiation: Steel has very low barriers in terms of product differentiation as it
does not 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.
Bargaining power of buyers: Unlike the FMCG or retail sectors, the buyers have a low
bargaining power. However, the government may curb or put a ceiling on prices if it feels the
need to do so. The steel companies either sell the steel directly to the user industries or
through their own distribution networks. Some companies also do exports.
Competition: High

The steel industry is truly global in terms of competition with large producing countries like
China significantly influencing global prices through aggressive exports.

Steel, being a commodity it is, branding is not common and there is little differentiation
between competing products.

It is medium in the domestic steel industry as demand still exceeds the supply. India is a net
importer of steel. However, a threat from dumping of cheaper products does exist.

Bargaining power of suppliers: High

The bargaining power of suppliers is low for the fully integrated steel plants as they have
their own mines of key raw material like iron ore coal for example Tata Steel. However,
those who are non-integrated or semi integrated has to depend on suppliers. An example
could be SAIL, which imports coking coal.

Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto supply nearly two-
thirds of the processed iron ore to steel mills and command very high bargaining power. In
India too, NMDC is a major supplier to standalone and non integrated steel mills.

Threat of substitutes: Low

Plastics and composites pose a threat to Indian steel in one of its biggest markets-automotive
manufacture. For the automobile industry, the other material at present with the potential to
upstage steel is aluminium. However, at present the high cost of electricity for extraction and
purification of aluminium in India weighs against viable use of aluminium for the automobile
industry. Steel has already been replaced in some large volume applications: railway sleepers
(RCC sleepers), large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes),
and domestic water tanks (PVC tanks). The substitution is more prevalent in the manufacture
of automobiles and consumer durables.

Bargaining power of Consumers: Mixed

Some of the major steel consumption sectors like automobiles, oil & gas, shipping, consumer
durables and power generation enjoy high bargaining power and get favorable deals. However,
small and retail consumers who are scattered and consume a significant part do not enjoy these
benefits.

Sources of competitive advantage in the steel industry

Length of production time, i.e., technology used in production process.


The cost of production, especially since the steel market is highlyprice-sensitive. Low-
cost, high-quality imports pose a significant threatto the domestic industry and hence,
competitive pricing is essential tobe ahead.
Dependable delivery, i.e., lower delivery time to consumers.
Quality of steel produced and distributed.
People
High productivity of labour at its plants/production facilities.
High performance orientation through performance linked compensation plans for
employees.
Dedicated workforce indicated by lower turnover (only 5%) than the industry average (10%-
12%). This could be attributed to the equality of treatment among workers at the production
facilities (same colour jackets).
Firm level capabilities
Simple and flat organization structure with only about 5 layers.
CONCLUSIONS

The New Industrial policy opened up the Indian iron and steel industry for private investment by
(a) removing it from the list of industries reserved for public sector and (b) exempting it from
compulsory licensing. Imports of foreign technology as well as foreign direct investment are now
freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of
a facilitator, providing broad directions and assistance to new and existing steel plants, in the
liberalized scenario
The liberalization of industrial policy and other initiatives taken by the Government have given a
definite impetus for entry, participation and growth of the private sector in the steel industry.
While the existing units are being modernized/expanded, a large number of new steel plants have
also come up in different parts of the country based on modern, cost effective, state of-the-art
technologies. In the last few years, the rapid and stable growth of the demand side has also
prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the
country.
BIBLIOGRAPHY

www.google.com
www.angeltrade.com
www.moneycontrol.com
www.cmlinks.com
www.rediff.com