Professional Documents
Culture Documents
BY
L. G. Burange
Shruti Yamini
Documentation Sheet
Title:
Abstract
The paper examines the performance of Indian iron and steel industry in the pre
and post-liberalisation periods in terms of primary indicators such as production,
consumption and foreign trade. It also studies growth in capacity utilisation, prices and
employment. It is deduced that the industry has grown manifold in all the aspects,
especially after the liberalisation of the economy except employment, which shows a
substantial fall during post-liberalisation when competition among the Indian
manufacturing firms has increased. Therefore, that leads us to investigate the
competitiveness of the sample firms in the industry through composite competitiveness
indices. On the basis of overall competitiveness, as well as financial and non-financial
aspects of competitiveness, the industry is mostly dominated by Tata Steel Ltd., even
though SAIL has a greater market share and proves to be superior with respect to non-
financial indicators. JSW Steel Ltd. stands tall on the index for ‘major producers’,
whereas Bhushan Power & Steel Ltd. leads the ‘other secondary producers’ index of
competitiveness.
L. G. Burange
Shruti Yamini
1. INTRODUCTION
It can apparently be stated that iron and steel has little or no competition
because of its ideal combination of strength, rigidity and workability and the
relatively high cost of alternative materials. Moreover, the steel industry has very
strong forward and backward linkages in terms of material flow, income generation
and employment creation; hence the economic prosperity and growth of an economy
is very closely related to the quantity of steel consumed by it.
The Indian iron and steel industry has traversed a long path since the first steel
plant went into operation in 1907. Starting at 1 million tonne (m. t.) capacity at the
time of independence, India has now risen to be the fifth largest crude steel producer
in the world and the largest producer of sponge iron. Moreover, India is expected to
become second largest producer of steel in the world by the year 2015. That the
industry has started to mark its presence world-wide is also evident from the fact that
its share in world production of crude steel has been constantly on a rise since the
industry‟s liberalisation, at a healthy compound annual growth rate (CAGR) of 2.86
percent between the period 1991 to 2007 and at astounding 14.44 percent in the last
eight years (World Steel Association 2008). As per an official estimate, the industry
contributes around 2 percent of the Gross Domestic Product and its weight in the
Index of Industrial Production is 6.20 percent (GOI 2008a, p.10). Further, with a share
of approximately 10 percent, the industry is amongst the largest contributors to the
central excise duty.
*
The inputs of an anonymous reviewer are greatly acknowledged. However, the authors are solely
responsible for any remaining errors.
The first large scale production of iron and steel in India was made in 1829,
when Josiah Heath ventured on his famous enterprise of mining and smelting iron ore
at Salem and Porto Novo. However, due to high capital requirement the works was
wound up in 1867. Therefore, the credit of finally initiating the iron and steel industry
in India on a full-fledged scale goes to late Jamshedji Tata who in 1907 organised the
Tata Iron and Steel Company (TISCO, now Tata Steel Ltd.). The iron and steel
production increased quite rapidly following Independence as India attempted to
strategically invest in this core sector to bring about national industrial transformation
(D‟Costa 2006, p.8). According to the first Industrial Policy Resolution adopted in
1948, new production units of iron and steel were to be started exclusively by the
government in the public sector without disturbing the existing ones in the private
sector. Therefore, state ownership of steel plants in independent India began in the
1950s as some integrated steel plants were set up in the public sector and few steel
units in the private sector. The first push to this industry came during the first three
five year plans (1952-1970). Massive injections of investment in the public sector
coupled with a protected market environment laid the foundations of a viable and
competitive indigenous iron and steel industry. Unfortunately, India's steel capacity
was not augmented to any appreciable extent over the next two decades as the
economic slowdown adversely affected the pace of growth. Many factors contributed
to the slowdown. Most important were related to structural deficiencies, such as the
need for institutional changes in agriculture and the inefficiency of most of the
industrial sector. Wars with China in 1962 and with Pakistan in 1965 and 1971; a
flood of refugees from East Pakistan in 1971; droughts in 1965, 1966, 1971, and
1972; currency devaluation in 1966; and the first world oil crisis, in 1973-74, all jolted
the economy. However, this phase was reversed from 1991-92, when the country
replaced the control regime by liberalisation and deregulation in the context of the
New Economic Policy.
The Indian iron and steel industry was freed from the shackles of control and
liberalised in July 1991, which led it to grow in several dimensions. The main policy
measures taken with regard to the industry include (GOI 2007):
1. The industry was removed from the list of industries reserved for the public sector
and also exempted from the provisions of compulsory licensing.
2. The industry was included in the list of „high priority‟ industries for automatic
approval for foreign equity investment up to 51 percent. This limit has recently
been increased to 100 percent.
3. Price and distribution of steel were deregulated from January 1992.
4. The trade policy was liberalised where import and export was freely allowed.
5. Levy on account of Steel Development Fund was discontinued from April 1994,
thereby providing greater flexibility to main producers to respond to the market.
After passing through the initial phase of stabilisation following the economic
reforms and liberalisation, the steel industry experienced a growth of 22 percent and
14 percent during 1994-95 and 1995-96, respectively (Mazumder and Ghoshal 2003,
p.65). The industry however experienced a difficult phase between 1997 and 2001.
This was due to the severe recession in the global economy which led to demand-
supply mismatch with potential production capacity being much higher than demand.
Prices of a few types of steel during this period touched a 20-year low and most
producers in India made heavy losses. Many firms were forced to shut down leading
to loss of jobs. New capacities became uneconomical and surplus (Joshi 2006, p.2).
As noted by Muthuraman (2006), the industrial recovery in India really began to be
seen in 2002-03; was consolidated during 2003-04; gathered momentum during 2004-
05; and scaled new heights during 2005-06 and 2006-07. Consequently, the
competition between the firms within the industry has increased. This is mainly on
account of the better performance of the existing firms in all the fields of competence
and the resultant surge in competition for market share. Furthermore, due to the
expectant prospects of the industry in the near future, newer secondary producers have
entered the market making competition even more intense down the line. The
accompanying outcome is worth examining through the analysis of the current
scenario of competitiveness among the firms in the industry in the following sections.
2.1. Production
The finished steel production in India has grown from a mere 1.1 m. t. in 1951
to 50.20 m. t. in 2006-07. During the first two decades of planned economic
development, i.e., 1950-60 and 1960-70, the average annual growth rate of steel
production exceeded 8 percent. However, this growth rate could not be sustained in
the following decades due to lack of demand. During 1970-80, the growth rate in steel
production came down to 5.7 percent p.a. and picked up marginally to 6.4 percent p.a.
during 1980-90 (GOI 2005a), which further increased to 8.61 percent p.a. during
1990-2000. The addition in production is all the more significant after recovery of the
industry on domestic as well as the global clues, i.e., after 2001-02. When CAGR is
estimated for the pre-liberalisation (1975-76 to 1991-92) and post-liberalisation
(1991-92 to 2006-07) periods, it is noted that growth rate is understandably higher in
the later period at 8.11 percent compared to 4.96 percent for the earlier period (table
1). After liberalisation, there have been no shortages of iron and steel materials in the
country as production has augmented. India's rapid economic growth and soaring
demand by sectors like infrastructure, real estate and automobiles, at home and
abroad, has put Indian steel industry on the global map.
2.2. Apparent Consumption
Liberalisation of the foreign trade regime has had a favourable effect on Indian
exports. Exports, in volume terms, grew fast- at a rate exceeding 30.7 percent p.a.
between 1991-92 and 2006-07 (post-liberalisation period). This was in contrast to the
declining trend, at (-) 1.15 percent in the pre-liberalisation period of 1975-76 to 1991-
92 (table 1). During the post-liberalisation period, the country‟s export basket also
changed in favour of more value added and sophisticated products. The major steel
items of export include hot rolled (HR) coils, plates, cold rolled (CR) and galvanised
products, pipes, stainless steel, wire rods and wires. The export destinations also got
widened with Indian steel reaching very large number of countries in all the
continents of the world. India‟s major markets for steel items include USA, Canada,
Indonesia, Italy, West Asia, Nepal, Taiwan, Thailand, Japan, Sri Lanka and Belgium.
Import of steel, on the other hand, followed a different growth path. Contrary
to the declining trend in exports, it remained stable at around 4.1 percent (CAGR) in
the pre-liberalisation period. And, unlike exports, it increased only marginally at
around 6.3 percent CAGR in the post-liberalisation period. Most dramatic increase in
imports can be seen between 2003-04 and 2006-07, doubling itself from 1.45 m. t. to
4.39 m. t. in over just four years. As a result, for a major part of the post-deregulation
years India enjoyed the status of a net exporter of steel, even though the net export
levels varied widely. As noted by the Report of the Working Group on Steel Industry
for the Eleventh Five-Year Plan (GOI 2006), an association observed between the
growth in domestic demand and relative movements in imports and exports (i.e., net
exports) shows that the industry is ready to operate in an open economy where exports
and imports respond to increases or decreases in domestic demand driven primarily by
market signals (i.e., relative domestic and international price and relative realisation
on domestic versus international sales) and appropriate fiscal adjustments (i.e.,
changes in tax rate) .
Apparent Consumption
Year Production (Production + Import) - Export Export Import
8.11
Production 4.96
6.85
6.26
Apparent
5.53
Consumption
6.19
30.70
-1.15 Export
14.16
6.30
Import 4.10
5.45
-5 0 5 10 15 20 25 30 35
Post- Liberalization Period Pre- Liberalization Period Total Period
The domestic prices of iron and steel have been market-determined ever since
the de-regulation of prices for integrated steel plants in 1991-92. Market prices remain
closely related to international prices, though generally lower. The main policy
instrument available to influence prices is the adjustment of the customs and excise
duty structure. An important feature of the de-regulated era is that prices of both
finished steel and its inputs have risen at a much faster rate and with a lot of volatility,
compared to the past. Table 3 below gives the trend in WPI (with base year 1993-
94=100) for iron and steel between 1990-91 and 2007-08. The Indian steel industry
experienced a significant slump in prices during the period 1998-99 to 2001-02 in line
with global trend, which adversely affected the profitability of domestic steel firms.
However, certain steel mills remained profitable during this period due to price
2000-01 136.80
2001-02 136.60
50
2002-03 143.50
2003-04 181.10
2004-05 232.90 0
2005-06 250.10
2006-07 254.40
2007-08 278.10
CAGR (%) 6.69
Source: GOI (2008b) Figure 3: Trend in Wholesale Price Index of Iron and Steel
(Base Year: 1993-94=100)
control over key inputs such as coal, value addition in the production chain and
product diversity by introducing new types of steel meant for specialised usage.
Nonetheless the prices have recovered significantly after 2003-04.
2.6. Employment
The trend in employment (number of workers) in the iron and steel industry is
studied in the post- and pre-liberalisation periods with the help of ASI database
(Government of India 2009). The results are distinct in the sense that it is the only
performance indicator which has recorded negative growth during the total period of
1975-76 to 2005-06. The estimated CAGR in employment in the period between
1975-76 and 2005-06 is (-) 1.01 percent. However, the rate was a little better at 0.35
percent in the pre-liberalisation period (1975-76 to 1991-92). The figures indicate that
the level of employment was worst in the post-liberalisation period (1991-92 to 2005-
06) where it declined at a rate of (-) 2.41 percent CAGR (table 4). After deregulation
of the industry, through the schemes such as voluntary retirement and golden hands-
shakes, industry tried to rationalise labour cost in the iron and steel production. This
led to decline in employment in the Indian iron and steel industry during post-
liberalisation period. The declining employment in the industry led to improvement in
labour productivity, although it is still low compared to most of the steel producing
countries. This phenomenon can be attributed to increased mechanisation and
technological advancement in the industry following decontrol, which led to the
substitution of labour with capital in iron and steel production. Nevertheless, after
stagnating in the years 2001-03, the number of workers in the
(%) 450000
400000
Overall Period
-1.01
(1975-76 to 2005-06) 350000
300000
Pre-liberalisation 250000
100000
Post-liberalisation
1995-961996-971997-981998-991999-002000-012001-022002-03
1980-811981-821982-831983-841984-851985-861986-871987-88
Period -2.41
1975-76
1979-80
1988-89
1992-93
1993-94
2003-04
1976-77
1977-78
1978-79
1989-90
1990-91
1991-92
2004-05
2005-06
1994-95
(1991-92 to 2005-06)
Number of Workers
Figure 4: Trend of Employment in the Industry
industry has increased from 268459 in 2003-04 to 294974 in 2004-05 and to 323051
in 2005-06, indicating a positive signal for the employment in the industry. This
recent growth in employment is primarily due to the growth in the number of
producing units in the industry, especially in the private sector, as well as the growth
in the size of individual units.
Pig iron is one of the basic raw materials required by the foundry and casting
industry for manufacture of various types of castings for the engineering industries. In
2006-07, the share of production of pig iron by secondary (smaller) producers was
82.8 percent, whereas primary producers produced only 17.2 percent. Along with the
production of steel, the production of pig iron in the country has also increased at a
modest rate of 6.3 percent in the post liberalisation period (table 5) due to positive
global demand, India being a major exporter. However, to help the industry, the
government should invest more on the development of the infrastructure sectors, such
as road and transport, so that the derived investment demand could flow into the
industry. Also, the foundries in India, particularly the smaller ones, are using obsolete
Table 5: Production in Indian Pig and Sponge Iron Industry (Million Tonnes)
Pig Sponge
Years 18.00
Iron Iron
1991-92 1.59 1.31 16.00
1992-93 1.84 1.44
1993-94 2.25 2.40 14.00
Source: JPC (2007, Various Issues) Figure 5: Trend in Production in Indian Pig
and Sponge Iron Industry
technology and need modernisation with better technology so that the cost of
production can come down. Although this might mean substitution of labour and
result in decline in employment in such units.
India is the world‟s largest producer of sponge iron. Production of sponge iron
in the country as an alternative feed material to steel melting scrap (re-usable steel
waste), which was being imported hitherto in large quantities by the Electric Arc
Furnace units and the Induction Furnace Units, has resulted in considerable savings in
foreign exchange. The growth of sponge iron especially during last 5 years in terms of
capacity and production has been substantial. The installed capacity of sponge iron
increased from 1.52 m. t. p.a. in 1990-91 to 26.39 m. t. in 2004-05. The production
has increased from 1.31 m. t. in 1991-92 to 16.27 m. t. in 2006-07 (table 5) at 14.77
percent CAGR mainly due to de-licensing of the industry. Moreover, growth in
production in sponge iron in the last 5 years has been at an impressive 24.11 percent.
In the same line of thinking, the Department of Trade and Industry (1994, p.9)
of U. K. states that; “for a firm, competitiveness is the ability to produce the right
goods and services, at the right price, at the right time. It means meeting customers'
needs more efficiently and more effectively than other firms.” Apart from stressing on
the productivity, quality and price aspects, the stated definition sheds some light on
importance of consumer satisfaction too.
D'Cruz and Rugman (1992, p.13) argue that the firm level competitiveness can
be defined as “…….the ability to design, produce and market goods and services, the
price and non-price characteristics of which form a more attractive package than
those of competitors”. A distinction is often made between the price and non-price
competitiveness, the first representing a firm‟s capacity to succeed in price
competition (for a given product quality) profitably, while non-price competitiveness
encompasses a host of other factors that account for a firm‟s success such as product
technology, diversity, novelty or sales and marketing services.
Gelei (2003, p.43) has used the definition of firm competitiveness as “the
basic capability of perceiving changes in both the external and internal environment
and the capability of adapting to these changes in a way that the profit flow generated
guarantees the long term operation of the firm”. This definition interprets
competitiveness of firms as an ongoing struggle for survival, which is one of the most
complex phenomena of firm‟s operation. She maintains that firm competitiveness is
basically a function of two factors. First, it is determined by the extent a firm can
identify the value dimensions that their customers expect and offer them those through
product and service package. In the long run a firm can be competitive only when it is
able to create value for their customers. The second factor of firm
competitiveness is the sum of resources and capabilities that makes a firm capable to
create and deliver the identified important value dimensions for the customer.
Prahalad and Hamel (1990) call the second set „core competences‟. It may be noted
that Gelei (2003) has placed a well-defined stress on the long term goals of the firm,
when competitiveness is implicated.
Krugman (1994, p.31) rightly states that the competitiveness of firms has a
clearly defined bottom line: “if a corporation cannot afford to pay its workers,
suppliers and bondholders, it will go out of business. So when we say that a
corporation is uncompetitive, we mean that its market position is unsustainable- that
unless it improves its performance, it will cease to exist.” By this, he certainly gives
an emphasis to the significance of financial stability of a firm in its existence in
market. Moreover, human resource development and profitable returns to the
shareholders are also considered crucial. Altenburg et al. (1998, p.2), elaborates this
view further by maintaining that firm competitiveness is “the ability to sustain a
market position. This ability requires the simultaneous achievement of several targets.
The firm must supply products of adequate quality on time and at competitive prices.
Moreover, as a rule it must be in a position to provide sufficiently diversified products
to meet a differentiated demand, and it must respond quickly to changes in demand
behaviour. Beyond this, success is contingent on a firm's innovative capacity, its
ability to build up an effective marketing system, to establish a brand name, and so
on.” The given definition exaggerates the criticality of the firm to sustain the
competitive position in the industry over a longer term, and not only focus on its
current performance. This objective can be attained through proper investment in
technology and marketing of the products.
Moving on to the application of the concept, since a firm does not produce in a
vacuum, its competitiveness can only be measured within various types of market
territories at the sub-national, national and supra-national levels (UNCTAD 2002,
Sinner 2002). Hence at least three general types of competitiveness have been
identified or implied in various contexts:
1. Economy Competitiveness: The ability of all the firms in the economy to
compete, via price or other product attributes, with businesses located in other
countries. This is sometimes referred to as the competitiveness of a country the as
combined firm performance of two or more countries is compared.
2. International Competitiveness of Firms: The ability of specific firms or industries
to compete for market share with the same businesses located in other countries,
which affects the location of production across countries.
3. Domestic Competitiveness of Firms: The ability of specific firms or industries to
compete for market share with other firms or industries in the same country.
Competitive Process
Sales and Marketing
Strategy
Consumer Satisfaction
Human Resource
Development and Social
Responsibility
The sample of firms has been chosen on the basis of their market shares for
the year 2006-07. The market share of each of the firm is arrived at by dividing their
respective sales (Rs. Cr.) by industry‟s total sales and then multiplying it by 100. The
data used is given by CMIE (2007). All efforts have been made to include a
representative sample of firms having more than 1 percent of the market share. With
this, 14 firms were selected as the sample of the study, which covered more than 75
percent of the industry‟s total market share. The precise market share of the selected
14 sample firms are given in table 6.
Table 6: Market Share of Sample Firms in Iron and Steel Industry in 2006-07
Since the industry is resource based, maximum weights have been assigned to
productive performance (14.50) of the firms. Moreover, cost effectiveness (13.40) is
considered important too by the experts for determining firms‟ competitiveness as it
determines the profit indirectly. Sales and marketing performance (10.60) is crucial
too in any industry today as customer awareness has increased over time; hence it is
on the fourth position in the list of importance. It is visible that least weight is given to
stock market performance (6.50) maybe because the customers of the firms are
somehow limited and are not guided by it. Also, major firms are government
undertakings; therefore need no investors from the open market to operate efficiently.
Table 7: Weights of the Indicators
Indicators Average Weights
Productive Performance 14.50
Financial Performance 12.85 16.00
Cost Effectiveness 13.40 14.00
The next step in constructing the competitiveness index for Indian iron and
steel industry is aggregating the sub-indicators and the main indicators (10) by
applying the linear aggregation rule (equation 2).
The last step is of aggregating these ten weighted indicator indices into one
competitiveness index for a firm in an industry. This is done in the same manner as in
equation 2.
The industry average score of the competitiveness index for the Indian iron
and steel industry has been calculated at 39.07 as seen in table 8, which is used to
examine the relative competitive performance of firms. Only five firms from the
sample of fourteen firms i.e. around 36 percent of the total sample size, show above
industry average competitive performance whereas the remaining nine are below this
average. The firms which are above the average score are Tata Steel Ltd., Steel
Authority of India Ltd., JSW Steel Ltd., Rashtriya Ispat Nigam Ltd., and Essar Steel
Ltd.. All of these firms belong to the „major‟ and „other major producers‟ category as
classified by the Ministry of Steel based on the production route they follow (a
detailed description of the classification of producers by Ministry of Steel is given in
section 6). The lone firm belonging to the „other major producers‟ group, which is
below the industry average, is Ispat Industries Ltd. at the eighth position. The other
firms that are below the industry average in 2006-07 such as Jindal Stainless, Uttam
Galva Steels Ltd., National Steel & Agro Ltd., Bhushan Steel Ltd., Shree Precoated
Steels Ltd., Bhushan Power & Steel Ltd., Mukand Ltd. and Lloyds Steel Inds. Ltd.
represent the „other secondary producers‟ group and are comparatively smaller in size.
As stated earlier, the overall competitiveness index is nothing but a sum total
of the ten main weighted indicator scores it constitutes. Therefore, the ten indicator
scores aggregate to form a firm‟s overall competitiveness score. A few general
observations regarding the indicator indices are made. The cost effectiveness may be
noted to be a high scoring index because of very little difference of performance
between the firms. In the said case where there are no outliers, when the data is
normalised using range equalisation technique, it yields more contiguous scores.
However, the case with the stock market performance index is different where it
registers very low scores. This character of the index is a result of the low weight
attached to it with regard to its importance in the overall competitiveness of the firms
in the steel industry. Furthermore, the consumer satisfaction index shows identical
scores of a few firms. This is mainly on account of two reasons, the first being lesser
number of sub-indicators in the index and the second being the qualitative nature of
all the sub-indicators which necessitated common ordinal observations. The
competitive ranks and scores of the individual firms in each of the indicators are
interesting to examine in order to interpret the overall competitiveness of the industry.
Tata Steel Ltd., the world‟s sixth largest steel company, earlier known as
TISCO, is the oldest private sector steel producer in India with an existing annual
crude steel production capacity of 30 million tonne per annum (m.t. p.a.). Established
in 1907, it is the first integrated steel plant in Asia and is now the world`s second
most geographically diversified steel producer and a Fortune 500 Company. The
company's steel plant having a capacity of around 5 m.t. p.a. is located at Jamshedpur
and additionally, it has a production facility there which manufactures welded steel
tubes too. The company also has a ferro chrome plant in Orissa, bearings plant in
West Bengal and wire manufacturing facilities in Maharashtra and Karnataka. Its
marketing network spans 24 cities in India and 15 countries across the globe in North
America, Europe, Southern Africa and Asia. The company is setting up three more
Greenfield steel plants in eastern India in Chhattisgarh, Jharkhand and Orissa for a
combined capacity of 23 m.t. p.a.. The company is also aggressively expanding
through the acquisition route.
In the light of above discussion, it may be noted that Tata Steel Ltd. comes
first with 55.16 score in the overall competitiveness rankings. This excellence is
mainly because of its first rank in five out of ten main indicators of competitiveness
such as cost effectiveness, sales and marketing, stock market performance, consumer
satisfaction and technological indicators (table 9). The firm has the lowest cost
incurred as percentage of its sales in raw material, stores etc. and in some other
miscellaneous expenses too. Also, sales and marketing are its strengths with good
expenditure (5.53 percent of the total expenditure) on distribution of its products and
second best market share in the industry. When stock market performance is
considered, it has the best yield i.e. 1.93 percent and good earnings per share of Rs.
66.62 in the reference year. Moreover, the firm has the best technical know-how
expenditure among its competitors and good R&D efforts. This is well supported by a
strong production base of 9 plants as well as appropriate product differentiation with
good mix of different kinds of steel. However, its weakness lies in the productive
performance on account of low labour productivity and foreign trade with minimal
exports, where it has secured twelfth and eleventh ranks respectively with poor
scores. It is evident from figure 9, that the firm is below the industry average scores in
the same indicators.
Weighted
Indicator Rank 12.00
Score
Productive Performance 4.14 12 10.00
Human Resource
3.79 3
Development
Foreign Trade 2.99 11
Growth Variables and
4.47 4
Potential
Overall Competitiveness 55.16 1
Firm Score Industry Average Score
Steel Authority of India Ltd. (SAIL), a public sector enterprise, is the largest
steel producer in India with greatest market share. The firm has a strong foothold in
the industry because of its heavy dependence on the state in times of difficulty. It is a
fully integrated iron and steel maker, producing both basic and special steels for
domestic construction, engineering, power, railway, automotive and defence
industries and for sale in export markets. It was incorporated in the year 1973 and is
one of the „Navratnas‟ enjoying significant operational and financial autonomy. SAIL
produces iron and steel at 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. The firm has the distinction of being India‟s second largest
producer of iron ore and of having the country‟s second largest mines network. This
gives SAIL a competitive edge in terms of captive availability of iron ore, limestone,
and dolomite which are inputs for steel making.
Steel Authority of India Ltd. follows the competitiveness index at the second
position with a score of 50.28 (table 10). The difference of 4.89 points between the
scores of two firms is noteworthy as it clearly reflects the unchallengeable and
dominant competitive position of Tata Steel in the industry. However, it may be
remarked here that SAIL, a profit making public enterprise, has better market share. It
has proved to be one of the most successful government undertakings in recent years.
SAIL has good overall score mainly due to sound investment in human resource
development where it has received first rank in 4 sub-indicators out of 8. Most
noteworthy among these is its expenditure on staff training as no other competitor has
spent even a rupee on it in the year 2006-07. Also as it is the largest firm in the
industry, it generates maximum employment. Similarly this firm also performs
relatively better in terms of consumer satisfaction acquiring first rank there.
Moreover, the firm exhibits effectual performance in sales and marketing (second
rank) with broad distribution base of 5 manufacturing plants and best R&D efforts in
technology indicators (second rank). Its stock market performance is also exceptional
with a score of 3.06 and second rank as its yield percentage is 1.92 which is
comparatively high. The firm has the same weaknesses as Tata Steel, i.e. productive
performance and foreign trade where it has secured last positions and below industry
average scores (figure 10), the exception being it‟s below average performance in the
cost effectiveness index (eighth position).
Weighted 10.00
Indicator Rank
Score 9.00
Productive Performance 2.31 14 8.00
JSW Steel Ltd. belonging to the Jindal Group was incorporated in the year
1994. Jindal Iron & Steel Co Ltd. (JISCO), promoted Jindal Vijayanagar Steel Ltd.,
was renamed JSW Steel Ltd.. The firm today has a fully integrated steel plant
producing pellets to colour coated steel with a capacity of 7.8 m.t. p.a.. The registered
office of JSW Steel is at Mumbai. The plants are located at Vasind and Tarapur in
Maharashtra and Toranagallu in Karnataka. The facilities are well connected with
major ports and rail heads. Based in the rich iron ore belt of Bellary-Hospet,
Karnataka, the company is engaged in the manufacture of galvanised steel products.
JSW Steel Ltd. consists of the most modern, eco-friendly steel plants with the latest
technologies for both upstream and downstream processes. It has received all the
three certificates; ISO: 9001 for Quality Management System, ISO: 14001 for
Environment Management System and OHSAS: 18001 for Occupational Health &
Safety Management System.
The third position of the index is occupied by JSW Steel Ltd. with overall
competitiveness score of 47.76. The firm has distinctly established its performance in
growth variables and potential as it has the third rank there (table 11). Over the last
Weighted 12.00
Indicator Rank
Score
Productive Performance 6.34 8 10.00
Technology and
3.91 3 0.00
Environment
Human Resource
1.76 6
Development
Foreign Trade 4.90 6
Growth Variables and
4.59 3
Potential
Overall Competitiveness 47.76 3 Firm Score Industry Average Score
Figure 11: Performance in Competitiveness Indicators
three years, its sales have grown at 37 percent and net worth at around 70 percent p.
a.. The other indicator where the firm has performed well (third rank) is related to
technology mainly because of its power efficiency and environmental protection
efforts. It has fared well in consumer satisfaction index too as the firm tries to evaluate
consumer related problems and solutions efficiently. Except for the productive
performance, where it has a 6.34 score, and is at a low eighth position because of
merely 70 percent of capacity utilisation; the firm has fared reasonably well in other
competitiveness indicators too.
Weighted
Indicator 12.00
Score
Productive Performance 4.39 10.00
Financial Performance 10.40
8
Cost Effectiveness 7.97 .
0
Sales and Marketing
3.84 0
Strategy
Stock Market Performance 0.27 6
.
Consumer Satisfaction 6.04 0
Technology and 0
3.83
Environment
4
Human Resource
4.06 .
Development 0
Foreign Trade 2.18 0
0
.
0
0
The fifth position, just above the industry average is held by Essar Steel Ltd.
(table 13), a private „other major‟ producer, as classified by the Ministry of Steel. The
difference of score with RINL is a vast 5.30, testifying to a divide between the first
four firms in the industry and the following firms. Essar Steel heads the consumer
satisfaction index (along with three other rivals) as it puts good efforts in the direction
in spite of the lesser weight of the indicator for competitiveness in the iron and steel
industry. Similarly, the firm performs reasonably well in productive performance,
sales and marketing strategy and foreign trade, standing at the fourth position in all
the three indices. It has the second best labour productivity in the industry, and on the
other hand it spends comparatively well on the marketing of the products. Noteworthy
is its performance in trade as it has recorded the best net forex earnings for the year.
Weighted 10.00
Indicator Rank
Score 9.00
Productive Performance 7.96 4 8.00
7.00
Financial Performance 3.48 9
6.00
Cost Effectiveness 8.86 9 5.00
Sales and Marketing 4.00
2.71 4
Strategy 3.00
Stock Market Performance 0.86 10 2.00
1.00
Consumer Satisfaction 6.04 1
0.00
Technology and
1.38 12
Environment
Human Resource
0.51 8
Development
Foreign Trade 4.97 4
Growth Variables and
2.74 11
Potential
Overall Competitiveness 39.52 5 Firm Score Industry Average Score
Figure 13: Performance in Competitiveness Indicators
The weakness of the firm lies in its unsatisfactory financial performance due to
inadequate liquidity and asset utilisation, lesser attention on technological up
gradation and poor growth trends in some of the key variables in the last few years.
Jindal Stainless Limited (JSL) was established in 1970 in the form of a single
unit plant at Hisar (Haryana). However, now one more plant has been added at Vizag
(Andhra Pradesh). JSL, a ISO: 9001 and ISO: 14001 company, is also setting up a
greenfield integrated stainless steel project in the state of Orissa with capacity of 1.6
m. t. p. a.. Formally incorporated in 1980, the firm fulfils the country's demand of
stainless steel and manufactures continuous cast slabs and blooms, hot rolled stainless
steel coils, hot rolled annealed pickled coils, hot rolled annealed pickled plates, cold
rolled stainless steel coils, chequered plates, customised products for crucial
applications like nuclear applications and applications in turbines. The R&D division
at Hisar plays a pivotal role in retaining and consolidating company's leadership role
in stainless steel business by continuous up gradation of quality, process and services,
and innovating development strategies to come up with new products with cost
competitiveness. The R&D division closely interacts with reputed national and
international laboratories to avail of expert services for critical investigation.
The sixth position in the overall competitiveness in the iron and steel industry,
just below the industry average, is occupied by Jindal Stainless Ltd. with a total score
of 38.87. As can be seen from table 14, Jindal Stainless Ltd. has its strength in
consumer satisfaction and foreign trade with good net foreign exchange earnings and
export as a percentage of sales. Also the firm has performed fairly well in
technological and environmental performance (fifth rank) as it has balanced its energy
usage and paid attention to environmental issues. However, its poor performance due
to low productivity (tenth rank) and indifference to human resource development
(tenth rank) has led to its comparatively lower overall score. Its stock market
performance at the eighth position is also one of the weaknesses, as the yield
(dividend divided by the current market price) and EPS are very low. The firm has
scored below industry average scores in 6 out of ten main indicators of
competitiveness (figure 14).
Table 14: Competitive Performance of Jindal Stainless Ltd.
10.00
Weighted
Indicator 9
Score .
Productive Performance 4.70 0
0
Financial Performance 4.11 8
Cost Effectiveness 9.16 .
0
Sales and Marketing 0
2.56
Strategy 7
Stock Market Performance 1.15 .
0
Consumer Satisfaction 5.53 0
Technology and 6
3.13
Environment .
0
Human Resource 0
0.26
Development 5
Foreign Trade 5.47 .
0
Growth Variables and 0
2.79
Potential 4
Overall Competitiveness 38.87 .
0
0
3
.
0
0
2
.
0
0
1
.
0
0
0
.
0
0
Weighted 12.00
Indicator Rank
Score
Productive Performance 6.36 7 10.00
Ispat Industries is the flagship company of Ispat Group, and was incorporated
in 1984 as Mittal Galvazinc Ltd.. The company started operations at Kalmeshwar in
Maharashtra for the manufacturing of thin gauge galvanised steel sheets in technical
collaboration with Japan-based Nippon Denro manufacturing company in 1985.
Subsequently, its name was changed to Nippon Denro Ispat Limited and in 1996 to
Ispat Industries, as the company started to produce primary steel products. It operates
a 3 m. t. hot rolled coils plant at Dolvi in Maharashtra. It has flexibility in the choice
of steel making route, be it the conventional blast furnace route or the gas-based
electric arc furnace route. The dual technology process gives it the flexibility to
choose different combinations of raw materials for its production. It also operates a
direct reduced iron plant of 1.6 m. t. and a pig iron plant with an annual capacity of 2
m. t.. The pig iron plant was added to Ispat Industries on account of amalgamation of
Ispat Metallics, a loss making company of the group in 2005. The company in recent
times has expanded its capacities as well as taken steps to integrate its manufacturing
operations. Production capacity for HR coil was increased from 2.4 m. t. to 3 m. t.. It
also added a 2.3 m. t. sinter plant and an oxygen plant with a daily capacity of 1260
tonnes for its captive consumption during 2005-06.
Ispat Industries Ltd., a major steel producer, holds the eighth position on the
competitiveness index with a 37.28 score (table 16). To start with the strong points, its
high labour productivity has ensured third position on the productivity index. The firm
also performs well on the growth index (fifth rank) and the stock market (sixth rank)
because of good insurance expenditure and highest price to earnings ratio. However, it
has proven to be less cost competitive and shown poor comparative
Weighted
Indicator Rank 10.00
Score
9.00
Productive Performance 8.90 3
8.00
Financial Performance 1.55 14 7.00
Cost Effectiveness 8.37 10 6.00
Sales and Marketing 5.00
2.54 7
Strategy 4.00
Stock Market Performance 2.25 6 3.00
Consumer Satisfaction 3.02 4 2.00
Technology and 1.00
3.05 6
Environment 0.00
Human Resource
0.61 7
Development
Foreign Trade 3.55 10
Growth Variables and
3.43 5
Potential
Overall Competitiveness 37.28 8
Firm Score Industry Average Score
Figure 16: Performance in Competitiveness Indicators
performance with the last rank in the financial indicators such as return on net worth,
debt to equity ratio and asset utilisation ratio. The firm also needs to improve its
foreign trade and cost effectiveness to remain competitive in the industry.
National Steel & Agro Inds. Ltd., incorporated in 1985, was formerly known
as National Steel Industries Ltd.. It was set up in technical collaboration with CMI,
Belgium; Phoenix Works, Belgium; and Stein Heurtey, France. It belongs to Ruchi
Group and is engaged in the manufacture of secondary steel products and trading of
agro products. The company's plant is located at village Sejwaya, in Madhya Pradesh.
It manufactures galvanised plain steel coils and sheets and galvanised corrugated steel
sheets. The products manufactured by the company have applications in agricultural
implements, electrical appliances, automobiles, air conditioning ducts, consumer
durables, construction, electrical panels, rolling shutters, engineering fabrications,
packaging, storage, roofing, furniture, ducting and slide walls. Its Agro Trading
Division started in 1990, deals in raw and processed pulses, beans and other
agricultural products. The company exports its produce in the markets of South East
Asia, African Countries, Middle East and other neighbouring countries.
The firm, National Steel & Agro Inds. Ltd., stands ninth on the overall
competitiveness index, with a 37.24 score as seen in table 17. Remarkably, it has
highest capacity utilisation levels of 130 percent, which has helped it to secure a
second position on the productivity index. Its productive superiority is also evident
from the fact that its score (9.87) in the index is far above the industry average score
(6.16) (figure 17). Furthermore, the firm has proved to be cost effective too as it has a
10.10 score and second position on the index mainly because of lesser financial and
extraordinary charges. However, barring the consumer satisfaction index (third rank);
it has not proved itself on any other index, getting last ranks in technology and
environment and human resource development. The firm has literally no expenditure
on either research or on technology imports. Its indifference to HRD is also visible
with little or no expenditure on various employee compensation schemes as well as
their training for betterment of skills. The firm‟s stock market, sales and marketing
and growth performance also needs attention in order to be competitive in the
industry. Notably, all this has pulled its overall score down. It may therefore be
concluded that being competitive in the industry implicates overall performance in all
the indicators, since conducting well in only a few of them does not help.
Table 17: Competitive Performance of National Steel & Agro Inds. Ltd.
Weighted
Indicator Rank 12.00
Score
Productive Performance 9.87 2 10.00
Financial Performance 3.81 8
8.00
Cost Effectiveness 10.10 2
Sales and Marketing 6.00
1.75 11
Strategy
Stock Market Performance 0.49 12 4.00
Human Resource
0.07 14
Development
Foreign Trade 4.81 7
Growth Variables and
1.60 13
Potential
Overall Competitiveness 37.24 9
Firm Score Industry Average Score
Incorporated in 1985, Shree Precoated Steels Ltd. (SPSL) is part of the Ajmera
Group of Companies. The company manufactures clad, plated or coated flat rolled
steel products, aluminium plates, sheets and strips and doors, windows and their
frames, etc.. As a direct corollary to its commitment to quality standards, SPSL has
already been accredited with the ISO: 9001 Certificate by DNV Netherlands. The
registered office of the firm is at Mumbai and its manufacturing facility is at
Sanaswadi in Maharashtra. The products of the company are exported to Europe, the
Far East, and the North American markets. Its products are marketed with the brand
names of Metacor, Metagalva and Metacolor. Metacolor plant is installed with
technical collaboration from Cockerill Mechanical Industries, Belgium. This plant
uses equipment like coating-laminating-embossing-printing stations, ovens combined
with reverse roller coating technology for organic coating to produce Metacolor.
Incorporated in 1999, Bhushan Power & Steel Ltd., is a fully integrated 1.5 m.
t. p. a. steel making company with turnover of Rs. 3873 crores with 7 world class ISO:
9000 certified state of the art manufacturing facilities in India and 2 overseas (1 in
Nigeria and another in Nepal). It is a leading manufacturer of flat, rounds and long
products including value added products. It also produces steel wire rods and special
alloy steels. It successfully commissioned a 1.5 m. t. p. a. greenfield steel and power
plant in Orissa with HR Coil making facility, the first in the private sector in Orissa
recently. For the Orissa plant, technology and equipments are procured from world-
renowned companies like Lurgi from Germany, ABB Ltd., SMS Demag, Siemens etc.
The firm is selling its value added range of products in secondary steel through a large
distribution network in India (comprising more than 35 sales offices) and abroad.
Bhushan Power & Steel Ltd. is in the twelfth position of the overall
competitiveness index with a score of 34.23 (table 20). The most outstanding
competitive performance of the firm is in terms of its productivity, where it has
secured first position with 10.26 score, mainly due to the highest labour productivity.
Also its HRD initiatives are about average as it is in the fourth position on the index
with health and safety of the employees‟ certifications to the plants of the firm. The
areas where the firm needs great improvement in order to strengthen its overall
competitive position relates mainly to the financial indicators such as debtors turnover
ratio, finished goods turnover ratio and asset utilisation ratio, cost effectiveness, sales
and marketing strategy and stock market performance.
Mukand Ltd. was originally incorporated as Mukand Iron and Steel Works
Ltd. in 1937, but in 1939 it was taken over by Bajaj Group. In 1989, it was renamed
Mukand Ltd. and the registered office setup in Mumbai. The company functions
Table 20: Competitive Performance of Bhushan Power & Steel Ltd.
Weighted 12.00
Indicator Rank
Score
Productive Performance 10.26 10.00
Weighted 10.00
Indicator Rank
Score 9.00
Productive Performance 6.93 5 8.00
7.00
Financial Performance 2.16 12
6.00
Cost Effectiveness 7.39 13 5.00
Sales and Marketing 4.00
1.75 12
Strategy 3.00
Stock Market Performance 2.30 5 2.00
1.00
Consumer Satisfaction 0.50 7
0.00
Technology and
1.61 11
Environment
Human Resource
2.03 5
Development
Foreign Trade 2.94 12
Growth Variables and
3.13 6
Potential
Overall Competitiveness 30.75 13 Firm Score Industry Average Score
Lloyds Steel Industries Ltd., a flagship company of the Lloyds Group was
incorporated in 1970 under the name Gupta Tubes & Pipes Pvt. Ltd.. It was renamed
Lloyds Steel Industries Ltd. in 1985. The firm is mainly engaged in the manufacture
and marketing of sponge iron, hot rolled and cold rolled coils, galvanised sheets and
coils. It also undertakes designing and fabrication of various chemicals,
pharmaceutical and other machinery coupled with manufacture of steel pipes, tubes
and steel castings. Presently the company has three manufacturing units situated in
Maharashtra. Two units are located at Wardha, manufacturing hot rolled, cold rolled,
galvanised plain and corrugated coils of steel. The third unit located at Thane
manufactures silos, steel pipes and tubes and fabricates chemical and pharmaceutical
machinery. Since its inception the company has entered into various technical
collaborations and tie-ups with national and international engineering companies.
However, due to poor performance in all spheres, the company has filed references
with BIFR for four consecutive years since 2001, for consideration of its sickness.
The industry average for the financial index is 19.08, whereas that of the non-
financial index is 20.00 (table 23). It is marked that while nine firms on the financial
index show above industry average performance, only seven of them are above the
same in the case of the non-financial index. This supports the observation that firms in
the Indian iron and steel industry needs to perform better in the non-financial
indicators of competitiveness. It may be noted here that the industry averages of both
the indices are very close; however the actual performance of the firms in the non
financial index is lower than that on the financial index. This can be reasoned as
relatively higher weight is attached to the non-financial indicators of competitiveness,
because of which the scores of the firms are bound to be higher. Therefore, the total
index scores should be analyzed independently and not comparatively. Furthermore,
what can be compared to examine the relative competitive performance are the ranks
of the firms.
A general industry analysis shows that eight firms such as Tata Steel Ltd.,
JSW Steel Ltd., Jindal Stainless Ltd., Uttam Galva Steels Ltd., Bhushan Steel Ltd.,
Shree Precoated Steels Ltd., National Steel & Agro Inds. Ltd. and Lloyds Steel Inds.
Ltd. have better competitive positions in the financial indicators of competitiveness
(figure 23). Further, only the remaining six firms perform better in non-financial
indicators in terms of ranks. However, in terms of scores, only six firms show
superior performance in the financial indicators, while eight of them have better non-
financial scores. This once again evidences the higher scores in the non financial
index on account thehigher weights attached.
Financia
l Non Financial Overall
Competitiveness
Firms Index Index Index
Score Rank Score Rank Score Rank
Tata Steel Ltd. 24.90 1 30.26 2 55.16 1
Steel Authority of India Ltd. 19.45 7 30.83 1 50.28 2
J S W Steel Ltd. 23.05 2 24.70 3 47.76 3
Rashtriya Ispat Nigam Ltd. 20.82 5 24.34 4 45.15 4
Essar Steel Ltd. 18.54 10 21.32 6 39.86 5
Jindal Stainless Ltd. 19.89 6 18.98 8 38.87 6
Uttam Galva Steels Ltd. 21.44 4 16.16 10 37.60 7
Ispat Industries Ltd. 15.73 11 21.55 5 37.28 8
National Steel & Agro Inds.
Ltd. 19.21 8 18.04 9 37.24 9
Bhushan Steel Ltd. 19.15 9 15.32 12 34.47 10
Shree Precoated Steels Ltd. 22.15 3 12.24 13 34.39 11
Bhushan Power & Steel Ltd. 13.45 14 20.77 7 34.23 12
Mukand Ltd. 14.79 12 15.96 11 30.75 13
Lloyds Steel Inds. Ltd. 14.52 13 9.48 14 24.00 14
Industry Average Score 19.08 -- 20.00 -- 39.07 --
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Jinda Lloyd
Bhushan Bhushan Essar IspatJ S W l s Mukand National Rashtriya Shree Steel Tata Steel Uttam
Power & Steel Ltd. Steel Ltd. Industries Steel Ltd. Stainless Steel Inds. Ltd. Steel & Ispat Precoated Authority Ltd. Galva
Steel Ltd. Ltd. Ltd. Ltd. Agro Inds. Nigam Steels Ltd. of India Steels Ltd.
Ltd. Ltd. Ltd.
The other firm which has striking differences in financial and non-financial
performances is Uttam Galva Steels Ltd., which stands in the fourth rank in terms of
the former index, whereas tenth in the later index. The opposite is the case with Ispat
Industries Ltd. whose non-financial performance (fifth rank) is much superior then the
financial performance (eleventh rank). Another prominent observation is that in spite
of below average overall competitive position (eleventh rank) of Shree Precoated
Steels Ltd., it is on the third rank in the financial index due to the highest score in
foreign trade measures and a good cost performance. In sharp contrast to this, is its
non-financial performance at the thirteenth (11.83 score) rank despite the fact that it
shows great growth potential in future. Remarkably, Bhushan Power & Steel Ltd. is
on the last position on the financial index, whereas it performs satisfactorily on the
non-financial index. The difference of scores is also notable in its case as out of a
34.23 overall score, only 13.45 comes from the financial indicators, which lays stress
on the requirement of more attention on the financial factors of competitiveness. All
the other sample firms have obtained more or less similar ranks and close scores in
both the financial and non-financial indices.
Therefore, it may be concluded here that practically even if a firm has great
performance in financial indicators of competitiveness, it might not be very
competitive in the industry if it does not pay adequate attention to the non-financial
aspects of competitiveness. This fact is substantially supported by the distribution of
weights between both the aspects of competitiveness, where the industry has given
understandingly more importance to the non-financial indicators. Also the firms must
strengthen its non-financial performance more in order to remain competitive.
Main Producers: This category includes the public sector plants of SAIL (4 plants
of its own and its subsidiaries), RINL and the lone private sector plant– Tata Steel.
These producers produce steel using the basic oxygen furnace route that uses iron
ore, coal/coke as the basic input mix for producing finished steel.
Major Producers: This category includes the integrated steel plants (other than
Main Producers) with crude steel capacity 0.5 million tonnes and above,
irrespective of the technology route. The Major Producers segment comprises
ESSAR, ISPAT and JSW Steel Ltd.. While Essar Steel and Ispat Industries
employ Electric Arc Furnace (EAF) route, JSW uses Corex, a revolutionary
technology for making steel using iron-ore and coal.
Other Secondary Producers: Eight of the sample firms studied fall under this
group. The category comprises:
o The mini steel plants with EAF and IF with capacity below 0.5 million tonne. o
Numerous standalone processors making pig iron and sponge iron (other than
those of main/major producers) without any backward integration.
o Re-rolling Units, Cold Rolling Units, Galvanised Sheets Units producing small
quantities of steel from materials procured from the market or through their
own backward integration system.
o Small producers using scrap-sponge iron-pig iron combination to produce steel
ingots (for long products) using the EAF route.
Traditionally, the Indian steel industry was classified into Primary Producers
(SAIL plants, Tata Steel and RINL) and Secondary Producers. However, with the
coming up of larger capacity steel making units of different process routes, the
classification has been characterised as Main Producers, Major Producers and Other
Secondary Producers. The last two categories, namely the „major producers‟ and the
„other secondary producers‟ together form the consolidated category of Secondary
Producers. This category is highly heterogeneous in terms of scale of production and
capacity, technology in use, integration of production processes and vintage of the
plants. The „secondary producers‟ segment accounted for nearly 56.40 percent of
India‟s crude steel, 76.20 percent of finished steel and 82.80 percent of pig iron
production in 2006-07 (JPC 2007). This segment produces the majority of the long
products being produced in the country and some of the high grade value added flat
steel products to meet the specific requirements of the industry. There are 4315 units
in the secondary producers‟ segment producing iron and steel through various
technology routes as against only 10 units in the main producers segment (JPC 2007).
7. CONCLUSIONS
It might be concluded that the performance of the Indian iron and steel
industry with respect to key indicators such as production, consumption, foreign trade,
prices etc. has certainly improved over the past years, especially after its
liberalisation. The growth in production and consumption during the post-
liberalisation period of 1991-92 to 2006-07 was estimated to be at a rate of 8.11
percent and 6.26 percent per annum. Furthermore, the trade performance of this
industry is excellent especially in terms of exports with 30.70 percent growth during
the post-liberalisation, which was negative during the pre-liberalisation period (1975-
76 to 1991-92). Therefore, the industry has positive prospects for the future too. The
Table 25: Summary of Results of Competitiveness of Firms in Different Segments o
Technology
Sales
Productive Financial Stock Market Consumer and
Segments/ and
Performance Performance HRD/ Social
Firms Marke
Performance Satisfaction
ting
Environmental Indicators
Strat
Indicators
egy
Sco Ra Score Rank Rank Score Rank Sco Ra Score Rank Rank Score Rank S
re nk Score re nk Score
Main Producers
Tata Steel Ltd. 12.60 2 3.97 3 7.84 1 7.11 1 6.50 1 6.04
Rashtriya Ispat
Nigam Ltd. 14.50 1 8.30 1 7.48 2 2.90 3 0.00 3 6.04
Steel Authority
of India Ltd. 0.00 3 5.18 2 5.25 3 4.97 2 4.51 2 6.04
Major Producers
J S W Steel Ltd. 0.79 3 11.27 1 11.17 1 4.24 1 2.17 1 6.04
Ispat Industries
Ltd. 12.37 1 2.41 3 3.48 3 2.80 3 2.17 1 3.02
Essar Steel Ltd. 7.25 2 5.55 2 5.13 2 3.47 2 0.13 2 4.03
Other Secondary Producers
Jindal Stainless
Ltd. 3.20 7 8.68 3 8.20 5 6.38 1 2.08 4 6.04
Uttam Galva
Steels Ltd. 5.92 3 9.60 1 10.46 1 2.50 8 0.98 6 3.35
Bhushan Steel
Ltd. 5.44 5 7.35 4 7.65 6 3.59 2 3.87 2 2.01
Shree Precoated
Steels Ltd. 0.10 8 8.78 2 9.45 3 2.33 7 2.94 3 1.34
National Steel &
Agro Inds. Ltd. 7.57 2 6.69 5 10.32 2 2.78 4 0.90 7 4.03
Bhushan Power
& Steel Ltd. 10.26 1 6.35 6 5.32 8 3.34 3 1.03 5 1.34
Mukand Ltd. 5.71 4 4.38 7 6.61 7 2.64 5 4.52 1 0.67
Lloyds Steel
Inds. Ltd. 3.53 6 3.30 8 9.17 4 2.48 6 0.00 8 0.00
N.B. Zero indicator scores is indicative of worst performance in all the sub-indicators of the index.
capacity utilisation has also improved to about 90 percent in the last few years.
However, employment is the only indicator which has shown negative growth during
the post-liberalisation period indicating jobless growth in the industry.
Looking at the financial and non-financial index separately, it is seen that the
competitive rankings differ slightly as some firms perform better in one than the other,
whereas more sample firms have better non-financial positions on the index.
Moreover, because of more weights to the non-financial indicators of competitiveness,
those firms which perform better there ensured better competitive positions on the
overall index. Segment wise analysis show no different competitiveness picture of the
industry, as most of the firms maintain similar competitive positions on it as on the
overall competitiveness index.
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29. Reiljan, Janno, Maria Hinrikus and Anneli Ivanov, 2000; Key Issues in Defining
and Analysing the Competitiveness of a Country, Estonian Science Foundation
Working Paper No. 1, Faculty of Economics and Business Administration,
University of Tartu, Tartu.
30. SAIL, 2008; Statistics for Iron and Steel Industry in India, Steel Authority of
India Limited, New Delhi, (Various Issues).
32. Schumacher, Katja and Jayant Sathaye, 1998; India’s Iron and Steel Industry:
Productivity, Energy Efficiency and Carbon Emissions, Energy Analysis Program,
Environmental Energy Technologies Division, Report Number LBNL-41844,
Ernest Orlando Lawrence Berkeley National Laboratory, Berkeley.
35. World Steel Association, 2008; Steel Statistics, Belgium. Retrieved on 05-09-2008
from
http://www.worldsteel.org/?action=stats_search
Appendix Table 1: Summary of Results of Competitiveness Index for Indian Iron and Ste
Sales and Stock Human
Productive Financial Cost Consumer Technology and
Marketing Market Resource
Performance Performance Effectiveness Satisfaction Environmental
Firms Strategy Performance Development
Index Index Index Index Index Index Index Index
Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank S
Bhushan Power
10.26 1 3.06 11 6.10 14 1.70 13 0.72 9 1.01 6 2.56 7 2.15 4
& Steel Ltd.
Bhushan Steel
6.65 6 3.51 10 7.88 12 2.26 8 2.60 3 1.51 5 1.90 9 0.16 12
Ltd.
Essar Steel Ltd. 7.96 4 3.61 9 8.86 9 2.71 4 0.63 10 6.04 1 1.38 12 0.48 8
Ispat Industries
8.90 3 1.55 14 8.37 10 2.54 7 2.25 6 3.02 4 3.05 6 0.61 7
Ltd.
J S W Steel
6.34 8 5.68 4 9.88 4 2.57 5 2.59 4 5.53 2 3.91 3 1.76 6
Ltd.
Jindal Stainless
4.70 10 4.11 7 9.16 7 2.56 6 1.15 8 5.53 2 3.13 5 0.26 10
Ltd.
Lloyds Steel
4.98 9 1.70 13 9.23 6 1.95 9 0.00 14 0.00 8 1.27 13 0.29 9
Inds. Ltd.
Mukand Ltd. 6.93 5 2.16 12 7.39 13 1.75 12 2.30 5 0.50 7 1.61 11 2.03 5
National Steel
& Agro Inds. 9.87 2 3.81 8 10.10 2 1.75 11 0.49 12 3.52 3 1.23 14 0.07 14
Ltd.
Rashtriya Ispat
4.39 11 10.40 1 7.97 11 3.84 3 0.27 13 6.04 1 3.83 4 4.06 2
Nigam Ltd.
Shree
Precoated 2.50 13 4.48 6 9.46 5 1.88 10 1.58 7 1.01 6 1.73 10 0.14 13
Steels Ltd.
Steel Authority
2.31 14 7.48 2 8.90 8 5.13 2 3.06 2 6.04 1 5.07 2 7.50 1
of India Ltd.
Tata Steel Ltd. 4.14 12 7.41 3 10.31 1 5.43 1 4.18 1 6.04 1 6.39 1 3.79 3
Uttam Galva
6.36 7 4.83 5 9.99 3 1.59 14 0.55 11 3.02 4 2.13 8 0.23 11
Steels Ltd.
Industry
6.16 4.56 8.83 2.69 1.60 3.49 2.80 1.68
Average
N.B. Zero indicator scores is indicative of worst performance of the firm in all the sub-indicators of that particular indicator index.
Appendix Table 2: Performance of Key Indicators of the Industry
Production Apparent Consumption Export Import Number
Years for Sale of Non- Alloy Finished Steel of Non- Alloy Finished Steel (Million (Million of
(Million Tonnes) (Million Tonnes) Tonnes) Tonnes) Workers
1975-76 5.75 5.47 0.51 0.23 335804
1976-77 6.80 5.64 1.41 0.25 328917
1977-78 6.97 6.22 1.10 0.35 334751
1978-79 7.65 7.91 0.52 0.78 363751
1979-80 7.64 8.97 0.06 1.39 375490
1980-81 7.90 8.86 0.05 1.01 398600
1981-82 9.38 10.39 0.04 1.05 406279
1982-83 9.13 9.93 0.07* 0.98* 415549
1983-84 8.50 9.30 0.07* 0.98* 425080
1984-85 8.78 9.33 0.15 0.70 458917
1985-86 10.03 11.16 0.02 1.15 417495
1986-87 10.54 11.34 0.03 0.83 443311
1987-88 11.95 12.82 0.04 0.92 437781
1988-89 13.36 14.03 0.12 0.78 426859
1989-90 13.83 14.18 0.25 0.59 321119
1990-91 13.53 13.71 0.33 0.51 346573
1991-92 14.33 14.84 0.37 0.97 311623
1992-93 15.20 15.00 0.74 1.08 366854
1993-94 15.20 15.32 1.02 1.06 349626
1994-95 17.82 18.66 0.87 1.70 344161
1995-96 21.40 21.43 1.28 1.54 383340
1996-97 22.72 22.12 1.92 1.56 346889
1997-98 23.37 22.63 1.62 1.82 351957
1998-99 23.82 23.15 1.77 1.13 324007
1999-00 26.71 25.01 2.67 1.60 331011
2000-01 29.70 26.87 2.66 1.42 282910
2001-02 30.63 27.35 2.70 1.27 267636
2002-03 35.41 28.90 4.50 1.45 264535
2003-04 38.58 31.17 4.84 1.47 268459
2004-05 41.32 34.39 4.38 2.08 294974
2005-06 44.39 39.19 4.47 3.79 323051
2006-07 50.20 44.33 4.89 4.39 --
CAGR 6.85 6.19 14.16 5.45 -1.01
Source: SAIL (2008), JPC (2007) and Government of India (2009)
* Estimated by using average of preceding two years and succeeding two years.
Appendix Table 3: Iron and Steel Industry Sample Firms‟ Websites Visited
Firm Websites
1. Bhushan Power & Steel Ltd. www.bhushanltd.com/
2. Bhushan Steel Ltd. www.bhushan-group.org/
3. Essar Steel Ltd. www.essarsteel.com/
4. Ispat Industries Ltd. www.ispatind.com/
5. J S W Steel Ltd. www.jsw.in/
6. Jindal Stainless Ltd. www.jindalstainless.com/
7. Lloyds Steel Inds. Ltd. www.lloydsgroup.com/
8. Mukand Ltd. www.mukand.com/
9. National Steel & Agro Inds. Ltd. www.nsail.com/
10. Rashtriya Ispat Nigam Ltd. www.vizagsteel.com/
11. Shree Precoated Steels Ltd. www.spsl.com/
12. Steel Authority of India Ltd. www.sail.co.in/
13. Tata Steel Ltd. www.tatasteel.com/
14. Uttam Galva Steels Ltd. www.uttamgalva.com/
Appendix Table 4: Indicators and Sub-indicators of Competitiveness for Indian Iron and St