STEEL

For updated information, please visit www.ibef.org March 2018

Table of Content

Executive Summary……………….….…….3

Advantage India…………………..….……...4

Market Overview …………………….……..6

Recent Trends and Strategies …….……..17

Growth Drivers…………………….............22

Opportunities…….……….......………….…30

Success Stories……………....……………33

Industry Associations……………....……...36

Useful Information……….......…………….38
 EXECUTIVE SUMMARY

 Total finished steel production in India has increased at a CAGR of 8.39 per cent during FY12–17, with
country’s crude steel production reaching to 97.936 million tonnes per annum (MTPA) in FY17.

3rd largest producer of  The country became the 3nd largest crude steel producer in 2017, as large public and private sector players
crude steel strengthen steel production capacity in view of rising demand.

 Moreover, capacity has increased to 128.28 million tonnes (MT) in FY17, which is 5.17 per cent more than
FY16, while in the coming ten years the country is anticipated to produce 300 MT of steel

 India’s comparatively low per capita steel consumption and expected growth in consumption due to growing
Strong growth infrastructure construction, automobile and railways sectors has offered scope for growth
opportunities  National Mineral Development Corporation is expected to increase the iron ore production 75 million tonnes
per annum (MTPA) until 2021 indicating new opportunities in the sector

 Domestic players’ investments in expanding and upgrading manufacturing facilities are expected to reduce
Rising domestic and
reliance on imports. In addition, the entry of international players would provide benefits in terms of capital
international investments
resources, technical know how and more competitive industry dynamics

Note: MTPA – Million Tonnes Per Annum

Source: World Steel Association, Ministry of Steel, Aranca Research

3 Steel For updated information, please visit www.ibef.org

 Steel

ADVANTAGE INDIA
 ADVANTAGE INDIA

 Demand would be supported by growth in  To achieve steel capacity build-up of 300

the domestic market million tonnes per annum (MTPA) by 2030,
 Infrastructure, oil and gas and automotives India would need to invest US$ 156.08
would drive the growth of the industry billion by 2030-31.

 Lower per capita consumption compared to  301 MoUs have been signed with various
international average states for planned capacity of about 486.7
MT.
 Steel production in India is forecast to double
by 2031, with growth rate expected to go  Ministry of Steel plans to set up Steel
above 10 per cent in FY18 Research and Technology Mission in India
to promote R&D activities in the sector

ADVANTAGE
INDIA
 As of 2017, India is the world’s 3rd largest  100 per cent FDI through the automatic
producer of crude steel (up from 8th in route is allowed. Large infrastructure
2003). India’s steel production in 2017 projects in the PPP mode are being formed
stood at 101.4 MT.  National Steel Policy (NSP) implemented to
 Easy availability of low-cost manpower encourage the industry to reach global
and presence of abundant iron ore benchmarks
reserves make India competitive in the  Policy clarity and stability expected in
global set up respect of mining leases and forest
clearances
 20 per cent safeguard duty on steel imports

Notes: MT - Million Tonnes, FDI – Foreign Direct Investment

Source: Metallurgical and Materials Engineering Division Board, Aranca Research

5 Steel For updated information, please visit www.ibef.org

 Steel

MARKET OVERVIEW
 EVOLUTION OF THE INDIAN STEEL SECTOR

 Foreign players began entering the Indian steel

 Hindustan Steel Ltd and Bokaro Steel Ltd market
were setup in 1954 and 1964, respectively
 Production of steel started in  No license requirement for capacity creation
 In the early 1990s, the public sector
India (TISCO was setup in 1907)  Imposition of export duty on iron ore, to focus more
dominated steel production
 IISC was set up in 1918 to on catering growing domestic demand
 Private players were in downstream
compete with TISCO  Decontrol of domestic steel prices
production mainly producing finished steel
using crude steel products  Launch of Scheme for promotion of Research and
Development in Iron and Steel sector

1907-18 1923-48 1954-64 1973-92 1993-2014 2015-17

 SAIL was created in 1973 as a holding company  In 2017, India ranked as the 3nd
 Mysore Iron and Steel Company
to oversee most of India's iron and steel largest crude steel producer in the
was set up in 1923
production world, leaving behind United States.
 According to the new Industrial
 In 1989, SAIL acquired Vivesvata Iron and Steel  During FY17, 8.24 MT of steel was
Policy Statement (1948), new
Ltd exported from India.
ventures were only undertaken by
the central government  In 1993, the government set plans in motion to
partially privatise SAIL
Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd;

7 Steel For updated information, please visit www.ibef.org

 STRUCTURE OF THE STEEL SECTOR

Steel

Form Composition End use

Liquid Steel Finished Alloy Non-alloy

Crude Steel Structural Steel
Steel Steel

Low
Ingots Flat Stainless carbon Construction Steel
Steel

Medium
Silicon Rail Steel
Semis Non-flat carbon
electrical
Steel

High
High
Carbon
Speed
Steel

Source: Report on Indian steel industry by Competition Commission of India, Aranca Research

8 Steel For updated information, please visit www.ibef.org

 STEEL PRODUCTION IN INDIA HAS BEEN GROWING
AT A FAST PACE

 In FY17, crude steel production in India was 97.42 MT, with the total Total crude steel production (million tonnes)
crude steel production growing at a CAGR of 5.49 per cent over the
last 6 years. 120 2CAGR 5.49%
100
 The steel sector contributes over 2 per cent to the GDP of the nation 18.5
80 17.2 17.9 17.9
and provides 20 lakh jobs in the country. 16.5 16.8

78.91
16.5

75.30
60 17.0

71.87
71.77
64.92
 During April 2017-February 2018, crude steel and finished steel

61.94
57.81
53.68
40
production for sale in India stood at 93.183 MT and 95.319 MT
20
respectively.
0
 As of March 2017, the capacity utilisation of steel producers is set to FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P 1
increase with strong export demand and signs of revival in domestic Private Sector Public Sector
sales. Companies like JSW and Essar Steel have experienced a
sharp increase in steel manufacturing in the last 2 months
Total finished steel production (million tonnes)*
 Steel manufacturing output of India is expected to increase to 128.6
MT by 2021, accelerating the country’s share of global steel 120 2CAGR 8.39%
production from 5.4 per cent in 2017 to 7.7 per cent by 2021. 100 14.9 14.6
12.8 13.0

96.39
80 13.4

92.46
 India’s steel output is expected to grow at a CAGR of 8.9 per cent 12.8
12.5

79.34

78.00
74.24
during 2017-21 and India is expected to become top global steel 60 13.3

68.86
63.18
55.37
producer^. 40
20
0
1
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P

Private Sector Public Sector

Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; P – Provisional, 1April 2017 to February 2018 , 2CAGR is till FY17, Figures
mentioned are as per latest data available, ^ As per BMI Research Report, *without deducting own consumption by producers
Source: Ministry of Steel Annual Report

9 Steel For updated information, please visit www.ibef.org

 SHARES IN PRODUCTION: SAIL AND TATA LEAD THE
WAY

 As of FY17, SAIL dominated India’s steel sector, with the company India’s crude steel market share by production – FY171
accounting for 11.40 per cent of country’s finished steel production
and 14.59 per cent of country’s crude steel production. During FY17,
Tata Steel accounted for 11.46 per cent of finished steel production 14.59%
and 12.46 per cent of the country’s crude steel production

 In January 2017, Indian government inaugurated Universal Rail Mill 12.46%

(URM) worth US$ 178.49 million at SAIL’s Bhilai steel plant. The SAIL TATA RINL OTHERS
production of the world’s longest single rail of 130 meters from the 4.47%
new URM also commenced in the new mill. 68.49%

India’s finished steel market share by production – FY171

10.40%

10.46% SAIL

3.22% TATA

RINL

OTHERS

75.91%

Notes: RINL - Rashtriya Ispat Nigam Limited ; (1)Provisional; Figures mentioned are as per latest data available
Source: Ministry of Steel Annual Report 2016-17, Aranca Research

10 Steel For updated information, please visit www.ibef.org

 GROWTH IN MARKET VALUE OF THE INDIAN STEEL
SECTOR HAS ALSO BEEN STRONG

 The sector has benefitted from the hike in prices and production, Market value of the Indian steel sector (US$ billion)
especially since the beginning of the millennium

 Over 2007–17(E), the sector’s market value is estimated to have 120 CAGR 12.76%
posted a strong CAGR of 12.76 per cent

100

100.00
95.30
87.9
80

81
60

57.8
46.8
40

43

36.5
30.1
20

0
FY07 FY08 FY09 FY10 FY11 FY14 FY15E FY16E FY17E

Note: E - Estimated
Source: Ministry of External Affairs, Aranca Research

11 Steel For updated information, please visit www.ibef.org

 DEMAND HAS OUTPACED SUPPLY OVER THE LAST
FIVE YEARS

 Total consumption of steel was 83.9 MT in FY17 as compared to Real consumption of steel (in million tonnes)
81.5 MT in FY16. Consumption during April 2017-February 2018
stood at 81.943 MT. 90.00
2CAGR 5.44%
80.00

83.90
 Driven by rising infrastructure development and growing demand for

81.94
81.52
76.99
70.00

74.10
73.50
automobiles, steel consumption is expected to reach 104 MT by

71.00
66.40
2017. 60.00

59.30
50.00
 It is expected that consumption per capita would increase supported

52.40
52.10
40.00
by rapid growth in the industrial sector and rising infra expenditure
30.00
projects in railways, roads and highways, etc.
20.00
 The consumption of real steel has grew at a CAGR of 5.44 per cent
10.00
during FY08-FY17
0.00
 India’s per capita consumption of steel grew at a CAGR of 4.75 per FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18*
cent from 45 kgs in FY09 to 65.25 kgs in FY17. The figure stood at
68 kgs (P) during April-February 2017-18. Per-capita consumption of steel (in kgs)

80.00
2CAGR 4.75%
70.00

68.00
60.00

65.25
63.99
61.15
59.56
59.30
58.20
50.00
40.00

45.00
30.00
20.00
10.00
0.00
FY09 FY12 FY13 FY14 FY15 FY16 FY17 FY18P*
Note: MT - Million Tonnes, FY18*-Up to February 2018, 2CAGR- up to FY17, P – Provisional, kg - kilograms
Source: JPC India Steel, Ministry of Steel, Aranca Research

12 Steel For updated information, please visit www.ibef.org

 TRENDS IN IMPORTS AND EXPORTS OF STEEL

 Indian Government imposed Anti-Dumping Duty on 47 steel products Iron and Steel exports and imports (in million tonnes)
for five years beginning from August 2016.
16.0
 In FY 2016-17, the country’s iron and steel exports has increased by
102.1 per cent year-on-year to 8.24 million tonnes (MT), as
14.0

14.6
compared to 4.07 MT in 2015-16

13.1
 In FY 2016-17, the country’s iron and steel imports fell by 36.6 per 12.0
cent year-on-year to 7.42 MT, as compared to 11.7 MT in 2015-16

11.7
 Exports and Imports of iron and steel stood at 14.6 MT and 13.1 MT 10.0

during April-February 2017-18, respectively.

9.3
8.0

8.2
7.9

7.4
6.0

6.0

5.6
5.5
5.4
4.0

4.6

4.1
2.0

0.9
0.0

1
FY12

FY13

FY14

FY15

FY16

FY17

FY18
Imports Exports

Note: FY - Indian Financial Year (April - March), DGFT - Directorate General of Foreign Trade, FY181-Up to February 2018
Source: Ministry of Steel,DGCIS, Aranca Research

13 Steel For updated information, please visit www.ibef.org

 KEY PLAYERS OF THE INDUSTRY

Company Products

Tata Steel Ltd Finished steel (non-alloy steel)

SAIL Finished steel (non-alloy steel)

JSW Steel Ltd Hot-rolled coils, strips and sheets

Jindal Steel and Power Ltd Iron and steel

Ispat Industries Ltd Hot-rolled coils, strips and sheets

Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes

Bhushan Steel Ltd Cold-rolled coils, strips and sheets

Visa Steel Ltd Ferro Chrome, coke and special steel

Source: Aranca Research

14 Steel For updated information, please visit www.ibef.org

 KEY STEEL PLANTS IN INDIA

Steel integrated plants

under SAIL (Bhilai, Rourkela,
Bokaro, Durgapur and
Burnpur)

Tata Steel’s largest steel

plant, based in Jamshedpur

Alloy and special steel plants

under SAIL (Bhadrawati and
Salem); iron and steel plant RINL steel plant in
at Visvesvaraya Vishakhapatnam

Source: Company websites, Aranca Research

15 Steel For updated information, please visit www.ibef.org

 PORTER’S FIVE FORCES FRAMEWORK

Threat of Substitutes

 Low - Aluminium and plastics are being

used in few cases in automotive and other
consumer durable sectors. However, it
still does not pose significant threat to
steel

Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers

 Medium - Large integrated companies
have their own mines to source key raw
materials
 Medium - The steel industry is highly
concentrated, with the top five players
accounting for more than 70 per cent of
the market share
 Steel companies usually compete on the
basis of production capacity, economies
of scale, access to raw material, etc.
 Medium - Major steel consumption
sectors, such as automobiles, oil and gas,
shipping, consumer durables and power
generation, enjoy high bargaining power
and get favourable bulk deals. Smaller
customers, however, do not enjoy this
benefit

Threat of New Entrants

 Low - Capital intensive, industry players

are large and enjoy economies of scale.
Positive Impact Some have their own mines for sourcing
key raw materials
Neutral Impact
 Several regulatory clearances required,
Negative Impact including environmental, land acquisition,
etc.

16 Steel For updated information, please visit www.ibef.org

 Steel

RECENT TRENDS
AND STRATEGIES
 NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY
… (1/2)

 Most of the companies in the industry are undertaking modernisation and expansion of plants to be more cost
efficient. E.g. SAIL has undertaken modernisation and expansion for its 6 plants

 An Inter-Ministerial Group (IMG) functioning under the Ministry of Steel, is monitoring and coordinating major
Growing investments
steel investments across the country

 The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with the total
investment of US$ 24.88 Billion

 SAIL and Arcelor Mittal are going to form a joint venture to set up a 1.5 million tonne per annum steel plant.

 The consortium of SAIL and National Fertiliser Ltd. (NFL) has been nominated for revival of Sindri Unit of the
Fertiliser Corporation of India Ltd
Strategic alliances
 RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed an
MoU to set up a JV company to manufacture transmission line towers and tower parts including R&D of new
high-end products

 Attracted by the growth potential of the Indian steel industry, several global steel players have been planning
Entry of international to enter the market
companies  National Mineral Development Corporation (NMDC) has signed an MoU with Russia’s 3rd largest steelmaker,
Severstal, for a greenfield steel plant in Karnataka

Notes: MTPA - Million Tonnes Per Annum

Source: Ministry of Steel, Ministry of Railways, Aranca Research

18 Steel For updated information, please visit www.ibef.org

 NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY
… (2/2)

 Indian steel companies have now started benchmarking their facilities and processes against global standards,
to enhance productivity

 These steps are expected to help Indian companies improve raw material and energy consumption as well as
improve compliance with environmental and pollution yardsticks

Increased emphasis on
technological innovations
 Companies are attempting coal gasification and gas-based Direct-Reduced Iron (DRI) production. Other
alternative technologies such as Hlsmelt, Finex and ITmk3 being adopted to produce hot metal
 Ministry of Steel has issued necessary direction to the steel companies to frame a strategy for taking up more
R&D projects by spending at least 1 per cent of their sales turnover on R&D to facilitate technological
innovations in the steel sector.

 Ministry has established a task force to identify the need for technology development and R&D

 Ministry has adopted energy efficiency improvement projects for mills operating with obsolete technologies

 In January 2017, Noamundi iron ore mine of Tata Steel introduced drone technology in mine monitoring

Source: Ministry of Steel, Aranca Research

19 Steel For updated information, please visit www.ibef.org

 STRATEGIES ADOPTED

 Companies in the steel industry are investing heavily in expanding their capacity. Major public and private
companies, including Tata Steel, SAIL and JSW Steel, are expanding their production capacity. The
government is targeting a steel production capacity of 150 million tonnes by 2020.

 India is the 3rd-largest crude steel producer in the world with production reaching 101.4 million tonnes in 2017.

 The government has stepped up infrastructure spending from the current 5 per cent of GDP to 10 per cent by
2017and the government has planned to invest US$ 61.8 billion in infrastructure in the Union Budget 2017-18.
Considering 15 per cent as steel component in the total investment, the initiative has a potential to generate an
additional demand for steel of 18.75mtpa
Capacity expansion
 The Ministry of Steel is encouraging R&D activities by providing financial assistance from Steel Development
Fund (SDF) and Plan Scheme of the Central Government. Furthermore, the government has allowed 100 per
cent FDI through the automatic route in the Indian steel sector

 A long term perspective is to achieve capacity of 300 mtpa by 2030, as per National Steel Policy 2017

 SAIL is increasing its production capacity by 60-70 per cent in the last leg of its US$10.79 billion programme.

 JSW Steel is looking at starting activity in the next fiscal on its 12 million tonnes mega steel plant proposed in
Odisha.

 In the last few years, rapid and stable growth in demand has also prompted domestic entrepreneurs to set up
Greenfield projects – fresh greenfield projects in different states of the country. Mittal Steel announced two 12 mtpa greenfield steel
focus on downstream projects, one each in Jharkhand and Orissa
value-added products
 As India surges ahead in building infrastructure, investments in steel pave the way ahead

Note: GDP – Gross Domestic Product, MTPA – Million tonnes per annum
Source: CCI, Ministry of External Affairs

20 Steel For updated information, please visit www.ibef.org

 STRATEGIES ADOPTED

 Steel companies are strengthening their position through cross border mergers and acquisitions. The focus is
on improving existing technology to upgrade production process and developing new value added-products.

 In 2014, Arcelor Mittal along with Nippon Steel and Sumitomo Metal Corporation acquired ThyssenKrupp
Steel USA. Notable deals include Essar Global’s acquisition of Canada-based Algoma Steel.

 On 1st August 2016, Kirloskar Ferrous Industries Ltd has announced to acquire pig iron plant of VSL Steels
Ltd. for US$ 23.68 million. Also on 18 August 2016, JSW Steel Ltd. has acquired 74 per cent stake of Praxair
Oxygen Pvt. Ltd. in their joint venture for US$ 36 million

 As on December 01, 2016, JSW Steel, the flagship steel company of JSW Group, entered into a consortium to
acquire 35 per cent stakes of Ilva steel plant, in Italy.

 Tata Steel has executed an agreement with Creative Port Development (CPDPL) for the acquisition of the
majority stakes, i.e., 51 per cent in CPDPL in January 2017
Mergers and Acquisition
 Italy’s Marcegaglia ArcelorMittal have offered to buy Italy’s troubled Ilva steel plant, for an amount of US$ 2.4
billion and will boost production

 In March 2017, Central Government permitted sale of SAIL’s 3 units including Alloy Steels Plants,
Visvesvaraya Iron and Steel Plant, Salem Steel Plant with the transfer of management in these plants for the
strategic disinvestment.

 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.

 In March 2018, Tata Steel won the bid for acquisition of Bhushan Steel and is awaiting approval from National
Company Law Tribunal (NCLT) and Competition Commission of India (CCI). Acquisition of Bhushan Steel will
help Tata Steel increase its capacity to over 18 MTPA.

Note: MTPA – Million Tonnes Per Annum

Source: CCI, Ministry of External Affairs

21 Steel For updated information, please visit www.ibef.org

 Steel

GROWTH DRIVERS
 STRONG DEMAND AND POLICY SUPPORT DRIVING
INVESTMENTS

Growing demand Policy support Increasing investments

Growing demand in the 100 per cent FDI in the steel Rising investments from
construction industry sector domestic and foreign players

Resulting in
Inviting

Encouragement of sector-based Increasing number of MoUs

Growing demand in the
R&D activities by the signed to boost investment in
automotives sector
government steel

Foreign investment of nearly

Rising demand for consumer Reduced custom duty and other
US$ 40 billion committed in the
durables and capital goods favourable measures
steel sector

Notes: FDI - Foreign Direct Investment, MOU – Memorandum of Understanding

23 Steel For updated information, please visit www.ibef.org

 CAPITAL GOODS, CONSUMER DURABLES AND
AUTOMOTIVES FURTHER DRIVING STEEL GROWTH

 Over FY05–20F, the consumer durables sector will expand at a Consumer durables market size (US$ billion)
CAGR of 12.54 per cent as growth in disposable income is expected
to result in increase in demand for such products.
25 CAGR 12.54%
 The consumer durables market is estimated at US$ 15 billion and is
20

20.60
projected to reach US$ 20.6 billion in FY20.
15
 The capital goods and consumer durables sectors are expected to

15.00
12.50
grow at 7.5–8.8 per cent over 2012–21. 10

9.70
9.00
 Automobile production in India expanded at a CAGR of 8.76 per cent

7.40
5

7.30
7.3
6.3
5.2
FY07 4.2

FY08 4.7
FY06 3.8
FY05 3.5
during FY10–17.
0

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY20F
*FY17E
Total automobile production in India (million units)

25
19.45 19.76 20.71
20 16.58 17.71
16.31
14.15
15 11.13
10

3.79
3.41
3.23

3.22
3.15

3.09
2.98
2.36

0.93

0.83

0.81
0.78
0.76
0.57

0.7

0.7
5
0

FY15
FY10

FY11

FY12

FY13

FY14

FY16

FY17
Passenger Vehicles Commercial Vehicles Two & Three Wheelers

Notes: *FY17 – As of February 2017, E - Estimated; F- Forecast, FY - Indian Financial Year (April - March)
Source: SIAM, JSPL presentation, Corporate Catalyst India, Aranca Research

24 Steel For updated information, please visit www.ibef.org

 POLICY SUPPORT AIDING GROWTH IN THE STEEL
SECTOR … (1/2)

 New National Steel Policy has been formulated by the Ministry of Steel in 2016, which will retain the objectives
included in National Steel Policy (NSP) 2005. It aims at covering broader aspects of steel sector across the
country including environment and facilitation of new steel projects, growth of steel demand in India and raw
materials

 Under the policy, the central government stated that all the government tenders will give preference to
domestically manufactured steel and iron products. Moreover, Indian steel makers importing intermediate
National Steel Policy 2017 products or raw materials can claim benefits of domestic procurement provision by adding minimum of 15 per
cent value to the product.

 The New steel policy, 2017 aspires to achieve 300MT of steel making capacity by 2030. This would translate
into additional investment of Rs 10 lakh Crore (US$ 156.08 billion) by 2030-31.

 New Steel Policy seeks to increase per capita steel consumption to the level of 160 kgs by 2030 from existing
level of around 60 kg.

 A new scheme, ‘The scheme for the promotion of R&D in the iron and steel sector’, was approved with budgetary
provision of US$ 24.6 million to initiate and implement the provisions of the scheme as per the 11th Five-Year Plan which
was continued in the 12th Five Year Plan

 The Ministry of Steel is also actively participating in the Impacting Research Innovation & Technology (IMPRINT) &
Uchchatar Avishkar Yojana (UAY) Schemes launched by Ministry of Human Resource Development. IMPRINT scheme
R&D and innovation aims to solve major engineering and technology challenges and UAY is promoting industry sponsored, outcome-oriented
research projects.

 Ministry of Steel is setting up an industry driven institutional mechanism - Steel Research & Technology Mission of India
(SRTMI) – with an initial corpus of US$ 30.89 million. The institute will facilitate joint collaborative research projects in the
sector.

Note: MT - Million tonnes

Source: Ministry of Steel, Aranca Research

25 Steel For updated information, please visit www.ibef.org

 POLICY SUPPORT AIDING GROWTH IN THE STEEL
SECTOR … (2/2)

 The government hiked the export duty on iron ore to 30 per cent ad valorem on all varieties of iron ore (except
Rise in export duty pellets)

 The government has reduced the basic custom duty on the plants and equipments required for initial set up or
expansion of iron ore pellets plants and iron ore beneficiation plants from 7.5/5 per cent to 2.5 per cent
 Customs duty on imported flat-rolled stainless steel products has been increased to 10 per cent from 7.5 per
Reduction in custom duty
cent
on plants and equipment
 Basic customs duty on steel grade dolomite and steel grade limestone is being reduced from 5 per cent to 2.5
per cent. Basic customs duty is being reduced from 10 per cent to 5 per cent on forged steel rings used in the
manufacture of bearings of wind-operated electricity generators

Push due to Make in India  Going forward, the Make in India initiative and policy decisions taken under it are expected to augment the
initiative country’s steel production capacity and resolve issues related to the mining industry

Foreign Direct Investment  100 per cent FDI through the automatic route is allowed in the Indian steel sector

Source: The Economic Times, Ministry of Steel, Business Standard, Make In India, Aranca Research

26 Steel For updated information, please visit www.ibef.org

 STEEL SEZs IN INDIA

Developer Location Product

Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products

SAIL Salem SEZ Pvt Ltd Salem, Tamil Nadu Steel

Orissa Industrial Infrastructure Development Metallurgical-based engineering and

Jaipur, Orissa
Corporation ancillary/downstream industry

Tata Steel Special Economic Zone (TSSEZ) Gopalpur, Odisha Steel and allied downstream industries

Source: Formal approvals granted in the Board of Approvals after the SEZ rules coming into force, Special Economic Zones in India website, www.sezindia.nic.in

27 Steel For updated information, please visit www.ibef.org

 THE SECTOR WITNESSED RISING INVESTMENTS IN
THE LAST DECADE

Date announced Acquirer name Target name Value of deal (US$ million)
Dec-17 Tata Steel Ltd Bhubaneshwar Power 39.5
Jan-17 Tata Steel Ltd Creative Port Development Pvt Ltd -
Aug-16 JSW Steel Ltd Praxair Oxygen Pvt. Ltd. 36
Aug-16 Kirloskar Ferrous Industries Ltd VSL Steels Ltd. 23.68
Aug-14 JSW Steel Ltd Welspun Maxsteel Ltd 165.85
Apr-14 JSW Steel Ltd Vallabh Tinplate Pvt Ltd 7.63
Mar-14 Lalitanjali Group Pvt Ltd Centom Industries Ltd -
Dec-13 Venus Insec Pvt Ltd Goodluck Steel Tubes Ltd 23.73
Oct-13 JSW Projects Ltd IST Steel and Power Ltd
Aug-13 Readymade Steel India Ltd Kridhan Infra Solutions Pvt
Jul-13 Swelect Energy Systems Ltd Amex Alloys Pvt Ltd
Apr-13 Metallurgica Siderfoge S.r.l AMW-MGM Forgings Pvt Ltd
Feb-13 Wayzata II Indian Ocean Ltd Ramkrishna Forgings Ltd 51.90
Nov-12 Rabale Engineering India Ltd Pradeep Metals Ltd 6.85
Nov-12 Suncoke Energy Inc Visa Steel Ltd-Coke division

Cumulative FDI inflows

Period: April 2000 to December 2017
 Sector
• Metallurgical industries US$ 10.56 billion

Source: Thomson ONE Banker, “Fact Sheet on Foreign Direct Investment (FDI)”, Department of Industrial Policy and Promotion

28 Steel For updated information, please visit www.ibef.org

 PLANNED CAPACITY ADDITIONS BY 2017-18

Crude steel capacity addition plans up to FY2017-18 (in MTPA) for private sector companies

Company Existing capacity Brownfield expansion Greenfield expansion Total capacity addition

Tata Steel Ltd 12.50 0.4 0 12.59

Essar Steel Ltd 10.00 0 0 10.00

JSW Steel Ltd 18.00 0 0 18.00

Jindal Stainless Limited 1.00 0.15 0 1.15

Jindal Stainless (Hissar) Ltd 0.78 0.08 0 0.86

Bhushan Steel Ltd 5.60 0 0 5.60

Bhushan Power and Steel Ltd 2.50 0 0 2.5

Monnet Ispat and Energy Ltd 1.80 0 0 1.80

Electrosteel Steel 1.88 0 0 1.88

Visa Steel Ltd 0.50 0 0 0.50

Notes: MTPA - Million Tonnes Per Annum

Source: Ministry of Steel Annual Report, Joint Plant Committee

29 Steel For updated information, please visit www.ibef.org

 Steel

OPPORTUNITIES
 OPPORTUNITIES … (1/2)
Automotive
 The automotive industry is
forecasted to grow in size by
US$ 74 billion in 2015 to US$
260-300 billion by 2026
 With increasing capacity
addition in the automotive
industry, demand for steel from
the sector is expected to be
robust
 In 2016, Indian automotive
sector is estimated to be 3rd
largest automotive market, by
volume
Source: Capex – Capital Expenditure, P - Provisional
Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India
31 Steel
Capital goods
 The capital goods sector
accounts for 11 per cent of
steel consumption and
expected to increase 14/15 per
cent by 2025-26 and has the
potential to increase in
tonnage and market share
 Corporate India’s capex is
expected to grow and generate
greater demand for steel
Infrastructure
 The infrastructure sector
accounts for 9 per cent of steel
consumption and expected to
increase 11 per cent by 2025-
26.
 Due to such a huge investment
in infrastructure the demand
for long steel products would
increase in the years ahead
For updated information, please visit www.ibef.org
Airports
 More and more modern and
private airports are expected to
be set up
 In FY17, passenger traffic at
Indian airports stood at 264.99
million and number of
operational airports stood at 94
in July 2017.
 Development of Tier-II city
airports would sustain
consumption growth
 Estimated steel consumption in
airport building is likely to grow
more than 20 per cent over
next few years
 OPPORTUNITIES … (2/2)
Railways
 The Dedicated Rail Freight
Corridor (DRFC) network
expansion would be enhanced
in future
 Gauge conversion, setting up
of new lines and electrification
would drive steel demand
 Indian Railways started the
PPP mode of funding and has
already awarded projects
worth around US$ 1.73 billion
during the 1st 7 months (April-
October) of FY16
 In January 2017, Crisil
estimated that the railways
sector could create business
opportunities worth US$ 99.65
billion
Source: Make In India, Ministry of Power, Aranca Research
32 Steel
Oil and gas
 Oil and gas amongst major
end-user segment accounted
for ~34.4 per cent of primary
energy consumption in FY16
 This would lead to an increase
in demand of steel tubes and
pipes, providing a lucrative
opportunity to the steel
industry
Power
 The government targets
capacity addition of 100 GW
under the 13th Five-Year Plan
(2017–22)
 Both generation and
transmission capacities would
be enhanced, thereby raising
steel demand from the sector
 Conventional power capacity
addition of 23.98 GW has
registered to be the highest in
FY16
For updated information, please visit www.ibef.org
Rural India
 Rural India is expected to
reach per capita consumption
of 12.11 kg to 14 kg for
finished steel by 2020.
 Policies like Food for Work
Programme (FWP) and Indira
Awaas Yojana, Pradhan Mantri
Gram Sadak Yojana are
driving growing demand for
construction steel in rural India
 In FY16, per capita
consumption of steel in rural
India is estimated at 60 kg,
which is lower in comparison
with the global average of 216
kg
 Steel

SUCCESS STORIES
 JINDAL STEEL AND POWER LTD: REAPING BENEFITS
OF PRUDENT INVESTMENTS … (1/3)

 Incorporated in 1979, Jindal Steel and Power Ltd. (JSPL) is an Projected

Visakhapatnam
crude steel
port
production
traffic (million
(million
tonnes)
tonnes)
integrated steel producer and the largest coal-based sponge iron
manufacturer in the world. The company has an installed steel
CAGR 41.76%
production capacity of 3 MTPA at Raigarh in Chhattisgarh. JSPL is 35.00
engaged in manufacturing long products and is specialised in
producing long rails for railways and large sized H-beams as well as 30.00 31.75
columns for the infrastructure and construction sector
 JSPL also has significant presence across the mining, power
25.00
generation and infrastructure sectors
 In March 2017, Jindal Steel has entered into an agreement with
20.00
Defence Research and Development Organisation (DRDO), which
would allow the agency to transfer technology facilitating
manufacturing of high-nitrogen steel, for application in defence 15.00 15.80
sector.
 New and expansion projects include setting up of a 7 MTPA 10.00
integrated steel plant in Chhattisgarh, 12 MTPA integrated steel plant
in Jharkhand and a 12.5 MTPA integrated steel plant in Orissa.
5.00
 Achievements:
• 2014 - Company has commissioned the billet caster plant with
0.00
capacity of 6 MTPA at Angul with record time of 1 year FY 17 FY 18 E
• 2015 - Company has created history with its Raigarh steel facility
producing 10,000 tonnes of crude steel in a single day
• 2017 – Launched a 6 MTPA integrated steel plant in Odisha.

Source: Ministry of Steel, Company website (www.jindalsteelpower.com), Aranca Research; E- Estimated

34 Steel For updated information, please visit www.ibef.org

 JINDAL STEEL AND POWER LTD: REAPING BENEFITS
OF PRUDENT INVESTMENTS … (2/3)

Sale of steel (million tonnes) Financial growth (US$ million)

5.0 4000

4.5

4.6
3500

3,542
4.0

4.2

3,315

3,218
3,199
4.0
3000

3.8

3,007
3.5

2,813
3.5
2500

3.27
3.0

3.2
3.1
3.0

2.9

2,287
2.8
2.8

2.5 2000

2.5
2.3

2.3

1,803
2.0
2.2

1500
2.1

1,596
2.0

1.9

1,488

958

910
1.5

818
1.6
1.6

727
1000

721
634
1.4

532
1.0
1.2

438
431

395
816
0.7
1.0

197
671
500
0.8

103
0.5 0.3
0.2
0.5

0.0 0

FY 14
FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 15

FY 16

FY 17
FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

Finished Steel Products Semi - Steel Products Pellets Gross Revenue PBIDT

Note: Company clubs iron and steel segment ‘s performance; PBIDT (Profit Before Interest, Depreciation and Tax)
Source: Company website (www.jindalsteelpower.com)

35 Steel For updated information, please visit www.ibef.org

 Steel

KEY INDUSTRY
ASSOCIATIONS
 INDUSTRY ASSOCIATIONS

Indian Stainless Steel Development Association

L-22/4, DLF Phase-II

Gurgaon, Haryana –122 002
Phone: 91-124-4375501
Fax: 91-124-4375509
E-mail: nissda@gmail.com

37 Steel For updated information, please visit www.ibef.org

 Steel

USEFUL
INFORMATION
 GLOSSARY

 CAGR: Compound Annual Growth Rate

 FDI: Foreign Direct Investment

 FY: Indian Financial Year (April to March)

• So FY10 implies April 2009 to March 2010

 JV: Joint Venture

 MoU: Memorandum of Understanding

 MT: Million Tonnes

 MTPA: Million Tonnes Per Annum

 NPAT: Net Profit After Tax

 SEZ: Special Economic Zone

 TMT: Thermo Mechanically Treated

 US$ : US Dollar

 Wherever applicable, numbers have been rounded off to the nearest whole number

39 Steel For updated information, please visit www.ibef.org

 EXCHANGE RATES

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year INR INR Equivalent of one US$ Year INR Equivalent of one US$
2004–05 44.81 2005 43.98
2005–06 44.14
2006 45.18
2006–07 45.14
2007 41.34
2007–08 40.27
2008–09 46.14 2008 43.62

2009–10 47.42 2009 48.42

2010–11 45.62
2010 45.72
2011–12 46.88
2011 46.85
2012–13 54.31
2013–14 60.28 2012 53.46

2014-15 61.06 2013 58.44

2015-16 65.46 2014 61.03
2016-17 67.09
2015 64.15
Q1 2017-18 64.46
2016 67.21
Q2 2017-18 64.29
Q3 2017-18 64.74 2017 65.12

Source: Reserve bank of India, Average for the year

40 Steel For updated information, please visit www.ibef.org

 DISCLAIMER

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with IBEF.

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This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the
information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a
substitute for professional advice.

Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do
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Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any
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41 Steel For updated information, please visit www.ibef.org