GROUP NO: 9

STEEL INDUSTRY
HISTORY OF THE STEEL INDUSTRY

Before 1800 A.D., the iron and steel industry located where raw material power supply and
running water were easily available. after 1950, iron and steel industry began to located on
large areas of flat land near sea ports. The history of the modern steel industry began in
the late 1850s. Since then, steel has become a staple of the world's industrial economy. This
article is intended only to address the business, economic and social dimensions of the
industry, since the bulk production of steel began as a result of Henry Bessemer's
development of the Bessemer converter, in 1857. Previously, steel was very expensive to
produce, and was only used in small, expensive items, such as knives, swords and armor.

Technology
Steel is an alloy composed of between 0.2 and 2.0 percent carbon, with the balance being
iron. From prehistory through the creation of the blast furnace, iron was produced from
iron ore as wrought iron, 99.82–100 percent, and the process of making steel involved
adding carbon to iron, usually in a serendipitous manner, in the forge, or via
the cementation process. The introduction of the blast furnace reversed the problem. A
blast furnace produces an alloy of approximately 90 percent iron and 10 percent carbon.
When the process of steel-making is started with pig iron, instead of wrought iron, the
challenge is to remove a sufficient amount of carbon to reduce it to the 0.2 to 2 percentage
of steel

India
The Bengal Iron Works was founded at Kulti in Bengal in 1870 which began its production
in 1874 followed by The Tata Iron and Steel Company (TISCO) was established by Dorabji
Tata in 1907, as part of his father's conglomerate. By 1939 it operated the largest steel
plant in the British Empire. The company launched a major modernization and expansion
program in 1951.
Prime Minister Jawaharlal Nehru, a believer in socialism, decided that the technological
revolution in India needed maximization of steel production. He, therefore, formed a
government owned company, Hindustan Steel Limited (HSL) and set up three steel plants
in the 1950s.
The Indian steel industry began expanding into Europe in the 21st century. In January 2007
India's Tata Steel made a successful $11.3 billion offer to buy European steel maker Corus
Group. In 2006 Mittal Steel (based in London but with Indian management) merged with
Arcelor after a takeover bid for $34.3 billion to become the world's biggest steel
maker, ArcelorMittal (based in Luxembourg City), with 10% of the world's output

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 Major Companies
Steel plays a significant part in the construction industry. Being the skeleton of the design, it
provides fundamental support and strength. Steel is a mixture of iron, carbon, and a variety of other
elements. They feature great tensile strength and structural integrity, making them one-of-a-kind.

Currently, there are numerous brands of steel in the market, and filtering out the best one leads
you to your wit’s end. Here, we make it easier for you by bringing the top 10 best steel companies in
India...

1. TATA Steel

Tata Steel was founded in India in 1907 as Asia's first integrated private steel firm, and it is now
one of the world's largest low-cost steel producers. With a focus on growth projects, lower net debt
levels, stronger return ratios, and, last but not least, significant cost savings, the company's financial
and operational performance for FY21 suggests that it generated good free cash flow. Along with
the obvious improvement in Indian markets, its European facilities (which were previously viewed
as a problem child) are likely to perform better, particularly in terms of free cash flow generation.
Management's confidence in the company's growth story is demonstrated by plans to increase
capacity from 21 mt to 35-40 mt by 2030. In FY21, Tata Steel increased its market share in the
Indian car sector and increased exports (in line with the industry). Its iron ore prices are still
among the cheapest in the world. As a result, in a strong steel cycle environment, it gives one of the
highest operating leverages (and financial leverage) in the world. TATA Steel is counted among the
best steel companies for major projects within the countries.

TATA STEEL FY 21 FY20

Revenue 156,294.18 148971.71

Profit 7490.22 1556.54

2. Vedanta

Vedanta entered the steel market once it acquired a 90% stake in ESL Steel Limited (ESL). Through
the Corporate Insolvency Resolution Process, created to handle the resolution of non-performing
assets in the Indian banking sector, Vedanta Limited obtained management control of ESL in June
2018. Vedanta wants to expand its steel operations in Bokaro through brownfield development and
become one of the country's top steel manufacturers. It is looking forward to broadening horizons
and breaking down barriers in both current and future initiatives, as well as bringing ongoing
growth, profit, and success to all of its stakeholders. As part of its brownfield expansion of 5 million
tonnes, Vedanta Ltd plans to concentrate on long products and ductile iron products

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 Vedanta FY 21 FY20

Revenue 86863.00 84447.00

Profit 11602.00 -6664.00

3. JSW Steel

JSW Group is one of India's most prestigious corporate conglomerates. In the last three decades, it
has developed from a single production unit to become India's largest integrated steel corporation,
with a capacity of 28 MTPA in India and the United States Since its inception, the company has
always been on the cutting edge of research and development. In addition to construction and
infrastructure, the products are used in several other industries including automobile, electrical
applications, appliances, etc. As a company with superior business that practices sustainable
measures, makes JSW Steel is widely respected firm. Since 2008, JSW Steel has been ranked among
the top 15 global steel producers by World Steel Dynamics for the 13th year in a row, making it the
only Indian company to reach that stage.

JSW Steel FY 21 FY20

Revenue 79839.00 73326.00

Profit 7911.00 4030.00

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 MARKET SHARE
The India special steel market size was valued at $7.0 billion in 2020, and is projected to
reach $38.8 billion by 2035, growing at a CAGR of 10.9% from 2021 to 2035.

In FY22 (till January), the production of crude steel and finished steel stood a 98.39 MT and
92.82 MT, respectively. According to CARE Ratings, crude steel production is expected to
reach 112-114 MT (million tonnes), an increase of 8-9% YoY in FY22. The consumption of
finished steel stood at 86.3 MT in FY22 (till January). Between April 2021-January 2022,
the consumption of finished steel stood at 86.3 MT.

In January 2022, India's finished steel consumption stood at 9.65 MT.

In FY22 (until February 2022), exports and imports of finished steel stood at 12.2 MT and
4.3 MT, respectively. In April 2021, India's export rose by 121.6% YoY, compared with
2020. In FY21, India exported 9.49 MT of finished steel.

The steel industry and its associated mining and metallurgy sectors have seen major
investments and developments in the recent past.

According to the data released by the Department for Promotion of Industry and Internal
Trade (DPIIT), between April 2000-December 2021, Indian metallurgical industries
attracted FDI inflows of US$ 16.1 billion.

In FY22, demand for steel is expected to increase by 17% to 110 million tonnes, driven by
rising construction activities.

The global steel market attained a value of about USD 841 billion in 2020. The market is
further expected to grow in the forecast period of 2022-2027 at a CAGR of 3.1% to reach
nearly USD 1010 billion by 2026.

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The market size of Steel in India is huge. According to available data, the production of
crude steel and finished steel in FY21 stood a 102.49 MT and 94.66 MT, respectively.
According to CARE Ratings (Credit Analysis & Research Ltd), crude steel production is
expected to reach 112-114 MT (million tonne), an increase of 8-9% YoY in FY22. The
consumption of finished steel stood at 93.43 MT in FY21. Between April 2021 and
September 2021, finished steel consumption stood at 49.11 MT. In May 2021, finished steel
production stood at 7.8 MT and in June 2021, SAIL’s crude steel production stood at 1.30
MT and saleable steel production was 1.27 MT.

The Exports and imports of finished steel stood at 7.75 MT and 2.37 MT, respectively, in
FY22 (until September 2021). In April 2021, India’s export rose by 121.6% YoY, compared
with 2020. In FY20, India exported 8.24 MT of finished steel.

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 FUTURE PLANS
The steel industry is one of India’s core industries, contributing to slightly more than 2 % of
GDP. According to the national steel policy, the business has planned to accomplish 300
MTPA by 2030-2031 and become independent in manufacturing a few special grades. The
planned capacity expansion and demand growth is expected to leverage Rs 10 lakh crore
incremental capital infusion and 30 GW power supply to the steel business. India’s steel
industry employs more than 20 lakh individuals through direct and indirect positions. It is
expected to grow to produce 36 lakh employments by 2031- broadly adding to the
country’s economic success directly (total value creation) and indirectly by assisting with
building buying power through the generation of employment.

The Indian government has announced a variety of initiatives over the years to promote
the development of the domestic steel industry, for instance, advancing steel-consuming
businesses, for example, infrastructure projects, including rail transport network,
dedicated freight corridors, high-speed railway tracks, affordable housing projects, and
low-cost power transmission. The Ministry of Steel has likewise made efforts to support
this area over the past few years. Some drivers include securing raw materials and helping
efficient production stream by using digitization in mining, promoting a shift to an energy-
efficient and environmentally friendly steel industry, expanding the capabilities of
domestic steel plants, enabling supply through phrased best-in-class greenfield and
brownfield capacity addition, and setting up value adding coast-based steel clusters for
logistical transformation.

All the major steelmakers in India have deferred the capacity addition plans of almost 15
MT in the last two years. In early FY21, Indian steel players saw utilizations reduced by 5 to
10 percent compared with previous years; some players also had higher dependence on
exports. For most players, sustained negative cash-flows cannot support high leverage. But
India has raw materials cost advantage with huge iron ore reserves; the cost curve will
tend to lower with raw materials, logistics, productivity, and energy improvements.

Infrastructure growth requires the availability of steel, stainless steel, cement, tiles,
ceramics, and many such infrastructural materials. IDCOL, with its prospective and leased
mining assets and related plant and machinery in iron ore, ferrochrome, limestone, and
heavy minerals, is ideally positioned to capitalize on these opportunities. While the current
operations and balance sheet indicate past performance, the potential for future
performance and value addition through the assets of IDCOL and its subsidiaries can be
significant. However, this will require reshaping the investments, market, and operations
strategy for IDCOL and its subsidiaries to create value-added products and services for the
market while exploring synergies with other related firms.

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India’s GDP growth is expected to remain muted. Therefore, the steel industry’s growth will
likely stay strong in 2022 — overcoming the challenges mentioned above. Consequently,
the country will need a strategy and revival plan to mitigate the impact of the pandemic
induced slowdown

Steel industry can play an integral role in steering India towards a $5 trillion economy by
2025, as per the EY-CII report titled ‘Steering India into a US$5 trillion economy with Steel’.
“The India steel sector has been vibrant and has been growing at a CAGR of about 5
percent-6 percent y-o-y. With a V-shaped demand recovery post-COVID, policy
announcements made by the government across sectors, including rail, road, aviation, gas
pipeline, and housing and changes in global supply demand equations, the industry has
made record production and growth,” the report read. Growth of crude steel production in
India has not kept pace with the growth in capacity of production, according to the report.
As per this report, steel sector contributes ~2 per cent to India’s GDP and employs half a
million people directly and 2 million people indirectly. This report illustrates as of FY21,
India is the world’s second largest steel producer with ~102.5 MT production and an
installed capacity of 142.2 MT. On the consumption front, India is the third largest steel
consumer in the world and has a finished steel consumption of 94.9 MT in FY21. Sectors
that have emerged as leaders in using finished steel are -- construction (62 percent);
capital goods (15 percent); automotive (9 percent); intermediate products (6 percent);
consumer durables (5 percent); and railways (3 percent) as of July 2021.

The National Steel Policy, 2017 envisage 300 million tonnes of production capacity by
2030-31. The per capita consumption of steel has increased from 57.6 kgs to 74.1 kgs
during the last five years. The government has a fixed objective of increasing rural
consumption of steel from the current 19.6 kg/per capita to 38 kg/per capita by 2030-31.

As per Indian Steel Association (ISA), steel demand will grow by 7.2% in 2019-20 and
2020-21.

Huge scope for growth is offered by India’s comparatively low per capita steel consumption
and the expected rise in consumption due to increased infrastructure construction and the
thriving automobile and railways sectors.

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Some Measure Investment By The Steel Companies In India

• In October 2021, Tata Steel was planning to set up more scrap-based facilities that
will have a capacity of at least a billion tonnes by 2025.

• In October 2021, JSW Steel invested Rs. 150 billion (US$ 19.9 million) to build a steel
plant in Jammu and Kashmir and boost manufacturing in the region.

• In October 2021, ArcelorMittal and Nippon Steel Corp.'s joint venture steel firm in
India, announced a plan to expand its operations in the country by investing ~Rs. 1
trillion (US$ 13.34 billion) over 10 years.

• In August 2021, Tata Steel announced to invest Rs. 8,000 crore (US$ 1.08 billion) in
capital expenditure to develop operations in India in FY22.

• In August 2021, ArcelorMittal announced to invest Rs. 1 lakh crore (US$ 13.48
billion) in Gujarat for capacity expansion.

• In August 2021, Tata Steel announced to invest Rs. 3,000 crore (US$ 404.46 million)
in Jharkhand to expand capacities over the next three years.

• In August 2021, Jindal Steel & Power Ltd. announced plans to invest US$ 2.4 billion
to increase capacity over the next six years to meet the rising demand from
customers.

• In the next three years from June 2021, JSW Steel is planning to invest Rs. 47,457
crore (US$ 6.36 billion) to increase Vijayanagar's steel plant capacity by 5 MTPA and
establish a mining infrastructure in Odisha.

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 Major Problems faced by Indian Iron and Steel Industry

1. Capital:

Iron and steel industry requires large capital investment which a developing country like

India cannot afford. Many of the public sector integrated steel plants have been established

with the help of foreign aid.

2. Lack of Technology:

Throughout the 1960s and up to the oil crisis in mid-1970s, Indian steel industry was

characterized by a high degree of technological efficiency. This technology was mainly from

abroad. But during the following two decades after the oil crisis, steep hike in energy costs

and escalation of costs of other inputs, reduced the margin of profit of the steel plants. This

resulted in lower levels of investment in technological developments. Consequently, the

industry lost its technology edge and is now way behind the advanced countries in this

regard. Material value productivity in India is still very low.

3. Low Productivity:

The per capita labour productivity in India is at 90-100 tonnes which is one of the lowest in

the world. The labour productivity in Japan, Korea and some other major steel producing
countries is about 600-700 tonnes per man per year. At Gallatin Steel a mini mill in the U.S.

there are less than 300 employees to produce 1.2 million tonnes of hot rolled coils. A

comparable facility in India employs 5,000 workers. Therefore, there is an urgent need to

increase the productivity which requires retraining and redevelopment of the labour force.

4. Inefficiency of public sector units:

Most of the public sector units are plagued by inefficiency caused by heavy investment on

social overheads, poor labour relations, inefficient management, underutilization of

capacity, etc. This hinders proper functioning of the steel plants and results in heavy losses.

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5. Low potential utilization:

The potential utilization in iron and steel is very low. Rarely the potential utilization

exceeds 80 per cent. For example, Durgapur steel plant utilizes only 50 per cent of its

potential. This is caused by several factors, like strikes, lockouts, scarcity of raw materials,

energy crisis, inefficient administration, etc.

6. Heavy demand:

Even at low per capita consumption rate, demand for iron and steel is

increasing with each passing day and large quantities of iron and steel are to be imported

for meeting the demands. Production has to be increased to save precious foreign

exchange.

7. Shortage of metallurgical coal:

Although India has huge deposits of high-grade iron ore, her coal reserves, especially high-

grade cooking coal for smelting iron are limited. Many steel plants are forced to import

metallurgical coal. For example, steel plant at Vishakhapatnam has to import coal from

Australia. Serious thought is now being given to replace imported coal by natural gas from

Krishna-Godavari basin.

8. Inferior quality of products:

Lack of modern technological and capital inputs and weak infrastructural facilities leads to

a process of steel making which is more time consuming, expensive and yields inferior

variety of goods. Such a situation forces us to import better quality steel from abroad. Thus,

there is urgent need to improve the situation and take the country out of desperate

position.

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