Documente Academic
Documente Profesional
Documente Cultură
Prepared and
Submitted by:
-------------------
Amit Agrawal
MBA (IB), 2006-08
School of Economics,
DAVV, Indore.
CONTENTS
1) TITLE
2) INTRODUCTION
3) REVIEW OF LITERATURE
4) OBJECTIVES
5) RESEARCH METHODOLOGY
a) Research design
b) Data collection method
6) DATA ANALYSIS
7) FINDINGS
8) BIBLIOGRAPHY
INTRODUCTION
Steel, the recycled material is one of the top products in the manufacturing
sector of the world.
The Asian countries have their respective dominance in the production of the
steel all over the world. India being one among the fastest growing economies of the
world has been considered as one of the potential global steel hub internationally.
Over the years, particularly after the adoption of the liberalization policies all over the
world, the World steel industry is growing very fast.
Steel Industry is a booming industry in the whole world. The increasing demand
for it was mainly generated by the development projects that have been going on
along the world, especially the infrastructural works and real estate projects that has
been on the boom around the developing countries. Steel Industry was till recently
dominated by the United Sates of America but this scenario is changing with a rapid
pace with the Indian steel companies on an acquisition spree. In the last one year, the
world has seen two big Mergers & Acquisitions deals to take place:-
• The Mittal Steel, listed in Holland, has acquired the world's largest steel
company called Arcelor Steel to become the world's largest producer of Steel
named Arcelor-Mittal.
• Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth
largest steel company, Corus, with the highest ever stock price.
It has been observed that Steel Industry has grown tremendously in the last one
and a half decade with a strong financial condition. The increasing needs of steel by
the developing countries for its infrastructural projects have pushed the companies in
this industry near their operative capacity.
The most significant growth that can be seen in the Steel Industry has been
observed during the period 1960 to 1974 when the consumption of steel around the
whole world doubled. Between these years, the rate at which the Steel Industry grew
has been recorded to be 5.5 %. This roaring market saw a phase of deceleration from
the year 1975 which continued till 1982. After this period, the continuous fall slowed
down and again started its upward movement from the early 1990s.
Steel Industry is becoming more and more competitive with every passing day.
During the period 1960s to late 1980s, the steel market used to be dominated by
OECD (Organization for Economic Cooperation and Development) countries. But with
the fast emergence of developing countries like China, India and South Korea in this
sector has led to slipping market share of OECD countries. The balance of trade line
is also tilting towards these countries.
The main demand creators for Steel Industry are Automobile industry,
Construction Industry, Infrastructure Industry, Oil and Gas Industry, and Container
Industry.
New innovations are also taking place in Steel Industry for cost minimization and
at the same time production maximization. Some of the cutting edge technologies that
are being implemented in this industry are thin-slab casting, making of steel through
the use of electric furnace, vacuum degassing, etc.
In the year 2004, the global steel production has made a record level by crossing
the 1000 million tones. Among the top producers in the steel production, China ranked
1 in the world.
The iron and steel industry not only directly accounts for about 2% of GDP, it also
has a bearing on how the consumer goods and downstream infrastructure sectors
develop. Further, with a share of approximately 10%, the sector is amongst the largest
contributors to the central excise. India accounted for 3.4% of the estimated world
steel production of 1,129 million tonnes (mt) during 2005. At present, India is the 7th
largest crude steel producing country in the world.
Size of Industry-
• This sector represents around Rs. 1 trillion of capital investments, and directly
provides employment to around 0.5 million, with the integrated steel plants
accounting for a 40% share.
• The iron and steel sector also contributes around 6.2% of India’s manufactured
goods exports and 4.6% of total exports by value.
• The industry is dominated by large integrated players like SAIL and Tata Steel
in steel.
• The Public sector has a significant presence in this industry, Steel Authority of
India Ltd. (SAIL) has 32% of India’s installed capacity of crude steel.
• Tata Steel and Essar Steel are the major private players in the industry.
• The global (and Indian) steel industry also suffers from cycles of over capacity
and shortages. This too leads to cyclically falling/rising prices and industry
losses/profits.
• Integrated steel producers (ISPs)—Tata Steel and SAIL—face high fixed costs,
and thus in a downturn, the percentage profit margins come down significantly.
The downturn phases have witnessed depressed prices at the firm level and
widespread operating losses.
• Economic logic differs for mini mills that can vary output more quickly when
prices fall.
Now let’s first understand the meaning and difference between Public Sector
Company and Private Sector Company. The term “Private Company” refers to
ownership of a business company in two different ways— First, referring to ownership
by non-governmental organizations; and second, referring to ownership of the
company's stock by a relatively small number of holders who do not trade the stock
publicly on the stock market.
Often, privately held companies are owned by the company founders and/or their
families and heirs or by a small group of investors. Sometimes employees also hold
shares of private companies. Most small businesses are privately held.
Private companies may be called corporations, limited liability companies, partnerships, sole
proprietorships, business trusts, or other names, depending on where and how they are
organized.
The term "Public Company" thus refers to a government-owned corporations. and the
ownership of assets and interest is shared by people. Normally, the shares of a public
company are owned by many investors. However, a company with many shareholders
is not necessarily a public company. The shares of a public company are often traded
on a stock exchange. The value or "size" of a public company is called its market capitalization
It is able to raise funds and capital through the sale of its securities. This is the
reason why public corporations are so important: prior to their existence, it was very
difficult to obtain large amounts of capital for private enterprises. In addition to being
able to easily raise capital, public companies may issue their securities as
compensation for those that provide services to the company, such as their directors,
officers, and employees.
TATA Steel:
Tata Steel is India's largest integrated private sector steel company. Established
in 1907, The Company is backward integrated with owned iron ore mines and
collieries. Tata Steel has an integrated steel plant, with an annual crude steel making
capacity of 5 million tonne, located at Jamshedpur, Jharkhand.
The steel works is situated at Jamshedpur in the state of Jharkhand, India. The
factory covers 800 hectares of land. West Bokaro sub division in Hazaribagh district
overs 2000 hectares of land in which mining and coal beneficiation activities are
performed. Jharia Division occupies 2500 hectares of land for its industrial, mining and
domestic activities in the district of Dhanbad both in the state of Jharkhand. The iron
ore and dolomite mines are located at Noamundi in the state of Jharkhand and at
Joda, Kalamati, Khondbond and Gomardih in the state of Orissa.
Over the years, Tata Steel has emerged as a thriving, nimble steel enterprise
due to its ability to transform itself rapidly to meet the challenges of a highly
competitive global economy and commitment to become a supplier of choice.
Constant modernization and introduction of state-of-the-art technology at Tata Steel
has enabled it to stay ahead in the industry.
Tata Steel has completed the first nine months of fiscal 2006-07 with impressive
increase in its production and sales volumes. The hot metal production at 4.1 million
tonne is 8.2% more compared to the last year in the corresponding period and crude
steel production at 3.7 million tonne is higher by 7.9% compared to the last year in first
three quarters.
Acquisition of Corus: Recently Tata Steel acquired the Anglo-Dutch steel maker
Corus, thus emerging as the fifth largest steel producer in the world.
The steel major has won the Prime Minister's Trophy four times. This award is
instituted by the Indian ministry of steel and awarded to the country's best integrated
steel plant. In 2000, it became the first Tata company to win the JRD Tata QV award,
given to the company with 'world class' operations under the Group's Tata Business
Excellence Model
Areas of business
Apart from the main steel division, Tata Steel's operations are grouped under
strategic profit centres like tubes, growth shop (for its steel plant and material handling
equipment), bearings, ferro alloys and minerals, rings, agrico and wires.
Tata Steel's products include hot and cold rolled coils and sheets, tubes, wire
rods, construction bars, structurals, forging quality steel, rings and bearings. In an
attempt to 'decommoditise' steel, the company has recently introduced brands like
Tata Steelium (India's first branded cold rolled steel), Tata Shaktee (galvanised
corrugated sheets), Tata Tiscon (re-rolled bars), Tata pipes, Tata bearings, Tata
Wiron (galvanised wire products) and Tata Agrico (hand tools and implements).
Essar Steel is an integrated steel producer, with operations all along the value
chain. Essar Steel produces some of the world’s best steel at its state-of-the-art steel
complex at Hazira, Gujarat. It is also India’s largest exporter of flat products, sending
half of its production abroad, mainly to the highly demanding markets of the west, and
the growth markets of South East Asia and Middle East. Essar ensures excellent
customer services through a modern distribution network.
Essar Steel’s core manufacturing facilities are located at its steel complex in
Hazira, Gujarat. The Hazira complex includes a 5.5 million tonne per annum Hot
Briquetted Iron (HBI) plant, a 4.6 mtpa continuous caster slab facility, a 3.6 million
tonne per annum Hot Rolled Coils (HRC) and a 1.2 mtpa cold roll mill complex with all
down stream facilities. The facilities are complemented by its own 8.0 mtpa pellet plant
at Vishakapatnam and 0.4 million tonne per annum cold rolled coil plant at Indonesia.
Expansion
Presently Essar Steel has embarked upon a capacity expansion for
enhancement of its production capacity from 4.6 million tonne per annum to 7.6 million
tonne per annum. The capacity expansion programme will consist of 2 units of Corex
units of 1.5 million tonne per annum each. Further value addition will be carried out by
Continuous Strip Caster Mill, conventional Slab Caster Mill and a 5.2 meter Wide Plate
Mill.
Products
All Essar Steel’s products are world class, meeting the highest international
standards, supported by excellent marketing and service.
JSW Steel Ltd. is a 3.8 million tonne per annum integrated steel plant, having a
process route consisting broadly of iron ore beneficiation – pelletisation – sintering –
coke making – iron making through blast furnace as well as Corex process – steel
making through BOF–continuous casting of slabs – hot strip rolling. The production
facilities include 3.0 million tonne per annum iron ore beneficiation unit, 5.0 million
tonne per annum pellet plant, 3.2 million tonne per annum sinter plant, 1.2 million
tonne per annum coke ovens, 0.9 + 1.3 million tonne per annum blast furnaces, two
Corex units of 0.8 million tonne per annum each, 3 X 130 t converters, three slab
casters, and a 2.5 million tonne per annum hot strip mill with state-of-the-art coil box
technology.
During this year, JSW Steel has also been conferred with a number of awards.
Production Performance
Jindal Steel and Power Ltd. (JSPL), part of the $4 billion Jindal Organisation, has
business interests in steel, power generation, mining iron ore, coal and diamond
exploration/mining. The current turnover of the company is over Rs. 3,000 crore. JSPL
is the world’s largest producer of coal based sponge iron. The product range
encompasses 27 steel slabs, rounds, blooms and beam blanks. JSPL is producing
rails and H beams and columns in technical collaboration with JFE Corporation,
Japan. These H-beams are the most desired option of structural engineers worldwide.
JSPL is the largest private sector investor in the state of Chhattisgarh with a total
investment commitment of more than Rs. 10,000 crore. The company is also setting
up a 6 million tonne steel plant in Orissa with an investment of Rs. 13,500 crore and a
5 million tonne steel plant in Jharkhand with an investment of Rs 11,500 crore.
Ispat Industries Ltd. (IIL) has set up integrated steel plants at Dolvi (district
Raigad), a backward region of Maharashtra, with a capacity of 3 million tonne of hot
rolled coils per annum. The plant has got a 2.24 million tonne per annum sintering
plant, 2 million tonne per annum blast furnace and 1.6 million tonne per annum gas
based sponge iron plant. IIL have uniquely combined the usage of hot metal and
sponge iron in the electric arc furnace for production of liquid steel for the first time in
India. IIL have also adopted the state-of-art technology called Compact Strip
Production (CSP) process, which has been installed for the first time in India and
produces high quality and very thin gauges of Hot Rolled Coils (HRC). The IIL’s
products are accepted in the domestic and international market.
The production performance of IIL during last three years has been as follows:
The two thin slab casters each with designed capacity to cast 55 and 60 mm slabs
with Iiquid Core Reduction (LCR) features available. Ispat’s casters have achieved
global benchmark in annual production, as confirmed by Steel Melting Shop (SMS)
Demag, the technology supplier.
• JISCO.
• Saw Pipes.
• Mukand Ltd.
• NMDC.
The Government of India owns about 86% of SAIL's equity and retains voting
control of the Company. However, SAIL, by virtue of its ‘Navratna’ status, enjoys
significant operational and financial autonomy
Ranked amongst the top ten public sector companies in India in terms of
turnover, SAIL manufactures and sells a broad range of steel products, including hot
and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals,
railway products, plates, bars and rods, stainless steel and other alloy steels. 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, including the Company's iron ore, limestone and dolomite
mines. The company has the distinction of being India’s 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.
SAIL's wide range of long and flat steel products is much in demand in the
domestic as well as the international market. This vital responsibility is carried out by
SAIL's own Central Marketing Organisation (CMO) and the International Trade
Division. CMO encompasses a wide network of 34 branch offices and 54 stockyards
located in major cities and towns throughout India.
With technical and managerial expertise and know-how in steel making gained
over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers
services and consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and Steel
(RDCIS) at Ranchi which helps to produce quality steel and develop new technologies
for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and
Technology (CET), Management Training Institute (MTI) and Safety Organisation at
Ranchi. Our captive mines are under the control of the Raw Materials Division in
Kolkata. The Environment Management Division and Growth Division of SAIL operate
from their headquarters in Kolkata. Almost all our plants and major units are ISO
Certified.
Subsidiary
Joint Ventures
SAIL has promoted joint ventures in different areas ranging from power plants to e-commerce.
Financial Performance
During the year 2005-06 the company recorded a turnover of Rs. 247.33 crore
(including conversion income of Rs. 171.10 crore) and made a net profit after tax of
Rs. 20.97 crore. The turnover and net profit after tax of the company during April,
2006 to December, 2006 were Rs. 220.26 crore (provisional) and Rs. 17.48 crore
(provisional) respectively.
Production Performance
(in tonne)
Visakhapatnam Steel Plant (VSP) is the first shore based integrated steel plant
located at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August
1992 with a capacity to produce 3 million tonne per annum of liquid steel. The plant
has been built to matching international standards in design and engineering with the
state-of-the-art technology, incorporating extensive energy saving and pollution
control measures. VSP has an excellent layout, which can be expanded to over 10
million tonne per annum capacity. Right from the year of its integrated operation, VSP
established its presence both in the domestic and international markets with its
superior quality of products. VSP has been awarded all the three International
Standards Certificates, namely, ISO 9001:2000, ISO 14001:1996 and OHSAS
18001:1999. The company has taken significant strides in the area of Corporate
Social Responsibility.
Production Performance
NMDC operates the largest mechanised iron ore mines in the country at Bailadila
(Chhattisgarh) and Donimalai (Karnataka). The silica sand project is at Lallapur,
Allahabad and the diamond mine is situated at Panna (Madhya Pradesh). Mining
activities at DMP, Panna were stopped with effect from 22.08.2005 on receipt of
notice from Madhya Pradesh Pollution Control Board. The case is pending with
Hon’ble Supreme Court of India. NMDC is following up the case for early hearing.
All the iron ore production units have been accredited with ISO 9001:2000 and ISO
14001:2004 certifications. R&D Centre of NMDC was also accredited with ISO
9001:2000 certification.
Iron Ore
NMDC produced 17.27 million tonne of iron ore during the year 2006-07 (up to
December 2006). Domestic sales of iron ore was 15.50 million tonne during the year
(up to December 2006). Exports of iron ore produced by NMDC is canalised through
MMTC Ltd. Iron ore is exported to Japan, South Korea and China. In 2006-07, NMDC
exported 1.78 million tonne of iron ore valued at approximately Rs. 429.80 crore.
Capital Structure
The authorised share capital of the company is Rs. 150 crore. The paid up equity
share capital was Rs. 132.16 crore. Outstanding loans from Government of India are
nil.
Financial Performance
The financial performance of the company for the year 2005-06 and 2006-07 (April-
Dec. 06) are given below:
Sales/Turnover
2226.55 3,710.92 2,790
Gross Margin
1287.49 2,889 2,455
MSTC LTD.
MSTC Ltd. (formerly Metal Scrap Trade Corporation Ltd.), a Government of India
Enterprise, was set up on September 9, 1964 as a canalising agency for the export of
scrap from the country. With the passage of time, the Company emerged as the
canalising agency for the import of scrap into the country. Import of scrap was de-
canalised by the Government in 1991-92 and MSTC has since then moved on to
marketing ferrous and miscellaneous scrap arising out of steel plants and other
industries and importing coal, coke, petroleum products, semi finished steel products
like HR coils and export of primarily iron ore. The company has also established an e-
auction portal and undertakes e-auction of coal, diamonds and steel scrap and has
developed an e-procurement portal in house.
Capital Structure
The company has an authorised capital of Rs. 5 crore and paid up capital was Rs.
2.20 crore as on 31.12.2006 of which approximately 90% is held by Government of
India and balance 10% by members of Steel Furnace Association 16 of India, Iron and
Steel Scrap Association of India and others. Paid up capital of Rs. 2.20 crore includes
bonus shares issued in the year 1993-94 in the ratio 1:1.
Ferro Scrap Nigam Ltd. (FSNL) is a wholly owned subsidiary of MSTC Ltd. with a paid
up capital of Rs. 2 lakh. The company undertakes the recovery and processing of
scrap from slag and refuse dumps in the nine steel plants at Rourkela, Burnpur, Bhilai,
Bokaro, Visakhapatnam, Durgapur, Dolvi, Duburi and Raigarh. The scrap recovered is
returned to the steel plants for recycling/disposal and the company is paid processing
charges on the quantity recovered at varying rates depending on the category of
scrap. Scrap is generated during iron and steel making and also in the rolling mills. In
addition, the company is also providing steel mill services such as scarfing of slabs,
handling of BOF slag, etc.
Financial Performance
Manganese Ore (India) Ltd. (MOIL) was established in 1962. It is the largest producer
of manganese ore in India. At the time of inception, 49% of its shares were held by the
Central Province Manganese Ore Co Ltd. (CPMO) and the remaining 51% in equal
proportion by Government of India and the State Governments of Madhya Pradesh 17
and Maharashtra. Subsequently, in 1977, the Government of India acquired the
shares held by C.P.M.O. in MOIL and MOIL became a wholly owned Government
company with effect from October, 1977. As on 30.11.2006, Government of India held
81.57% shares in MOIL with State Governments of Maharashtra and Madhya Pradesh
holding 9.61% and 8.82% shares respectively.
The physical and financial performance of the Company during 2004-05, 2005-06 and
2006-07 (April-Dec. 2006) are given below in the table:
2006-07 (up to
Items 2004-05 2005-06
Dec.2006)
1. Production
Kudremukh Iron Ore Company Ltd (KIOCL), an 100% Export Oriented Unit, ISO
9001:2000 and ISO 14001 company was established in April, 1976 to meet the long
term requirements of Iran. An iron ore concentrate plant of 7.5 million tonne capacity
was set up at Kudremukh. This project was to be financed in full by Iran. However, as
Iran stopped further loan disbursements after paying US $ 255 million, the project was
completed as per schedule with the funds provided by Government of India. While the
project was commissioned on schedule, consequent upon the political developments
in Iran, they did not lift any quantity of concentrate. As a diversification measure, the
Government approved the construction of a 3 million tonne per year capacity pellet
plant in Mangalore in May, 1981. The capacity of the pellet plant was increased to 3.5
million tonne with additions/modifications. The plant went into commercial production
in 1987 and is now exporting blast furnace grade pellets to China and also to domestic
units such as Ispat Industries Ltd. and Rastriya Ispat Nigam Ltd. Aerial view of Pellet
Plant, Mangalore.
Production
A target of 3.1 million tonne and 3.05 million tonne was set for production of iron ore
concentrate and iron oxide pellets respectively during the year 2005-06. Actual
production was 2.922 million tonne of concentrate and 2.834 million tonne of pellets.
The target set for production during the year 2006-07 is 3.05 million tonne of pellets.
In pursuance of directive of Hon’ble Supreme Court dated 30-09-2005, the mining
activities at Kudremukh were stopped on 31-12-2005. Therefore, there is no
production of iron ore concentrate during the year 2006-07. As against a target of 1.88
million tonne of pellets fixed for the period April to November, 2006, the actual
production was 0.275 million tonne which represents 15% target fulfilment. There is
shortfall in production of pellets up to November, 2006 during 2006-07. The shortfall in
production of pellets is on account of operational problems being encountered in the
pellet plant after switching over to usage of 100% hematite ore from magnetite ore.
There was excessive generation of su er fines (slimes) affecting filtration, clogging of
filters, overflow and contamination of process water due to filling of cooling pond
affecting production. While efforts are continuing to rectify the problems, the operation
of pellet plant is yet to stabilize and normal production is yet to commence.
The sales revenue during the last five years and up to November, 2006, during 2006-
07 is detailed below:
(Rs. in lakh)
Financial Performance
An overview of the performance of KIOCL during the year 2006-07 (up to November,
2006) together with actuals for the previous three years, is indicated below:
(Rs. in lakh)\
Inventories(excluding
finished stock) 20,417 15,843 8,720 7,616
Consequent upon nationalisation of the undertaking of Bird and Company Ltd in 1980,
the following seven companies came under the administrative control of the Ministry of
Steel, Government of India:
c) OMDC, BSLC, KDCL & SSL are operating companies under the Group.
At the time when the Bird Group of Companies came under the administrative control
of the Ministry of Steel, Government of India, all of them were financially sick and
burdened with various problems. With the financial support from the Government of
India, problems relating mainly to excessive manpower, erosion of working capital and
outstanding liabilities could be settled to a considerable extent.
REVIEW OF LITERATURE
R.S. PANDEY sees a bright future for the steel industry in India provided, of course,
the iron ore mining policy to be announced by the government soon acts as a catalyst
for growth. He discusses the industry's problems and prospects in an interview. When
asked about the steel sectors i.e. private and public he expressed his expert views.
The interview was published in a magazine ‘FRONTLINE’ in the December 2006.
Excerpts:
The public sector steel companies in India are doing extremely well. And, therefore,
they will have a decisive role to play. In fact, SAIL and RINL [Rashtriya Ispat Nigam
Ltd.], which has the Vizag steel plant, have undertaken massive expansion plans.
Between 1992-93 and now, the share of the public sector in steel production had gone
down. Today, its share is 41 per cent while that of the private sector is 59 per cent. In
1992-93, the private sector had a share of only 37 per cent. In terms of finished steel,
the private sector, even in 1992-93, had a 67 per cent share and this has now grown
to 71 per cent. But the public sector units are growing, even if the private sector is
growing faster.
During 2006, SAIL and RINL decided on major capacity expansion plans. SAIL is
going to increase its capacity from the current 13 million tonnes of hot metal to 22.5
million tonnes in just four years. RINL is set to expand its capacity from three million
tonnes to 6.3 million tonnes in the next three years. So that is a major expansion of
capacity for the PSUs.
The public sector should be encouraged all the more. Let there be a healthy
competition between public and private sector producers. The question of exit comes
when they do not perform. Look at the stock prices of SAIL. A few years ago, the scrip
was at below Rs.10 per share. Today, it is more than Rs.130, and the expectations
are that it will go up even higher.
When talked about the labour productivity he says, Yes, labour productivity is low, in
SAIL in particular. But it is improving. The steel major is going to adjust much of its
existing manpower in the expansion phase when its capacity is going to almost
double. The management had also undertaken a massive VRS [voluntary retirement
scheme]. In RINL, labour productivity is not all that bad.
Besides, SAIL has done very well in various other techno-economic parameters in the
last two and a half years. In 2003-04, SAIL's manpower productivity was 127 tonnes
per man per year. In 2005-06, it went up to 150 tonnes per man per year, an
improvement of 20 per cent. In blast furnace productivity also, there has been an
improvement, as also in the production of high-end special steels and capacity
utilisation.
With the improved turnover, which comes from higher capacity use and higher
manpower productivity, SAIL's profits have surged. Its gross profit more than doubled
between 2003-04 and 2005-06. The general presumption was that the spurt in profits
was largely due to the high prices of steel. An analysis has shown that as far as SAIL
is concerned, the higher profit is 29 per cent owing to the price factor in steel and
other input costs, and 71 per cent owing to improvement in capacity use and other
factors that are just mentioned.
OBJECTIVES
• To compare Private and Public steel sector with refrence to TATA Steel and
Steel Authority Of India.
• To analyse potential of both the companies i.e. TATA Steel and SAIL.
• To analyse measures taken by Indian government to improve the industry and
study the National Steel Policy 2005
• To analyse the future of Indian steel industry.
Research Methodology
This section deals with the research design used and data collection method used.
According to my topic of research I found that the use of secondary data is the
only right choice. For that I mainly used Internet and collective various data from
government and private websites.
I visited to the library and went through various books and journals for collection
of the relevant data for the research.
DATA ANALYSIS
The Public sector undertakings (PSUs) under the Ministry of Steel have shown
significant improvements in the last two years. The combined profit before tax of all 15
PSUs of the Steel Ministry exhibited an enhancement of more than two times, from
Rs. 5,568 crore in fiscal 2003-04 to Rs. 11,497 crore in 2005-06.
The profit before tax for all PSUs also exhibited a significant improvement of
around 26% in the three quarters of 2005-06 (April-December 2006) amounting to
Rs.10,566.40 crore as against a combined profit before tax of Rs.8,368.75 crore in the
comparable period of last year.
Contribution of PSUs to public exchequer has also gone up significantly. For
example, the contribution of five leading companies, namely, SAIL, RINL, NMDC,
KIOCL and MOIL, to Central and State exchequer by way of excise duty, customs
duty, dividend, corporate tax, sales tax, royalty etc. has gone up by more than double,
from Rs. 5,761 crore in 2003-04 to Rs.13,110 crore in 2005-06.
On the other hand, the Private sector of the Steel Industry is currently playing an
important and dominant role in production and growth of steel industry in the country.
During the period (April-December 2006), 20.5 million tonne of steel was produced by
Private Sector steel units, out of the total production of 33.15 million tonne in the
country. The private sector units consist of major steel producers in one hand and
relatively smaller & medium units such as Sponge iron plants, Re-rolling mills, Electric
Arc Furnaces and Induction Furnaces on the other. They not only play an important
role in production of primary and secondary steel, but also contribute substantial value
addition in terms of quality, innovation and cost effectiveness.
For comparing both the companies i.e. Tata Steel and SAIL lets analyse both the
companies on following parameters:
Production
Chart showing production of both the companies:
TATA Steel :
The company had a Production target for the year 2007-08 was 5 million tonnes (mT)
but it could produce only 4.93 (mT). For the first 3 quarters of the years company set a
target of 3.744 (mT) but could produce 3.709. However for the same period in last
year company produced 3.738 (mT) steel a capacity utilisation of 100% as compared
to 99% this year.
Financials
TATA Steel :
The year 2006-07 has seen the highest turnover and profits, continuing the trend
of the past four years. The Company achieved the best ever sales turnover and
profitability during the year under review. A robust Indian economy, firm steel prices,
higher volumes and several improvement initiatives contributed to the record
performance. Finished steel sales were higher by 11.33% at 4.51 million tonnes over
the previous year. Export turnover was lower by about 5% due to lower volumes.
Average price realisation improved mainly due to higher prices of hot rolled
coils/sheets. Operating profit was higher by over Rs. 1,000 crores at Rs. 6,973 crores
(2005-06: Rs. 5,938 crores), an increase of 17% over the previous year.
Net interest charges were higher at Rs. 174 crores (2005-06: Rs. 125 crores),
due to additional borrowings for the Company’s domestic expansion programs and
funding Company’s contribution for financing the acquisition of Corus Group plc. After
providing for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and Rs. 152
crores towards employee separation scheme (2005-06: Rs. 53 crores), the profit
before tax rose by 20% to Rs. 6,262 crores (2005-06: Rs. 5,240 crores). Net Profit
after taxes was higher at Rs. 4,222 crores (2005-06: Rs. 3,506 crores), an increase of
20% compared to the previous year.
The record financial results would not have been possible without a matching
performance by the operating departments including the raw materials division. The
year witnessed the best ever crude steel production by the Company at 5.05 million
tonnes, an increase of 6.7% over the previous year. Jamshedpur Plant became the
first plant in India to produce more than 5 million tonnes of crude steel in a year. The
upgraded “G” Blast Furnace produced over 2 million tonnes of hot metal, as against its
rated capacity of 1.8 million tonnes. Among the Finishing Mills, the output at the Cold
Rolling Mill and the Hot Strip Mill exceeded their rated capacities. The all-round
increase in production was backed by improvements in operating practices and
productivity resulting in a reduction in consumption of raw materials, energy,
refractories etc.
Financial Year 2006-07 has been eventful year for the company with further
momentum in improving operational efficiencies, laying strong foundation and building
road map for modernisation and expansion of SAIL Plants, with several new initiatives
undertaken, with its human resource at the core. During the year, the company got the
distinction of first metal company in the country to reach a market capitalization of Rs.
50,000 crore.
There have been improvements in all financial parameters which are shown in
the table given below-
SAIL set new record in achieving the turnover of Rs.39,189 crore and profit
before tax of Rs.9423 crore, registering growth of 21% & 65% respectively over
previous year. The company recorded net profit after tax (PAT) of Rs.6202 crore, an
increase of 55%.
Research and Development
(Rs. Crore)
TATA Steel :
The R & D laboratory was set up in 1937. Today, Tata Steel is the first in India to
develop galvannealed skin panels. It is the only Indian supplier of bake hardening
steel for body panels.
Research is undertaken at Tata Steel in the areas of raw materials including coal,
coke, energy conservation, waste utilisation, sintering, blast furnace productivity and
phosphorous reduction, product development and improvement in life of plant and
machinery. The Company spends 7% of its turnover for R&D 17 patents have been
sealed and over 100 are in process
TATA Steel:
Tata Steel’s efforts at Environment Management are well recognised. It’s Steel
Works in Jamshedpur, all its mines, collieries and manufacturing divisions in its out
has an ISO-14001 certified service provider.locations are certified to ISO-14001.
Jamshedpur is the only town in the country which
Ozone depleting substances: The Steel Works reduced use of refrigerants to 7.044
tonnes in 2003-04 as against 7.90 tonnes used during the previous year.
Hazardous Waste under Basel Convention: The Company does not import or export
any waste, deemed hazardous under the Basel Convention. All hazardous wastes
generated are handled as per the requirement of the Hazardous Waste Management
and Handling Rules 1989/2000.
Emissions
Tata Steel has undertaken several initiatives, which have resulted in
considerable reduction in stack emission. Emissions are well below the Indian and
international standards. The emission load including particulate matter, Sulphur
Dioxide and Oxides of Nitrogen have dropped as a result of the improvement initiative
undertaken at the Steel Works.
Waste handling
Most of the solid waste generated from Steel Works is recycled or reused. 18%
of the solid waste generated, amounting to approximately 5,50,000 tonnes in 2003-04
was used to fill low-lying areas and for peripheral road construction around
Jamshedpur. About 2,00,000 tonnes of fly ash and bottom ash, generated in the
power plants was dumped in a designated dump area.
Effluent Management
Waste water from the steel making process is being treated with best available
physio-chemical methods as well as being recycled. Waste water from the coke plant
is treated biologically where organic pollutants are oxidised and decomposed by micro
organisms. The Company has reduced the levels of total pollutant discharge in waste
water streams from 0.211 in 1999-2000 to 0.178 in 2003-04.
During 2005-06, SAIL produced approximately 13.4 million tonne of crude steel
and generated 5.6 million tonne of Blast Furnace (BF) slag, 1.3 million tonne Steel
Melting Shop (SMS) slag and 0.6 million tonne of other process wastes. Utilisation of
these wastes are being made through internal recycling and selling to outside
agencies. The wastes generated in the steel plants are being utilized mainly through
their Sinter plant. SAIL plants have achieved 70% utilisation of solid wastes generated
during April-September, 2006.
Environmental Plantation
A total number of 1,45,521 saplings have been planted covering an area of 63.7
hectare in 2005-06 as against 77,242 nos of saplings planted in an area of 36.6
hectare in 2004-05 in and around the steel plants of SAIL.
Environmental Recognitions
SAIL plants have been awarded various prizes for environmental management in
their plants viz. “Sustainability prize in independent unit category”, 2006 instuted by
the Confederation of Indian Industries (CII) for exemplary performance in the
environmental, economic andsocial dimensions of sustainable development and the
Greentech Environment Excellence Gold Award,Golden Peacock Environment
Excellence Award in the metal sector, 2005 instuted by the World Environment
Foundation and the Jawaharlal Nehru Memorial Pollution Control Excellence Award
for 2005 from International Greenland Society.
Workforce and Welfare of Society
TATA steel
Tata Steel has not lost focus of this philosophy and has adapted it in a broader
and modern context in its Vision 2007: A lot is dependent on the individual spirit and
enthusiasm of the employees to realise our vision. TATA Steel accelerates efforts to
provide a work environment that will ensure a sense of purpose and personal growth
for each individual. The wish of the company is to see the smile on every face
everyday. A pioneer in employee welfare, Tata Steel has invested in the power of its
people and enriched, empowered and enhanced their lives.
Even in its nascent years, social scientists Sidney and Beatrice Webb were
brought in to work on welfare schemes. In fact, some of the initiatives introduced by
Tata Steel were the first of their kind in India and some even in the western countries
at that time! Tata Steel’s Human Resource policy recognises its people as the primary
source of its competitiveness. It focuses on constantly updating and challenging
intellectual capabilities to enable them to excel in performance. Special efforts are
made for enhancing strategic thinking skills and analytical abilities of its managers and
workers. As a true ‘Learning Organisation’, Tata Steel has tapped the knowledge
available with its people through Knowledge Management and sharing of best
practices.
In the year 2003, Tata Steel celebrated 75 years of industrial harmony and
mutual co-operation, coordination and understanding between the Management and
the Union. It has twice emerged as “Asia’s Most Admired Knowledge Enterprise”
among many other prestigious awards and recognition. Tata Steel aims at ensuring
transparency, fairness and equity in all its interactions with its employees to create an
enthused and happy workforce.
The biggest boost to efficiency in the steel industry has come from the increased
use of continuous casting – an indicator of the modernity of the production process. Its
share of Indian crude steel output has climbed from 38% in the mid-1990s to 66%
now. India is thus well on its way to joining the ranks of the leading steelmakers
among the industrial nations (share in EU-25: 96%). However, in India some 6% of
crude steel is still made using the outdated open-hearth process (EU-25: 0.3%), which
suggests there is restructuring potential.
TATA Steel
Tata Steel's stall at the International Trade Fair was adjudged the best, along
with SAIL, amongst ninety national companies participating in the Trade Fair. Thirty
international companies also took part in the exhibition. Participating companies from
countries all over the world exhibited latest technologies and know-how. List of
participating companies included Baosteel, SAIL, Heavy Engineering Corporation,
Hindustan Copper, Jindal Steel & Power, M.N. Dastur & Co. MECON and other such
companies of national and international repute. China was the partner country for the
International Trade Fair this year.
In the award winning exhibition, Tata Steel showcased its best coal mining practices,
cutting-edge technology used in iron ore mining, pioneering human resource
practices, 78 years of industrial harmony and various other aspects of the world's best
steel company.
The 6th International Trade Fair and Conference, an institutionalised global
event, is considered to be one of the most prestigious forums for national as well
international participants. It is a conclave of the finest minds concerned with the future
direction and growth of these sectors. The forum provided the world's most eminent
metallurgist's, manufacturers of metallurgical and mining machinery and related
sector's professionals, analysts and experts with the opportunity to exchange views on
emerging technologies, synergy and strengths and open up wider horizons for
sectorial development.
Tata Steel to adopt Corus technology:
Tata Steel plans to implement alternate technology used by the British steel
maker Corus, which it acquired recently, in its greenfield steel plants to reduce cost of
production, according to Mr B. Muthuraman, Managing Director, Tata Steel.
“We are looking at alternate technology. Corus has developed an alternate
technology, which could be implemented in our greenfield plants,” Mr Muthuraman
told newspersons on the sidelines of the 34th National Management Convention
organised by the All-India Management Association. However, he declined to give
further details on the type of technology the Indian steel giant plans to implement.
Tata Steel :
Safety has always been a prime focus at Tata Steel. A Safety Committee, a
Safety department and a Safety Trophy helped spread the message all across the
company.
TATA reaffirms its commitment to provide safe working place and clean
environment to its employees and other stakeholders as an integral part of its
business philosophy and values. We will continually enhance our Environmental,
Occupational Health & Safety (EHS) performance in our activities, products and
services through a structured EHS management framework. Towards this
commitment, we shall;
SAIL has a separate corporate unit, called the SAIL Safety Organisation to
monitor safety system & activities- SAIL also has a comprehensive safety policy:
• Annual Performance Plans (APP) for the areas of safety and fire services are
formulated and review of implementation of APP is done during Heads of
Safety meeting.
• Internal and external safety audits of major departments particularly hazardous
areas are conducted every year and points arising from these audits are
liquidated. Safety aspects have been incorporated in standard operating
practices (SOP) and standard maintenance practices (SMP).
• All major capital repairs/shut downs are closely monitored round the clock.
Periodic drives are conducted to inculcate safety awareness/culture up to
grass-root level apart from regular inspections as per checklists to identify
unsafe conditions/acts.
• Safety training is imparted to target group employees at various levels. HRD
intervention in the area of safety covers Heads of Departments, Line Managers
& Departmental Safety Officers. Besides area specific workshops are
conducted at different locations on important topics like gas safety, rail/road
safety, safety in iron, steel & coke making etc.
Consistent efforts were made by SAIL Safety Organisation for improving safety
standards in the company by taking measures like intensive safety drives in works
area and conducting safety audits in hazardous departments of different plants and
mines. In addition, specific workshops on safety aspects were organised in various
SAIL steel plants.
.
Measures taken by Indian government to improve the industry
Now let’s have a look over what government has done to make the industry
competitive in world market. Government has taken several initiatives in last decade
to improve the steel industry. The main steps taken for this are as follows-
1. In the new Industrial Policy announced in July, 1991 Iron and Steel industry,
among others, was removed from the list of industries reserved for the public
sector and also exempted from the provisions of compulsory licensing under the
Industries (Development and Regulation) Act, 1951.
2. With effect from 24th May 1992, Iron and Steel industry has been included in the list
of `high priority' industries for automatic approval for foreign equity investment up
to 51%. This limit has been recently increased to 100%.
3. Price and distribution of steel were deregulated from January 1992. At the same
time, it was ensured that priority continued to be accorded for meeting the
requirements of small scale industries, exporters of engineering goods and North
Eastern Region of the country, besides strategic sectors such as Defence and
Railways.
4. The trade policy has been liberalised and import and export of iron and steel is
freely allowed. There are no quantitative restrictions on import of iron and steel
items, covered under Chapter No. 72 of the ITC(HS) Code. The only mechanism
regulating the imports is the tariff mechanism. Tariffs on various items of iron and
steel have drastically come down since 1991-92 levels and the government is
committed to bring them down to the international levels. In Chapter 72 there are
two items viz. 72042110 and 72042910, which fall in the restricted list of imports.
5. Iron & Steel are freely importable as per the Extant Policy.
6. Iron & Steel are freely exportable.
7. Advance Licensing Scheme allows duty free import of raw materials for exports.
8. The floor price for seconds and defectives continues till date.
9. Imports of seconds and defectives of steel are allowed only through three
designated ports of Mumbai, Calcutta and Chennai.
10. Mandatory pre inspection certificate by a reputed international agency for every
import consignment of seconds and defectives.
11. In budget 2004-05, the customs duty on nonalloy steel was reduced from 15 % to
10 per cent and on alloy steel from 20 per cent to 15 per cent. In August 2004,
the customs duty on non-alloy steel was further reduced from 10 per cent to 5
per cent; on meltingscrap from 5 per cent to 'zero' and on ships for breaking from
15 per cent to 5 per cent.
12. Further, customs duty on several raw materials used by the steel sector like
noncoking coal, metcoke and nickel has been reduced to 5 per cent and on
coking coal to 'zero'.
13. To bring down the prices of steel, the excise duty on steel products was reduced
from 16 per cent to 8 per cent with effect from February 28, 2004 with a caveat
that the duty regime will be reviewed. Budget 2004-05 revised this partially by
increasing the duty from 8 per cent to 12 per cent, as the intended impact of duty
cut on moderating prices was not achieved.
14. The union Budget 2007-08 the import duty on seconds and defective has been
further reduced from 20% to 10%.
1. Ministry of Steel is extending all possible support, as detailed below, for the
development of Iron and Steel Sector in the country:
2. The Ministry is providing linkage for raw materials, rail movement clearance etc. for
new plants and expansion of existing ones, wherever applied for.
3. To ensure an un-interrupted supply of raw materials to the producers.
4. The Ministry has been interacting with All India Financial institutions to expedite
clearance of projects.
5. Regular interactions with Entrepreneurs, who are proposing to setup Iron and Steel
Plants, are held at the level of Secretary.
6. Ministry of Steel identifies infra-structural and related facilities required by steel
industry so that their absence does not lead to bottlenecks in the future growth of
the Iron and Steel Sector, and takes up these issues with the concerned ministries.
7. The Ministry has encouraged the setting up of "Institute for Steel Development and
Growth (INSDAG)" in Calcutta in August, 1996. The leading steel producers in the
country are members of this Institute, which has been set up with the objective of
promoting, developing and propagating the proper and effective use of steel.
8. In order to resolve the problems faced by existing & new steel plants & to assist
major steel plants being implemented, Govt. has setup a Project Coordination
Group under the Chairmanship of Steel Minister.
The progress of the steel industry has a critical influence on the pace of India’s
development and, as such, great importance is attached to capacity expansion in line
with expected demand at cost and prices which make Indian steel internationally
competitive. The existing regime of liberalization, decontrol and deregulation of
industry in the country has opened up new opportunities for the expansion of the steel
industry. With a view to accelerating the growth of the steel sector and attaining the
vision of India becoming a developed economy by 2020, the Ministry of Steel
formulated a National Steel Policy (NSP) in 2005.
The following salient features can be derived after analysing the NSP 2005:
• The NSP sets out a broad roadmap for the Indian Steel Industry in its journey
towards reform, restructuring and globalisation.
• The long-term goal of the NSP is that India should have a modern and efficient
steel industry of world standards, catering to diversified steel demand. The focus of
the policy is to achieve global competitiveness not only in terms of cost, quality and
product-mix but also in terms of global benchmarks of efficiency and productivity.
• In order to achieve the goal of 110 million tones of steel production by 2019-20,
the NSP seeks to remove the supply-side constraints to the growth of this industry
in an open, globally integrated and competitive environment.
• The NSP seeks to adopt a multi-pronged strategy to move towards the long-
term policy goal. On the demand side, the strategy would be to create incremental
demand through promotional efforts, creation of awareness and strengthening the
delivery chain, particularly in rural areas. On the supply side, the strategy would be
to facilitate creation of additional capacity, remove procedural and policy
bottlenecks in the availability of inputs such as iron ore and coal, make higher
investments in R&D and encourage the creation of infrastructure such as roads,
railways and ports.
• The NSP acknowledges the low per capita consumption of steel in the country,
especially in the rural areas and the need to boost steel consumption to improve
quality of life and help in meeting the growing aspirations of masses.
• In order to achieve the strategic goal of 110 MT of steel production by 2019-20,
the industry would need additional capital. In addition, funds would be required for
technological upgrade of existing facilities. In order to mobilize such vast resources
NSP seeks to encourage foreign direct investment. In addition, the policy also
seeks to make the fiscal incentives, available to infrastructure projects, accessible
to the steel industry.
• The NSP seeks to support developing of risk-hedging instruments like futures
and derivatives to contain price volatility in the steel market.
• The NSP seeks to strengthen the existing training and research facilities
available to the domestic steel industry so as to provide suitable training
programmes especially for the secondary small-scale units and also to collect and
analyse data on important parameters of the industry.
• The NSP seeks to mount aggressive R&D efforts to create manufacturing
capability for special types of steel, substitute coking coal, use iron ore fines,
develop new products suited to rural needs, enhance material and energy
efficiency, utilize waste, and arrest environmental degradation.
• The NSP acknowledges the important role played by the secondary steel sector
in providing employment, meeting local demand of steel in rural and semi-urban
areas, and meeting the country’s demand of some special products and seeks to
endeavour to provide the necessary feedstock to these units at reasonable prices
from major plants through the existing mechanism of State Small Industries
Corporations.
• The NSP recognizes the fact that integration of the Indian steel industry with
the global economy requires that the industry should be protected from unfair trade
practices. The NSP, therefore, envisages institution of mechanisms for import
surveillance, and monitoring export subsidies in other countries.
The present per capita consumption of steel in the country is very low compared to the
world average. As mentioned above, one of the objectives of the NSP is to augment
the demand and consumption of steel in the country by conscious promotion of steel
usage. With a view to create a mass awareness campaign on conscious promotion of
steel usage a ‘Steel Promotion Coordination Committee’ has been formed under
the Chairmanship of Secretary, Ministry of Steel, consisting of major steel producers.
The Committee is being serviced by Institute for Steel Development and Growth
(INSDAG). The objective of the Committee is to promote steel usage in the country by
way of an awareness campaign with particular emphasis on rural sectors. The
Committee also aims at educating the designers, architects, builders and planners
regarding the qualitative and cost effective applications of steel in various structures
including buildings, bridges, flyovers and airports.
FUTURE OF INDIAN STEEL INDUSTRY
India is amongst a few countries in the world having the dual advantage of fast
growing domestic demand coupled with access to raw materials. Further, the trend
that is already discernible is that the axis of global steel production / consumption is
shifting towards Asia. With their large populations, China and India already account for
35 % of the total world steel production - more than double of Europe. Asia is
expected to outpace other regions of the world to an even greater extent in the coming
years.
Amongst the Asian nations, China has established a huge, unbridgeable lead. It
is accepted that China will continue to be the leader. However, India is slated to
emerge as the second Asian giant in the next eight years. Figuratively speaking, while
the "Dragon" has reached maturity; the "Lotus" is about to bloom in resplendent
splendour. In 2005 Chinese steel consumption was around 320 million tonnes; i.e
China swallowed almost 32% of global steel. It is unlikely that future production and
consumption would continue to flourish at growth rates of 8% and 18% respectively as
has been the case over the last few years. On the other hand, it is sun-rise time for
India where the demand has increased by 7-8% in the last couple of years. In the long
run, Indian steel is likely to be more cost-effective since unlike China, India has
relatively large reserves of iron ore (14 billion tonnes), which if strategically exploited,
can sustain domestic production of 120-130 million tonnes for at least 25-30 years.
However, the position with coal is not so favourable. Though thermal coal
reserves of over 92 billion tonnes can fuel industry, large-scale iron making using the
traditional blast furnace route would require coking coal. India does not have adequate
reserves of coking coal; nor is the meagre amount available of appropriate quality.
Thus, the steel industry always had to contend with the dual problems of inadequate
availability and poor quality of Indian coking coal. This has been partly addressed by
adopting alternative iron making processes that are not dependent on coking coal; it
can not be denied that coal is the biggest cause for concern for bulk steel production
in India.
Because of the shortage of indigenous coal, attempts have been made by steel
producers to ensure long-term supplies by tying up with global majors or by acquiring
mines in other countries. This is the only long-term solution, but with a global shortage
of coal it may not remain cost-effective in the long run.
India is the seventh largest producer of steel and may further improve its position
going by the current trends. A series of investment decisions by major domestic
players and international steel giants such as Steel Authority of India Ltd, Tata Steel,
POSCO, the LN Mittal Group etc. clearly establish that such hopes are well founded.
The keen interest shown by various prospective investors is not only due to
expectations of strong growth in domestic demand but also due to indigenous
availability of key resources like iron ore and skilled workforce.
With the likely growth of Indian economy at around 7 per cent per annum,
demand for steel is expected to remain strong and is projected to reach a level of 90
million tonnes by 2019-20 as envisaged in the National Steel Policy. This growth in
demand is sustainable considering the fact that India's per capita consumption of steel
is still very low at 31 kgs per head compared to the world average of 145 kgs. The
very low level of per capita consumption of steel in India is highlighted further when
compared with the consumption levels of its peer group consisting of countries like
China, Brazil, Mexico and Republic of Korea as also with selected developed
countries.
Similar optimism prevails with regard to export of iron and steel. Export of steel
starting from a negligible amount in 1991-92 has increased to 5.5 million tonnes in
2003-04. Exports in 2004-05 were lower at 4.6 million tonnes, primarily because of
rising domestic demand and low capacity additions. Exports now constitute around 17
per cent of total production and India's presence in the developing and developed
world is being increasingly felt. Indian steel producers have recently been able to
supply specialized grades and products used for sophisticated applications like
automobiles. On the cost front, some of our producers are counted amongst the least
cost producers of the world. For an average reference plant, India is competitively
placed in the middle of the hierarchy of steel producing nations.
However, we have a long way to go to catch up with the leading exporters of the
world such as Japan, the CIS countries, Brazil etc. It is, however, expected that by
2019-20 India will be able to export around 26 million tonnes of steel representing 24
per cent of total projected production. The projected export ratio compares well with
the current worldwide export ratio of 27 per cent (excluding intra-regional trade).
The projected production of steel by 2019-20, to meet the domestic and export
demand will be around 110 million tonnes. Management of resources and
infrastructural growth is going to be critical in achievement of the production level
envisaged. The broad requirements of various resources will increase manifold from
the current level. The bottlenecks in availability of critical inputs and various facilities
need to be removed through concerted efforts of Government and industry. The broad
strategy to overcome these constraints as well as meet the strategic goals of the steel
sector has been discussed in the National Steel Policy, which has been recently
approved by the Government.
As stated earlier, the long-term goal of the National Steel Policy is that India
should have a modern and efficient steel industry of world standards, catering to a
diversified steel demand. The focus of the policy is to achieve global competitiveness
not only in terms of cost, quality and product mix but also in terms of global
benchmarks of efficiency and productivity. The policy envisages adopting a multi-
pronged strategy to achieve these goals. On the demand side, the strategy would be
to create incremental demand through promotional efforts, creation of awareness and
strengthening the delivery chain, particularly in rural areas. On the supply side, the
strategy would be to facilitate creation of additional capacity, remove procedural and
policy bottlenecks in the availability of inputs such as iron ore and coal, make higher
investments in R&D and HRD and encourage the creation of infrastructure such as
roads, railways, and ports.
The production figures, exports and imports of finished carbon steel and pig iron,
and apparent consumption patterns of finished carbon steel as indicated by TATA
Steel and SAIL attest to the continuing growth for both the sectors.
FINDINGS
Meanwhile, the industry is already into an expansion mode with all steel majors
like SAIL, Tata Steels, RINL, Ispat, Jindals and Essar hiking their capacities. States
like Orissa and Jharkhand, rich in iron ore, are attracting major investment interest
both from domestic and international majors. There is, however, some concern
regarding the differential treatment meted out to overseas players to attract
investment, mainly in respect of export of iron ore. In the final analysis, the industry
scenario is expected to radically alter in the coming years.
• However, the public sector is expanding its capacities but, it has more potential
lies within to perform more than that.
• Utilization of capacities in public sector is more than that of private sector but
the performance still has to be improved.
• Public sector has increased its profit over the year particularly in 2006-07.
• Both the companies are planning to adopt modern technology which is going to
help them to compete in world market but they need to be less dependent on
state of art technology and coal for long term prospects.
• Public sector has undergone retrenchment for the employees and improved
has its lobour productivity but it is still lacking behind as compared to private
sector.
• SAIL has reduced the no. of accidents due to improper handling of machinery
still no of accidents are more than that of TATA Steel.
• Most of the plans to achieve the significant position in world market will remain
on paper unless adequate attention is given to augmentation of infrastructure
i.e. roads, ports, railways, power, etc.
These areas are of prime concern and the policy envisages a High Level
Monitoring Group which will not only prepare action plans in consultation with the
concerned Ministries but also coordinate development of the required facilities.
There are tremendous challenges ahead of us but these have to be met
comprehensively if we are to take our legitimate place in the world as a developed
nation by 2020.
BIBLIOGRAPHY
Annual report (2006-07) published by ministry of steel.