Report on Indian Steel sector

Introdution: India’s economic growth is contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be an indicator of economic development. As the present per capita consumption in the country is only around 47 kg (2008) against the world average of 190* kg and that of 400 kg* in developed countries. India is the fifth largest producer of crude steel in the world in 2010 and expected to become the second largest steel producer in the world by 2015-16, provided all requirements for fresh capacity creation are met. As per official estimates, the Iron and Steel Industry contributes 2 % of the Gross Domestic Product (GDP) and its weight in the Index of Industrial Production (IIP) is 6.2 %. Domestic crude steel production grew at CAGR 8.6 per cent during 2004-05 to 2008-09 which is more than the projected growth by National Steel Policy 2005. The National Steel Policy 2005 had projected consumption to grow at 7% based on a GDP growth rate of 7-7.5% and production of 110 million tons by 2019-20 against the present production of 56 MT. Production, Import and Export trend of steel in India: The following table shows the increasing trend in production of steel. Total Production of Steel in India (in ‘000tons) Year Production for Import Sale 2005-06 46566 4305 2007-08 52529 4927 2008-09 56075 7029 April-Dec 2009-10 43849 5210

Export 4801 5242 5077 2099

Trade policy of Steel: · Import Policy: Import duty rates have been brought down progressively in the post-deregulation period. The Indian steel industry has been able to successfully withstand the competitive pressures of overseas producers. · Export Policy: It is estimated that the country will achieve an export ratio of around 25 percent of the total production in 2019-20 from 11 percent in 2004-05. This is comparable with a 30 percent share of exports in global production. Its attribute to increase in import duty .Due to increase in duty local player has got protection from government and able to sale steel in domestic market. Merger/acquisitions/revival and restructuring of Indian Steel industries: · Government has approved merger of Sponge Iron India Limited (SIIL) with NMDC. · Bharat Refractories Ltd. (BRL) has finally been merged with SAIL w.e.f. 01.04.2007. · The Cabinet has approved a restructuring plan for Bird Group of Companies (BGC). · Tata Steel acquired Corus Group plc. The acquisition deal amounted to $12,000 million. · Steel Authority of India Limited (SAIL) & POSCO Joint venture for set up steel plant in BOKARO. SWOT Analysis :
Strength Weakness 1. Availability of iron ore and coal 1. Low productivity 2. Low labor wage rates 2. Coking coal import dependence 3. Abundance of quality manpower 3. Low R&D investments Opportunity Threat 1 Unexplored rural market 1. China becoming net exporter 2. Growing domestic demand 2. Protectionism in the West 3. Exports 3. Dumping by competitors Conclusion: An Indian steel industry has great potential to produce steel and support from present government. In such situation Industries are heading with M&A. with present pace of infrastructure development, Indian steel Industries have bright future.

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