STEEL

JUNE 2017 (As of 23 June 2017) For updated information, please visit www.ibef.org 1
STEEL

Executive Summary.3
Advantage India...4
Market Overview and Trends.6
Porters Five Forces Analysis..19
Strategies Adopted.21
Growth Drivers...24
Opportunities..34
Success Stories..37
Useful Information.50

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STEEL
EXECUTIVE SUMMARY

Total finished steel production in India has increased at a CAGR of 4.70 per cent during FY12
16, with countrys steel production reaching to 90.98 million tonnes per annum (MTPA) in FY16.
3rd largest producer of The country became the 2rd largest crude steel producer in 2017, as large public & private sector
crude steel players strengthen steel production capacity in view of rising demand.
Moreover, capacity has increased to 124.77 million tonnes (MT) in FY171, which is 2.2 per cent
more than FY16, while in the coming 10 years the country is anticipated to produce 300 MT of
steel

Indias comparatively low per capita steel consumption & expected growth in consumption due to
Strong growth growing infrastructure construction, automobile and railways sectors has offered scope for growth
opportunities National Mineral Development Corporation is expected to increase the iron ore production 75
MTPA until 2021 indicating new opportunities in the sector

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

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

Note: 1 April-December 2016
MTPA Million Tonnes Per Annum

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STEEL

ADVANTAGE INDIA
STEEL
ADVANTAGE INDIA
Increasing investments
2016 Robust demand
Growing demand 2025E
To achieve steel capacity build-up of 300
Demand would be supported by growth in the million tonnes per annum (MTPA) by 2025,
domestic market
Market India would need to invest USD210 billion over Market
size: 96 Infrastructure, oil & gas & automotives would the next decade size: 300
drive the growth of the industry
million million
Lower per capita consumption compared to 301 MoUs have been signed with various
tonnes tonnes
international average states for planned capacity of about 486.7 MT.
In 2015, 4 MOUs were signed at Dantewada
Steel production in India is forecast to double
by 2031, with growth rate expected to go Ministry of Steel plans to set up Steel Research
above 10 per cent in FY18 & Technology Mission in India to promote R&D
activities in the sector
Advantage
India Policy support
Competitive advantage 100 per cent FDI through the automatic route is
allowed . Large infrastructure projects in the PPP
As of 2017, India is the worlds 2rd largest mode are being formed
producer of crude steel (up from 8th in
2003); National Steel Policy (NSP) implemented to
encourage the industry to reach global
Easy availability of low-cost manpower & benchmarks
presence of abundant iron ore reserves
Policy clarity & stability expected in respect of
make India competitive in the global set up
mining leases & forest clearances
20 per cent safeguard duty on steel imports

Source: Metallurgical & Materials Engineering Division Board, TechSci Research

Notes: FDI - Foreign Direct Investment, MT - Million Tonnes, E- Estimated
MoUs - Memorandum of Understanding, 2016E - Estimated figure for the year 2016; These estimates are from Data monitor, PPP - Public-Private Partnership
JUNE 2017 For updated information, please visit www.ibef.org 5
STEEL

MARKET OVERVIEW & TRENDS

STEEL
EVOLUTION OF INDIAN STEEL SECTOR
2015
19932014
19731992
19541964

19231948
Reduction in basic
Foreign players custom duty on the
began entering the plants & equipments In 2015, India
19071918 SAIL was ranked as the 3rd
Indian steel market required for initial set
created in 1973 up or expansion of largest crude steel
No license
Hindustan Steel as a holding iron ore pellet plants producer in the
requirement for
Ltd & Bokaro company to & iron ore world, leaving
capacity creation
Steel Ltd were oversee most of beneficiation plants, behind United
India's iron & Imposition of export States.
Mysore Iron & setup in 1954 & to encourage
1964, respectively steel production duty on iron ore, to
Steel Company focus more on beneficiation &
was set up in In the early 1990s, In 1989, SAIL pelletisation of iron The total finished
Production catering growing
1923 the public sector acquired ore fines in the steel production in
of steel domestic demand
dominated steel Vivesvata Iron & country FY17(1) stood at
started in According to Decontrol of
production Steel Ltd Government is 83.10 MT
India (TISCO the new domestic steel
was setup in Industrial Policy Private players In 1993, the implementing many
prices
1907) Statement were in government set infra projects such During FY17(1),
plans in motion Launch of Scheme
IISC was set (1948), new downstream as construction of 6.10 million tonnes
production mainly to partially for promotion of
up in 1918 to ventures were ports, freight of finished steel
producing finished privatise SAIL Research &
compete only corridors etc which was imported into
steel using crude Development in
with TISCO undertaken by would boost steel India
steel products Iron & Steel sector
the central industry
government
Notes: TISCO - Tata Iron and Steel Company; IISC - Indian Iron & Steel Company; SAIL - Steel Authority of India Ltd
FY17 (1) - April to January 2017

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STEEL
STRUCTURE OF THE STEEL SECTOR

Steel

Form Composition End use

Non-alloy Structural
Liquid steel Crude steel Finished steel Alloy
steel steel

Stainless Low carbon

steel Construction
steel

Ingots Flat
Silicon Medium
electrical carbon steel
Rail steel

Semis Non-flat
High carbon
High speed
steel

Source: Report on Indian steel industry by Competition

Commission of India, TechSci Research
JUNE 2017 For updated information, please visit www.ibef.org 8
STEEL
STEEL PRODUCTION IN INDIA HAS BEEN GROWING AT A FAST PACE
In FY17 (1), crude steel production in India was 72.35 MT, with the total crude steel production growing at a CAGR of 4.90 per cent
over the last 5 years & reached 89.79 MT in FY16.
The steel sector contribute over 2 per cent to the GDP of the nation & provides 20 lakh jobs in the country
During April-January 2017, crude steel production in India grew by 7 per cent YoY & stood at 39.98 MT.
Steel manufacturing output of India is expected to increase from 88.4 million tonnes (MT) in 2017 to 128.6 MT by 2021, accelerating
the countrys share of global steel production from 5.4 per cent in 2017 to 7.7 per cent by 2021.
As of March 2017, the capacity utilisation of steel producers is set to increase with strong export demand and signs of revival in
domestic sales. Companies like JSW & Essar Steel have experienced a sharp increase in steel manufacturing in the last 2 months
JSW Steel is planning two plants with a capacity of 10 million metric tonnes each in Jharkhand and Odisha, in a bid to become
Indias largest steel maker in 2017, which is also a part of its initiative to more than double in size to 40 million tonnes by 2030.
Vedanta Group and Jharkhand Mineral Development Corporation (JSMDC) are jointly setting up a steel plant at Manoharpur in West
Singhbhum district, Jharkhand. Around USD104 million of the total MoU signed has already been implemented on the ground.
Total finished steel production (million tonnes)
Total crude steel production (million tonnes)

13.44 12.83 12.97

12.52 12.82 10.74
17.21 17.92 13.25

79.34

78.00
16.77

74.24
16.48

68.86
16.48 13.63

63.22
63.18
16.99 55.37
71.87
71.77
FY14 64.92
FY13 61.94

FY17 58.72
FY12 57.81
FY11 53.68

(1)
FY15

FY16

FY11

FY12

FY13

FY14

FY15

FY16

FY17
(1)
Private Sector Public Sector
Private Sector Public Sector
Source: Ministry of Steel Annual Report, TechSci Research;
Notes: FY - Indian Financial Year (April March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate;
(1) - April to January 2017 , Figures mentioned are as per latest data available

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STEEL
SHARES IN PRODUCTION: SAIL AND TATA LEAD THE WAY
Total proposed crude steel capacity during 2016-17(2) by the private investors is expected to rise by 76.8 MT

As of FY17(1), SAIL dominated Indias steel sector, with the company accounting for 11.47 per cent of countrys finished steel
production & 14.8 per cent of countrys crude steel production.. During FY17(1), Tata Steel accounted for 10.84 per cent of finished
steel production & 11.72 per cent of the countrys crude steel production

In January 2017, Indian government inaugurated Universal Rail Mill (URM) worth USD 178.49 million at SAILs Bhilai steel plant.
The production of the worlds longest single rail of 130 meters from the new URM also commenced in the new mill

Indias crude steel market share by production FY17(1) Indias finished steel market share by production FY17(1)

14.80% 11.47%
SAIL SAIL

11.72% 10.84%
TATA TATA

4.04%
3.05%
RINIL RINIL
69.45% 53.96%

OTHERS OTHERS

Source: Ministry of Steel Annual Report 2016-17, TechSci Research

Notes: RINL - Rashtriya Ispat Nigam Limited, (1) - April to December 2016; (2) - Provisional
Figures mentioned are as per latest data available

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

Market value of the Indian steel sector

The sector has benefitted from the hike in prices & (USD billion)
production, especially since the beginning of the millennium

Over 200716(E), the sectors market value is estimated to

have posted a strong CAGR of 18.7 per cent 100

CAGR: 18.7% 87.9
81

Market value of Indian steel sector is expected to reach 57.8

43 46.8
USD100 billion by FY16 36.5
30.1

FY07 FY08 FY09 FY10 FY11 FY14 FY15E FY16E

Source: Ministry of External Affairs, TechSci Research

Note: E - Estimates

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STEEL
DEMAND HAS OUTPACED SUPPLY OVER THE LAST FIVE YEARS
Total real consumption of steel is estimated at 81.52 MT in FY16. Real consumption of steel (in million tonnes)
Driven by rising infrastructure development & growing demand for
automotives, steel consumption is expected to reach 104 MT by
2017
It is expected that consumption per capita would increase supported CAGR: 1.87%
by rapid growth in the industrial sector & rising infra expenditure 81.52
73.5 74.1 76.99
projects in railways, roads & highways, etc. 71
66.4
59.3 61.54
Real consumption of steel during FY171 was estimated at 61.54 52.1 52.4
MT. The consumption of real steel has grew at a CAGR of 1.87 per
cent during FY08-FY171

1
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Source: JPC India Steel, Ministry of Steel, TechSci Research

Notes: MT - Million Tonnes
FY17(1) April -December 2017

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STEEL
DEMAND SUPPLY GAP LEADING TO RISE IN IMPORTS
Total domestic demand for steel is estimated at 113.3 mtpa by 2016-17
Steel exports and imports (in million tonnes)
In order to reduce imports & boost domestic steel manufacturing

11.71
industry, the Central Government extended the minimum import price
(MIP) on 19 products, till February 4, 2017. These products include
semi-finished products of iron or non-alloyed steel, flat-rolled products

9.32
of different widths, bars & rods

8.24
7.93

7.42
According to DGFT, the MIP for these products would range between

5.98

5.59
5.45
5.37
USD 643-752 per tonne

4.59

4.08
In February 2016, Indian government imposed Minimum Import Price
(MIP) on 173 steel products

0.86
In April 2017, the countrys steel exports has increased by 102 per cent
in 2016-17 to 8.24 million tonnes (mt), as compared to 4.08 mt in 2015-
16 FY12 FY13 FY14 FY15 FY16 FY17

Imports Exports

Source: Ministry of Steel, JSPL Presentation, TechSci Research

Notes: FY - Indian Financial Year (April - March),
E Estimates, (1) - Provisional,
DGFT - Directorate General of Foreign Trade

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STEEL
CONSTRUCTION AND INFRASTRUCTURE: KEY STEEL CONSUMERS IN INDIA

Construction is Indias largest steel consumer, accounting for 35 per cent of total consumption

This is not surprising given the heavy use of steel in this sector & soaring construction & infrastructure activity in the
country over the past decade

Infrastructure and Automobiles are the next largest consumer, with 32 per cent of total consumption

Based on higher demand requirements from construction & other steel-intensive sectors, the government plans to double the
domestic per capita consumption of the alloy to 120 kg by 2020.

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STEEL
KEY PLAYERS OF THE INDUSTRY

Company Products

Tata Steel Ltd Finished steel (non-alloy steel)

SAIL Finished steel (non-alloy steel)

JSW Steel Ltd Hot-rolled coils, strips and sheets

Jindal Steel & Power Ltd Iron and steel

Ispat Industries Ltd Hot-rolled coils, strips and sheets

Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes

Bhushan Steel Ltd Cold-rolled coils, strips and sheets

Visa Steel Ltd Ferro Chrome, coke and special steel

Source: TechSci Research

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STEEL
NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY (1/2)
Most of the companies in the industry are undertaking modernisation & expansion of plants to be
more cost efficient. E.g. SAIL has undertaken modernisation & expansion for its 6 plants
Growing investments An Inter-Ministerial Group (IMG) functioning under the Ministry of Steel, is monitoring & coordinating
major steel investments across the country
The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with the
total investment of USD24.88 Billion

International Coal Ventures Pvt Ltd, comprising SAIL, RINL, CIL, NTPC & NMDC, set up for
acquisition of coal mines overseas
The consortium of SAIL & National Fertiliser Ltd. (NFL) has been nominated for revival of Sindri Unit
Strategic alliances of the Fertiliser Corporation of India Ltd
RINL, Vishakhapatnam Steel Plant & the Power Grid Corporation of India Ltd (POWERGRID) signed
an MoU to set up a JV company to manufacture transmission line towers & tower parts including
R&D of new high-end products

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

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

Notes: MOUs - Memorandum of Understanding, MT - Million Tonnes

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

Indian steel companies have now started benchmarking their facilities & processes against global
standards, to enhance productivity. These steps are expected to help Indian companies improve raw
material & energy consumption, and improve compliance with environmental & pollution yardsticks

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

Ministry has established a task force to identify the need for technology development and R&D and
has adopted energy efficiency improvement projects for mills operating with obsolete technologies

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

Source: Ministry of Steel, TechSci Research

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STEEL
KEY STEEL PLANTS IN INDIA

Steel integrated plants

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

Tata Steels largest steel

plant, based in Jamshedpur

Alloy and special steel plants

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

Source: Company websites, TechSci Research

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STEEL

PORTERS FIVE FORCES ANALYSIS

STEEL
PORTERS FIVE FORCES ANALYSIS
Competitive Rivalry

The steel industry is highly concentrated, with the top five players accounting
for more than 70 per cent of the market share
Price is generally market determined. Steel companies usually compete on the Threat of New
basis of production capacity, economies of scale, access to raw material, etc. Entrants
(Low)

Threat of New Entrants Substitute Products

Capital intensive, industry players Low threat of substitutes

are large and enjoy economies of Aluminium and plastics are being Bargaining Competitive Substitute
scale. Some have their own mines used in few cases in automotive
for sourcing key raw materials
Power of Rivalry Products
and other consumer durable
Customers (Medium) (Low)
Several regulatory clearances sectors. However, it still does not
required, including environmental, pose significant threat to steel (Medium)
land acquisition, etc.

Bargaining Power of Suppliers Bargaining Power of Customers

Bargaining
Power of
Large integrated companies have Major steel consumption sectors,
Suppliers
their own mines to source key raw such as automobiles, oil & gas,
shipping, consumer durables and
(Medium)
materials
power generation, enjoy high
bargaining power and get
favourable bulk deals. Smaller
customers, however, do not enjoy
this benefit

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STEEL

STRATEGIES ADOPTED
STEEL
STRATEGIES ADOPTED
Companies in the steel industry are investing heavily in expanding their capacity. Major public &
private companies, including Tata Steel, SAIL & JSW Steel, are expanding their production
capacity. Steel production is expected to reach 200 mtpa by 2020 compared to 91.46 mtpa in 2015
India is the 3rd-largest crude steel producer in the world with production reaching 96 million tonnes
in 2016.
The government has stepped up infrastructure spending from the current 5 per cent of GDP to 10
Capacity expansion per cent by 2017, and the country is committed to investing USD1 trillion in infrastructure during the
12th Five Year Plan. Considering 15 per cent as steel component in the total investment, the
initiative has a potential to generate an additional demand for steel of 18.75mtpa
The Ministry of Steel is encouraging R&D activities by providing financial assistance from Steel
Development Fund (SDF) & Plan Scheme of the Central Government. Furthermore, the
government has allowed 100 per cent FDI through the automatic route in the Indian steel sector
A long term perspective is to achieve capacity of 300 mtpa by 2025

In the last few years, rapid & stable growth in demand has also prompted domestic entrepreneurs
Greenfield projects
to set up fresh greenfield projects in different states of the country. Mittal Steel announced two 12
focus on downstream mtpa greenfield steel projects, 1 each in Jharkhand & Orissa
value-added products
As India surges ahead in building infrastructure, investments in steel pave the way ahead

Source: CCI, Ministry of External Affairs

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STEEL
STRATEGIES ADOPTED
Steel companies are strengthening their position through cross border mergers & acquisitions.
The focus is on improving existing technology to upgrade production process & developing
new value added-products.
In 2014, Arcelor Mittal along with Nippon Steel & Sumitomo Metal Corporation acquired
ThyssenKrupp Steel USA. Notable deals include Essar Globals acquisition of Canada-based
Algoma Steel.
Mergers & Acquisition
On 1st August 2016, Kirloskar Ferrous Industries Ltd has announced to acquire pig iron plant
of VSL Steels Ltd. for USD23.68 million. Also on 18 August 2016, JSW Steel Ltd. has acquired
74 per cent stake of Praxair Oxygen Pvt. Ltd. in their joint venture for USD36 million
As on December 01, 2016, JSW Steel, the flagship steel company of JSW Group, entered into
a consortium to acquire 35 per cent stakes of Ilva steel plant, in Italy.
Tata Steel has executed an agreement with Creative Port Development (CPDPL) for the
acquisition of the majority stakes, i.e., 51 per cent in CPDPL in January 2017
Italys Marcegaglia ArcelorMittal have offered to buy Italys troubled Ilva steel plant, for an
amount of USD2.4 billion & will boost production
In March 2017, Central Government permitted sale of SAILs 3 units including Alloy Steels
Plants, Visvesvaraya Iron & Steel Plant, Salem Steel Plant with the transfer of management in
these plants for the strategic disinvestment.

Source: CCI, Ministry of External Affairs

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STEEL

GROWTH DRIVERS
STEEL
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS

Growing demand Policy support Increasing investments

Growing demand in Rising investments

100 per cent FDI in
the construction from domestic and
the steel sector
industry foreign players
Inviting Resulting in

Encouragement of Increasing number

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

Reduced custom Foreign investment

Rising demand for duty and other of nearly USD40
consumer durables favourable billion committed in
and capital goods measures the steel sector

Note: FDI - Foreign Direct Investment

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STEEL
STEEL GROWTH DRIVEN BY CONSTRUCTION & INFRASTRUCTURE

Investment in infrastructure by NITI Aayog is expected to Projected values of investment in infrastructure

expand at a CAGR of 14.5 per cent over FY1217 (USD billion)
Investment of USD650 billion in the urban infrastructure
sector is expected in the next 20 years
CAGR: 14.5
This increase in infrastructure investment is set to raise 191.4
per cent
steel demand by roughly 18.75 MTPA 169.0
149.1
Investments of USD33.06 billion* would be made in the 131.2
steel sector in the coming years 114.1
97.3

FY12 FY13 FY14 FY15 FY16 FY17

Source: TechSci Research, Tata Steel

Note: MTPA - Million Tonnes Per Annum
*As per Tata Steels estimates

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STEEL
CAPITAL GOODS, CONSUMER DURABLES AND AUTOMOTIVES FURTHER DRIVING STEEL GROWTH
Over FY0520F, the consumer durables sector will expand at a CAGR of 12.54 per cent as growth in disposable income is
expected to result in increase in demand for such products
The consumer durables market is expected to reach USD12.5 billion in FY16 and is projected to reach USD20.6 in FY20
The capital goods & consumer durables sectors are expected to grow at 7.58.8 per cent over 201221
Automotive production in India expanded at a CAGR of 8.76 per cent during FY1017
Over FY1421, the automotive sector is projected to rise at a CAGR of 10.2 per cent

Consumer durables market size (USD billion) Total automobile production in India (million units)

20.71
19.76
19.45
17.71
16.58
16.31
14.15
20.6

11.13
CAGR:12.54%
12.5
9.7

3.79
3.41
3.23

3.22
3.15

3.09
2.98
7.3 7.3 7.4
2.36

6.3
5.2

0.93

0.83

0.81
0.78
4.7 0.76
0.57

3.8 4.2

0.7

0.7
3.5

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY14

FY15

FY16E

FY20F

Passenger Vehicles Commercial Vehicles Two & Three Wheelers

Source: SIAM, JSPL presentation, Corporate Catalyst India, TechSci Research

Notes: E - Estimate; F- Forecast, FY - Indian Financial Year (April - March)
JUNE 2017 For updated information, please visit www.ibef.org 27
STEEL
POLICY SUPPORT AIDING GROWTH IN THE STEEL SECTOR (1/2)

New National Steel Policy has been formulated by the Ministry of Steel in 2016, which will
retain the objectives included in National Steel Policy (NSP) 2005. It aims at covering
broader aspects of steel sector across the country including environment and facilitation of
For National Steel new steel projects, growth of steel demand in India & raw materials
Policy 2016 Under the policy, the central government stated that all the government tenders will give
preference to domestically manufactured steel & iron products. Moreover, Indian steel
makers importing intermediate products or raw materials can claim benefits of domestic
procurement provision by adding minimum of 15% value to the product.

A new scheme, The scheme for the promotion of R&D in the iron & steel sector, has been
approved with budgetary provision of USD24.6 million to initiate & implement the
provisions of the scheme as per the 11th Five-Year Plan which has continued in the 12th
R&D and innovation Five Year Plan
The development of technology for Cold-Rolled Grain Oriented (CRGO) steel sheets &
other value-added products is also included under the policy purview and is allocated
USD6.7 million

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

Source: Ministry of Steel, TechSci Research

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STEEL
POLICY SUPPORT AIDING GROWTH IN THE STEEL SECTOR (2/2)
The government hiked the export duty on iron ore to 30 per cent ad valorem on all varieties of
Rise in export duty
iron ore (except pellets)

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

Push due to Make in Going forward, the Make in India initiative & policy decisions taken under it are expected to
India initiative augment the countrys steel production capacity & resolve issues related to the mining industry

Increase per Capita Steel Consumption to 160 Kgs by 2030-31.

To domestically meet entire demand of high grade automotive steel, electrical steel, special
National Steel Policy steels and alloys for strategic applications by 2030-31.
2017 Increase domestic availability of washed coking coal so as to reduce import dependence on
coking coal from ~85 per cent to ~65 per cent by 2030-31

To meet the target of 300 MT capacity by 2025, the government is planning to come up with a new & dynamic steel policy for
the sector. The government is also planning to create independent regulators for steel and mining sectors.
Source: The Economic Times, Ministry of Steel, Business Standard,
Make In India, TechSci Research
JUNE 2017 For updated information, please visit www.ibef.org 29
STEEL
MAJOR INITIATIVES TAKEN BY THE MINISTRY OF STEEL

Export duty on iron ore has been increased to 30

per cent ad valorem on all varieties of iron ore
(except pellets), to preserve iron ore resources for
domestic use
As per the governments decision, the Government
of Indias 51 per cent shareholding in Eastern
Investments Company Ltd (EIL), under Bird Group
of Companies, was transferred to RINL
New R&D policy for the steel sector have been
finalised/adopted for implementation
New techno-economic benchmarks have been
evolved on international patterns to improve
performance of steel PSUs; implementation is
being monitored closely
The Steel Ministry is preparing a feasibility report to
merge all the small PSUs. Feasibility study is under
preparation for the merger of MSTC(1) & Ferro
Scrap Nigam Ltd, Bhilai (FSNL)
Under R&D scheme in assistance with SDF, 91
R&D projects have been approved upto April 2016,
with total fund of USD145.23 million, wherein SDF
contributed for USD81.91 million
Under the Ministry, the Joint Plant Committee
(JPC) studied 300 districts, 1,500 villages, 4,500
manufacturers & 8,000 retailers spread over Indias
28 states & 7 union territories to assess steel
demand in the rural areas & examine the potential
to increase steel consumption levels
The Ministry of Steel set up the Steel Innovation
Council to promote innovative ideas in the steel
sector
The National Steel Policy 2017 for the forthcoming
years has been approved
To lead the research in the steel sector, Ministry
will be setting up Steel Research & Technology
Mission of India (SRTMI) with an initial corpus of
USD33 million
Government has initiated Project Monitoring Group
(PMG) constituted under the Cabinet Secretariat in
order to fast track various clearance issues that
results in the delay in investments in the steel
industry

Source: Ministry of Steel, Ministry of External Affairs, TechSci Research

Notes: FSNL: Ferro Scrap Nigam Ltd, (1) Previously known as Metal Scrap Trade Corporation Limited,
SDF: Steel Development Fund

JUNE 2017 For updated information, please visit www.ibef.org 30

STEEL
STEEL SEZs IN INDIA

Developer Location Product

Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products

SAIL Salem SEZ Pvt Ltd Salem, Tamil Nadu Steel

Orissa Industrial Infrastructure Metallurgical-based engineering &

Jaipur, Orissa
Development Corporation ancillary/downstream industry

Tata Steel Special Economic Zone

Gopalpur, Odisha Steel & allied downstream industries
(TSSEZ)

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

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STEEL
THE SECTOR WITNESSED RISING INVESTMENTS IN THE LAST DECADE
Date announced Acquirer name Target name Value of deal (USD million)
Aug-16 JSW Steel Ltd Praxair Oxygen Pvt. Ltd. 36
Aug-16 Kirloskar Ferrous Industries Ltd VSL Steels Ltd. 23.68
Aug-14 JSW Steel Ltd Welspun Maxsteel Ltd 165.85
Apr-14 JSW Steel Ltd Vallabh Tinplate Pvt Ltd 7.63
Mar-14 Lalitanjali Group Pvt Ltd Centom Industries Ltd -
Dec-13 Venus Insec Pvt Ltd Goodluck Steel Tubes Ltd 23.73
Oct-13 JSW Projects Ltd IST Steel & Power Ltd
Aug-13 Readymade Steel India Ltd Kridhan Infra Solutions Pvt
Jul-13 Swelect Energy Systems Ltd Amex Alloys Pvt Ltd
Apr-13 Metallurgica Siderfoge S.r.l AMW-MGM Forgings Pvt Ltd
Feb-13 Wayzata II Indian Ocean Ltd Ramkrishna Forgings Ltd 51.90
Nov-12 Rabale Engineering India Ltd Pradeep Metals Ltd 6.85
Nov-12 Suncoke Energy Inc Visa Steel Ltd-Coke division
Oct-12 Aum Saw Pipes & Industries Pvt Greenearth Resources 2.77

Cumulative FDI inflows

Period: April 2000 to March 2017
Sector
Metallurgical industries USD10.331 billion
Per cent of total FDI inflow 3.00
Source: Thomson ONE Banker, Fact Sheet on Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion

JUNE 2017 For updated information, please visit www.ibef.org 32

STEEL
PLANNED CAPACITY ADDITIONS BY 2017-18

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

Existing Brownfield Greenfield Total capacity

Company
capacity expansion expansion addition

Tata Steel Ltd 12.50 0.4 0 12.59

Essar Steel Ltd 10.00 0 0 10.00

JSW Steel Ltd 18.00 0 0 18.00

Jindal Stainless Limited 1.00 0.15 0 1.15

Jindal Stainless (Hissar) Ltd 0.78 0.08 0 0.86

Bhushan Steel Ltd 5.60 0 0 5.60

Bhushan Power & Steel Ltd 2.50 0 0 2.5

Monnet Ispat & Energy Ltd 1.80 0 0 1.80

Electrosteel Steel 1.88 0 0 1.88

Visa Steel Ltd 0.50 0 0 0.50

Source: Ministry of Steel Annual Report, Joint Plant Committee

Note: MTPA - Million Tonnes Per Annum

JUNE 2017 For updated information, please visit www.ibef.org 33

STEEL

OPPORTUNITIES
STEEL
OPPORTUNITIES (1/2)

Automotive Capital goods Infrastructure Airports

The automotives The capital goods The infrastructure More and more modern &
industry is forecasted sector accounts for sector accounts for 9 private airports are
to grow in size by 11 per cent of steel per cent of steel expected to be set up
USD74 billion in 2015 consumption & consumption &
In 2016, passenger traffic
to USD260-300 expected to increase expected to increase
billion by 2026 at Indian airport stood at
14/15 per cent by 11 per cent by 2025-
223.61 million & number
With increasing 2025-26 & has the 26.
of operational airports
capacity addition in potential to increase
Due to such a huge stood at 95 in FY16
the automotive in tonnage & market
investment in
share Development of Tier-II city
industry, demand for infrastructure the
airports would sustain
steel from the sector Corporate Indias demand for long steel
is expected to be consumption growth
capex is expected to products would
robust grow & generate increase in the years Estimated steel
In 2016, Indian greater demand for ahead consumption in airport
automotive sector is steel building is likely to grow
estimated to be 3rd more than 20 per cent
largest automotive over next few years
market, by volume

Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India

Notes: Capex Capital Expenditure, P - Provisional

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STEEL
Railways
The Dedicated Rail
Freight Corridor (DRFC)
network expansion would
be enhanced in future
Gauge conversion,
setting up of new lines &
electrification would drive
steel demand
Indian Railways started
the PPP mode of funding
& has already awarded
projects worth around
USD1.73 billion during
the 1st 7 months (April-
October) of FY16
In January 2017, Crisil
estimated that the
railways sector could
create business
opportunities worth
USD99.65 billion
JUNE 2017
Oil and gas
Oil and gas amongst The government targets
major end-user segment
accounted for ~34.4 per
cent of primary energy
consumption in FY16
This would lead to an
increase in demand of
steel tubes and pipes,
providing a lucrative
opportunity to the steel
industry
Investment of USD70
billion are expected
during 2012-17
OPPORTUNITIES (2/2)
Power Rural India
Rural India is expected to
capacity addition of 88.5 reach per capita
GW under the 12th Five- consumption of 12.11 kg
Year Plan (201217) & to 14 kg for finished steel
around 100 GW under the by 2020.
13th Five-Year Plan (2017
Policies like Food for
22)
Work Programme (FWP)
Both generation & & Indira Awaas Yojana,
transmission capacities Pradhan Mantri Gram
would be enhanced, Sadak Yojana are driving
thereby raising steel growing demand for
demand from the sector construction steel in rural
India
Conventional power
capacity addition of 23.98 In FY16, per capita
GW has registered to be consumption of steel in
the highest in FY16 rural India is estimated at
60 kg, which is lower in
comparison with the
global average of 216 kg
Source: Make In India, Ministry of Power, TechSci Research
For updated information, please visit www.ibef.org 36
STEEL

SUCCESS STORIES
STEEL
JINDAL STEEL AND POWER LTD: REAPING BENEFITS OF PRUDENT INVESTMENTS (1/3)
Jindal Steel and Power Limited Projected crude steel production (million tonnes)
Incorporated in 1979, Jindal Steel & Power Ltd. (JSPL) is an integrated
steel producer & the largest coal-based sponge iron manufacturer in the
world. The company has an installed steel production capacity of 3 MTPA
at Raigarh in Chhattisgarh. JSPL is engaged in manufacturing long 31.75
CAGR:
products & is specialised in producing long rails for railways & large sized 36.0per cent
H-beams as well as columns for the infrastructure & construction sector
JSPL also has significant presence across the mining, power generation
& infrastructure sectors
In March 2017, Jindal Steel has entered into an agreement with Defence 12.56
Research & Development Organisation (DRDO), which would allow the
agency to transfer technology facilitating manufacturing of high-nitrogen
steel, for application in defence sector.
New & expansion projects include setting up of a 7 MTPA integrated steel
plant in Chhattisgarh, 12 MTPA integrated steel plant in Jharkhand & a 6
FY15 FY18E
12.5 MTPA integrated steel plant in Orissa. Source: Ministry of Steel,
Company website (www.jindalsteelpower.com),
Achievements: TechSci Research
2014 - Company has commissioned the billet caster plant with E- Estimated
capacity of 6 MTPA at Angul with record time of 1 year
2015 - Company has created history with its Raigarh steel
facility producing 10,000 tonnes of crude steel in a single day

JUNE 2017 For updated information, please visit www.ibef.org 38

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

Sale of steel (million tonnes) Financial growth (USD million)

3,376
4.6

3,315

3,218
3,199
3,007
4.2
4.0

2,813
3.8

3.5

2,287
3.2
3.1
3.0

2.9
2.8

2.8

1,803
2.5

1,596
1,488
2.3

2.3
2.2
2.1
2.0

1.9
1.6

1.6
1.4

958

910
816
1.2

818
671
1.0

721
634
0.8

532
0.7

452
438
431

395
0.5

197
0.3

103
0.2

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Finished Steel Products Semi - Steel Products Pellets Gross Revenue PBDIT

Source: Company website (www.jindalsteelpower.com)

Notes: Company clubs iron and steel segment s performance; PBIDT (Profit Before Interest, Depreciation and Tax)

JUNE 2017 For updated information, please visit www.ibef.org 39

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

Strong diversified
customer base of
more than 1 lakh
TMT Re-bars
Expansion in
international
markets FY17
Wire rods Gross
Foray into the oil & Revenue is
gas and cement USD3376
sectors as a part of FY16
Million
diversification Gross
Plate and coils Revenue is
USD2813
Million
Organic growth
through capacity
Column sections
additions FY15 FY16
FY08 Steel capacity: Steel capacity:
ISO 5.75 MTPA 4.75 MTPA
Hot-rolled parallel 9001:2008
flange beams 1991 accreditation The iron & steel
Commenced segment continues to
operations be a major contributor
Long track rails (~75per cent)

1991 1993 2012 2015

Source: Company Website

JUNE 2017 For updated information, please visit www.ibef.org 40

STEEL
BSL: TRANSITION INTO INTEGRATED STEEL PRODUCER, A STRATEGIC MOVE (1/3)

Projected crude steel production (million tonnes)

Bhushan Steel Limited

Established in 1983, Bhushan Steel Ltd. (BSL) is the 3rd largest

secondary steel producer in India. The company is headed 7.34
towards an installed capacity of 7 MTPA (post completion of CAGR:
Phase III; 4.7 MTPA of primary & 2.2 MTPA of secondary). It 78.1per cent
primarily manufactures flat steel products for the automobile
industry
Products Cold-rolled closed annealed coils, galvanised coils
and sheets, high tensile steel strapping, colour coated coils,
galume sheets, coils, hardened & tempered steel strips, billets, 2
sponge iron, precision tubes & wire rods
Milestones:
Emerged as 3rd largest cold rolled steel producer with
an installed capacity of 1 MT and sales more than FY16 FY18E
USD1 Billion
Transformed itself as one of the largest & only Cold
Source: Company website (www.bhushansteel.com), Ministry of Steel
Rolled Steel plant in India Annual Report 2015, TechSci Research
E- Estimated

JUNE 2017 For updated information, please visit www.ibef.org 41

STEEL
BSL: TRANSITION INTO INTEGRATED STEEL PRODUCER, A STRATEGIC MOVE (2/3)

Steel production (million tonnes) Financial growth (USD million)

2251
3.07

2173

1937
1766
1662
2.4

1539
2.1 2.18

1266
1178
1161
1.8
1.6

928
1.2 1.1

693
1 1.08

221

213
178

167
105

92
62
35

10
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

-208

-434
Gross Revenue NPAT

Source: Company website (www.bhushansteel.com), TechSci Research

Note: NPAT - Net Profit After Tax

JUNE 2017 For updated information, please visit www.ibef.org 42

STEEL
BSL: TRANSITION INTO INTEGRATED STEEL PRODUCER, A STRATEGIC MOVE (3/3)

Company has
March, 2016: Received the
Other existing capacity(1)
environment clearance of
developed products Technological of 5.6 MT
USD458.3 million for
setting up a pellet unit upgradation and
having production capacity further capacity
Sponge iron of 7 MTPA addition
Iron making and
Capacity
castings expansion FY16
(0.9 MT to 2.5 MT) USD1.94
billion
Partnership with
Alloy billets turnover
Alloy steel Japanese steel
producer,
Sumitomo FY15
Organic growth in FY06 USD1.76
Color coated tiles
Wheel, tyre and steel and flat Primary steel billion
and pipes turnover
products production in
axle plant (railways) Odisha
1989
Galvanised Secondary
Company has 6,047
steel
employees as of
production in
March 2014
UP
Cold-rolled
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2014 2016

Note: (1) - Data is in terms of crude steel, till December 2015

JUNE 2017 For updated information, please visit www.ibef.org 43
STEEL
TATA STEEL: A COMPELLING GROWTH STORY (1/3)
Tata Steel Limited Projected crude steel Production (million tonnes)
Established in 1907 by the visionary founder JN Tata, Tata Steel is
among the top ten global steel companies with an annual crude steel
capacity of nearly 30 MTPA 33.2
The company caters to sectors such as automotive, construction, CAGR:
consumer goods, engineering, packaging, energy & power, ship 82.6per cent
building, rail and defense & security
Milestones:
2009 Tata Ryerson & HMPCL merge with Tata Steel 9.96
2007 Tata Steel and Corus were integrated at USD12 billion,
making Tata Steel one of the top 10 global steel producers
2013 Tata Steel made a transition from open cast mining to
underground mining FY16 FY18F
FY18E

2016 Company would increase its crude steel capacity from

the current level of 9.96 MTPA in FY16 to 33.2 MTPA by FY18
As per Dow Jones Sustainability Index 2016, the company was Source: Ministry of Steel Annual Report 2016, Company website
declared global industry leader in the steel sector. (www.tatasteel.com), TechSci Research
F- Forecast
As on December 7, 2016, Tata Steel announced its plans to
invest USD1.36 billion during 2017-2027, to support its steel
manufacturing at Port Talbot, United Kingdom
In accordance with all technical parameters, Tata Steels 1st
ever Ferro Chrome plant started production at Gopalpur in
Bhubaneshwar, in February 2017

JUNE 2017 For updated information, please visit www.ibef.org 44

STEEL
TATA STEEL: A COMPELLING GROWTH STORY (2/3)

Production and sale of steel (million tonnes) Financial growth (USD billion)(1)

7.20

7.10

7.00

6.90

6.90
5.90

5.84
5.80
5.60
9.5
10
9.1
8.9

8.8
8.5

4.50
7.9
7.5

3.90
7.0
6.7

6.6
6.4
6.4
6.2
5.4
5.2

2.48
4.9

4.9
4.8

4.8
4.6
4.4

1.50

1.40
1.20

1.10

1.10

1.10

1.10
0.90

0.90
0.80

0.75

0.21
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Gross Revenue NPAT
Production Sales
Source: Company website (www.tatasteel.com), TechSci Research
Notes: NPAT - Net Profit After Tax,
(1)Financials reflect figures of Indian operations

JUNE 2017 For updated information, please visit www.ibef.org 45

STEEL
TATA STEEL: A COMPELLING GROWTH STORY (3/3)

Developed products
Technological
upgradation
FY17
Iron making and USD2.48
Capacity billion
castings expansion turnover(1)
(3 MT) FY16
USD5.84
billion
Alloy steel Diversification turnover(1)
(coal injection
FY15
unit) USD6.9
billion
Wheel, tyre and Organic growth in turnover(1)
axle plant (railways) steel Announced plans to
merge Tata
Company Metaliks Ltd and
has existing Tata Metaliks
Pig iron and 1912 capacity(2) Kuboto Pipes Ltd
steel ingots M&A with itself in April
Production of 9.6 MT
(Tata-Corus) 2013
capacity (1.6
lakh tonnes)

Blast furnace
1991 1993 2013 2016
Source: Company website (www.tatasteel.com), TechSci Research
Notes: M&A - Mergers and Acquisitions, (1)- Revenues from Indian operations; (2) Data is in terms of crude steel, till December 2015
JUNE 2017 For updated information, please visit www.ibef.org 46
STEEL
JSW STEEL: SURGING AHEAD ON COST COMPETITIVENESS (1/3)
JSW Steel Projected crude steel production (million tonnes)

Established in 1994, JSW Steel Ltd manufactures iron & steel

products in India & abroad. The company has an installed 47
capacity of 14.3 million tonnes per annum, CAGR: 197.5
Products Hot-rolled coils, plates & sheets; cold-rolled coils per cent
and sheets; galvanised sheets & coils, galvume; TMT bars,
wire rods, cast products, pre-painted galvanised coils, sheets.
Achievements:
15.8
2011 National Sustainability Award by the Indian
Institute of Metals
2009 Gold Award in the Metal and Mining sector
2008 National Energy Management Award instituted
by CII FY17 FY18E

2014 Company plans to increase the crude steel

capacity to 47 MTPA by FY18 from the current level of
14.3 MTPA Source: Ministry of Steel Annual Report 2016,
Company website (www.jsw.in), TechSci Research
In FY15, JSW reported net sales of USD8.79 billion & E- Estimated
became the largest steel producer in the country
leaving behind SAIL & Tata Steel
In FY16, JSW accounted for net sales of USD6.4 billion

JUNE 2017 For updated information, please visit www.ibef.org 47

STEEL
JSW STEEL: SURGING AHEAD ON COST COMPETITIVENESS (2/3)
Product group-wise sales (million tonnes) Financial growth (USD million)

8,465
7,646
7,515
7,221

7,137
10.97

6,165
5,228
9.7
9.7

4,053
6.9

3,162
5.53
5.9

2,631
4.7

1,937
1,417
3.06
2.76
2.0
1.8
1.7
1.5
0.74

534

532
1.1

421

419
0.39
0.34

360

359
339

332
0.25

269

221
178
0.4
0.3

0.3

96
Semis Rolled Flat Rolled Long FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

FY11 FY12 FY13 FY14 FY15 FY16 FY17 Gross Revenue NPAT

Source: Company website (www.jsw.in)

JUNE 2017 For updated information, please visit www.ibef.org 48

STEEL
JSW STEEL: SURGING AHEAD ON COST COMPETITIVENESS (3/3)
FY17
USD8.46
Hot-rolled billion
Capacity turnover
addition 7.8 MT

Cold-rolled
JV formed to
explore, develop & FY16
mine iron ore with USD6.17
MML billion
Wire rods turnover
FY15
USD7.6
Organic growth billion
TMT Re-bars and integration turnover
1994
ISO FY16
Galvanised accreditations Saleable steel
1994
product Production sales to reach
capacity 12.13 million
(1.25 MTPA) tonnes
Special steel bars
1994 1995 1996 1997 2014 2015 2016

Notes: JV - Joint Venture, TMT - Thermo Mechanically Treated, MML - Mysore Minerals Limited, MTPA - Million Tonnes Per Annum

JUNE 2017 For updated information, please visit www.ibef.org 49

STEEL

USEFUL INFORMATION
STEEL
INDUSTRY ASSOCIATIONS

Indian Stainless Steel Development Association

L-22/4, DLF Phase-II
Gurgaon, Haryana 122 002
Phone: 91-124-4375501
Fax: 91-124-4375509
E-mail: nissda@gmail.com

JUNE 2017 For updated information, please visit www.ibef.org 51

STEEL
GLOSSARY
CAGR: Compound Annual Growth Rate

FDI: Foreign Direct Investment

FY: Indian Financial Year (April to March)

So FY10 implies April 2009 to March 2010

JV: Joint Venture

MoU: Memorandum of Understanding

MT: Million Tonnes

MTPA: Million Tonnes Per Annum

NPAT: Net Profit After Tax

SEZ: Special Economic Zone

TMT: Thermo Mechanically Treated

USD: US Dollar

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

JUNE 2017 For updated information, please visit www.ibef.org 52

STEEL
EXCHANGE RATES

Exchange rates (Fiscal Year) Exchange rates (Calendar Year)

Year INR equivalent of one USD Year INR equivalent of one USD
200405 44.81
2005 43.98
200506 44.14
2006 45.18
200607 45.14
200708 40.27 2007 41.34

200809 46.14 2008 43.62

200910 47.42 2009 48.42

201011 45.62
2010 45.72
201112 46.88
2011 46.85
201213 54.31
2012 53.46
201314 60.28
2013 58.44
2014-15 61.06
2014 61.03
2015-16 65.46 2015 64.15

2016-2017E 66.95 2016 (Expected) 67.22

Source: Reserve bank of India,
Average for the year
JUNE 2017 For updated information, please visit www.ibef.org 53
STEEL
DISCLAIMER

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JUNE 2017 For updated information, please visit www.ibef.org 54