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INDIA AHOY!!!!!

INDIA AHOY!!!!!. STEEL SECTOR. Russia 68.5 mT. Japan 118.7 mT. USA 91.4 mT. India 58.1 mT. Brazil 33.7 mT. World Steel Industry – Top Ten. 8. 1. 4. 7. Ukraine 38.6 mT. Germany 45.8 mT. China 502 mT. 2. 10. Italy 30.6 mT. S. Korea 53.6 mT. 3. 6. 5. 9.

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INDIA AHOY!!!!!

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  1. INDIA AHOY!!!!!

  2. STEEL SECTOR

  3. Russia 68.5 mT Japan 118.7 mT USA 91.4 mT India 58.1 mT Brazil 33.7 mT World Steel Industry – Top Ten 8 1 4 7 Ukraine 38.6 mT Germany 45.8 mT China 502 mT 2 10 Italy 30.6 mT S. Korea 53.6 mT 3 6 5 9 Global crude steel Production: 1326.5 million tonnes (mT) Source: IISI

  4. Global ranking of Indian steel

  5. Indian Steel Industry

  6. Supply With trade barriers having been lowered over the years, imports play an important role in the domestic markets.Demand The demand is derived from sectors that include infrastructure, consumer durables and automobiles.Barriers to entry High capital costs, technology. Bargaining power of suppliers The government’s move on railway freight costs and grid power costs would determine the final price of the metal. Bargaining power of customers High, presence of a large number of suppliers and access to global markets.Competition High, presence of a large number of players in the unorganized sector.

  7. Indian Potential for Steel Huge Potential for Demand • High GDP growth rate of 7% • 1 billion population • Low per capita steel consumption of 33kg (World av. 181 kg) Growth factors for India Abundant Iron Ore Skilled Human Resources Reserves 23 billion tonnes Government Policy • Encouraging trade relations with ASEAN and other countries • Infrastructure building • Exploring new Energy resources • Stable currency • Easing of regulations • Strong Banking & judicial system

  8. Indian Steel Industry – An Overview • Fifth largest producer of steel in the world and second largest producer of crude steel - Press Information Bureau • Steel production reached 28.49 million tonne (MT) in April-September 2009. • About 50% of the steel produced in India is exported. • India accounts for over 7% of the total steel produced globally • India accounts for around 5 per cent of the global steel consumption • Huge Iron Ore reserves – 23 bn. tonnes • Indian Steel Producers are increasingly looking for overseas acquisitions in steel as well as raw materials. • Positive overall growth in the production of crude steel

  9. Composition of Steel Production -A Value Proposition HR

  10. Steel - Products

  11. Indian Steel IndustrySWOT Analysis

  12. SWOT ANALYSIS OF INDIAN STEEL INDUSTRY • STRENGTHS • Abundant resources of iron ore • Low cost and efficient labour force • Strong managerial capability • Strongly globalised industry and emerging global competitiveness • Modern new plants & modernised old plants • Strong DRI production base • Regionally dispersed merchant rolling mills • WEAKNESSES • High cost of energy • Higher duties and taxes • Infrastructure • Quality of coking coal • Labour laws • Dependence on imports for steel manufacturing equipments & technology • Slow statutory clearances for development of mines

  13. SWOT ANALYSIS OF INDIAN STEEL INDUSTRY • THREATS • Slow growth in infrastructure development • Market fluctuations and China’s export possibilities • Global economic slow down • OPPORTUNITIES • Huge Infrastructure demand • Rapid urbanisation • Increasing demand for consumer durables • Untapped rural demand • Increasing interest of foreign steel producers in India

  14. Michael Porters Five Forces Analysis Buyers’ Power • Increasing Demand for Steel • Fragmented Coke Suppliers Suppliers’ Power • High Raw Material Prices • Lack of Captive Source Hurting Steel Producers • Lack of Transportation • Backward Integration Intensity of Competition • Competition from Foreign Players • Spurt in Merger and Acquisition Activities Threat of New Entrants • High Cost of Basic Inputs and Services Threat of Substitutes • Use of Aluminum/Plastic

  15. PEST Analysis Political Factors • Recommendations on Captive Mines • National Steel Policy to Remove Bottlenecks Economic Factors • GDP Growth Rate • Reduction in Customs Duty Social Factors • Rural-Urban Divide • Higher Disposable Income Technological Factors • Popularity of Steel Portals • Application of SML (Steel Markup Language)

  16. Top 10 Players • 1st; 103.3 mmt; ArcelorMittal • 2nd; 37.5 mmt; Nippon Steel • 3rd; 35.4 mmt; Baosteel Group • 4th; 34.7 mmt; POSCO • 5th; 33.3 mmt; Hebei Steel Group • 6th; 33.0 mmt; JFE • 7th; 27.7 mmt; Wuhan Steel Group • 8th; 24.4 mmt; Tata Steel • 9th; 23.3 mmt; JiangsuShagang Group • 10th; 23.2mmt; U.S. Steel Source: World Steel Association

  17. ArcelorMittal • largest steel company, with 315,867 employees in more than 60 countries. • formed in 2006 by the merger of Arcelor and Mittal Steel. ($38.3 billion ) • It ranks 28th on the 2009 Fortune Global 500 list. • the market leader in steel for use in automotive, construction, household appliances and packaging. • ArcelorMittal is looking to develop positions in the high-growth Indian and Chinese markets.

  18. MAJOR PLAYER - SAIL • fully integrated iron and steel maker. • GOI - 86% of SAIL's equity • However, SAIL, by virtue of its "Navratna" status, enjoys significant operational and financial autonomy. • SAIL and TISCO (which enjoy the benfits of captive ore mines) are among the lowest cost producers of steel in the world.

  19. Major units of SAIL are as under: . Integrated Steel Plants • Bhilai Steel Plant (BSP) in Chhattisgarh • Durgapur Steel Plant (DSP) in West Bengal • Rourkela Steel Plant (RSP) in Orissa • Bokaro Steel Plant (BSL) in Jharkhand Special Steel Plants • Alloy Steels Plants (ASP) in West Bengal • Salem Steel Plant (SSP) in Tamil Nadu • Visvesvaraya Iron and Steel Plant (VISL) in Karnataka Subsidiaries • Indian Iron and Steel Company (IISCO) in West Bengal • Maharashtra Elektrosmelt Limited (MEL) in Maharashtra • Bhilai Oxygen Limited (BOL) in New Delhi

  20. SAIL’S GROWTH PLANS mT - Planned Investments of US$ 7.7 bn. - Includes only growth in existing Units

  21. Other Major steel producers • Tisco • JSW • Essar Steel • RINL • MECON • MOIL • MSTC • KIOCL • NMDC

  22. TATA STEEL LIMITED • Tisco -1907 • country's single largest • Integrated steel plant • ranks 34th in the world • Technical collaboration with Nippon Steel & Arcelor • In January 2007 Tata Steel made a successful $11.3 billion offer to buy European steel maker Corus Group PLC.

  23. STEEL SECTOR TRENDS • India - world’s largest producer of direct reduced iron (DRI) or sponge iron with nearly 20 million tonnes production in 2008-09. • Estimated steel production capacity -124 million tonnes by the year 2011-12. • Generate additional employment of around 4 million by 2020 for production of around 295 million tonnes of crude steel by 2019-2020. • 222 MoUs have been signed with various States for planned capacity of around 276 million tonnes

  24. Steel: Key facts

  25. Performance of PSUs

  26. Production, consumption and growth of steel

  27. Crude steel production

  28. Trends in production, private/public sector

  29. Turnaround in Industrial Activity Services Industry Agriculture Services and Industry contribute to higher GDP growth

  30. Indian Steel Growth-Slowly, Steadily Confidence Stagnation Decontrol Controlled Regime 1991 2005 1951

  31. Proof of the Pudding !

  32. Booming Capital Market

  33. Other Key Indicators • Exports crossed US$100bn. mark in 2005-06. Fourth consecutive year of more than 20% exports growth • Imports of Capital goods increasing • Moderate inflation rate - within 4-5% • Stable Rupee against US dollar • Growing corporate sector profits • Growing Forex reserves - US$ 160 bn. • Business Confidence at all time high

  34. Steel Sector TheBack Seat Drivers!

  35. BOOMING STEEL CONSUMING SECTORS Capital Goods Construction Manufacturing Consumer Durables Industrial growth led by Manufacturing Capital and Consumer Goods sectors flag bearers of manufacturing sector growth

  36. INDIA’S CRUDE STEEL PRODUCTION (MT) HISTORIC TRENDS 58 mT in 2008 1.25 mT in 1948 16.2 mT in 1991 6.6 mT in 1973 HIGH GROWTH India gains independence in 1947 MODEST GROWTH Enabled by India’s Economic liberalization process SLOW GROWTH * Year indicates FY

  37. Apparent Finished Steel Consumption (mT) CAGR – 7.0%

  38. National Steel PolicyAddressing the Weaknesses &Harnessing the Opportunities Approved by Government of India in September 2005

  39. OBJECTIVE • To have modern and efficient steel industry of world standards, catering to diversified steel demand. • To achieve global competitiveness in cost, quality, product-mix, efficiency and productivity • To attain Finished Steel production of 110 mTpa by 2019-20

  40. STRATEGY • Demand Side • Strengthening of delivery chain • Interface between producers, designers of steel intensive products, fabricators and ultimate user • Creating awareness about cost-effective and technically efficient end-use of steel • Supply side • Enhanced and easy access to critical inputs – iron ore & coking coal • Expansion and improvement in quality of infrastructure • Well developed financial market • Increased focus on R&D, training of manpower and integrated information services

  41. New Capacities

  42. SAIL Tata Steel RINL Essar Bhushan JSPL JSW Ispat Sterlite Mittal POSCO MMK Proposed state-wise capacity additions upto 2012. J’khand: 34 mtpa W Bengal: 4 mtpa Ch’garh: 9 mtpa Orissa : 38 mtpa AP: 3.3 mtpa Karnataka: 9.7 mtpa

  43. Future of Indian Steel Industry You ain’t seen nothing yet !

  44. Projected per Capita consumption of Finished Steel in India (kg) India’s current population is - 1100 million It is assumed that till 2051, population would be about : 1.4 bn.

  45. GROWTH SCENARIOS * - Also projected by National SteelPolicy

  46. INDIAN STEEL INDUSTRY A BRIGHT FUTURE RESOURCES • Abundant Iron Ore reserves • Strong Managerial skills in Iron and Steel making • Large pool of skilled Man-power • Established steel players with strong skills in steel making OPPORTUNITIES • High economic growth driven increasingly by industry • Faster Urbanisation • Increased Fixed Asset Building • Automobiles and component industry growth POLICY • Pro-active stance of Govt. • Encouragement for overseas investments

  47. Currently with a production of 56 million tones India accounts for over 7% of the total steel produced globally, while it accounts to about 5% of global steel consumption. • The steel sector in India grew by 5.3% in May 2009. Globally India is the only country to post a positive overall growth in the production of crude steel at 1.01% for the period of January – March in 2009.

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