Budget 2011: Steel

The Indian steel sector has witnessed a roller coaster ride of late wherein it has witnessed a significant spurt in demand due to expanding oil and gas sector, large infrastructure spending coupled with growth in housing, consumer durables and auto sectors. India became the fourth largest producer of crude steel in the world in 2010 as against the eighth position in 2003 and is expected to become the second largest producer of crude steel in the world by 2015. As per World Steel Association (WSA), India was the fourth largest producer of crude steel during JanuarySeptember 2010 producing produced 50.1 m tonnes (MT) crude steel during the period. Currently, with the governments increased emphasis on infrastructure, we believe the sector is poised for significant growth over the medium to long term. As a matter of fact, Indias per capita steel consumption continues to be low at 46 kg as against the global average of 198 kg. Thus, this further strengthens our belief that the potential ahead for India to raise its steel consumption is high. The domestic steel industry, which raised prices in wake of some stimulus measures being withdrawn after the last budget, has warned of another price hike if stimulus is completely withdrawn in Budget 2011-12.

Budget expectations Hike in export duty on all types of iron ore forms. Increase in import duty on steel to 20% from the current 5%. Increase in excise duties from current 8%. Infrastructure status to the steel industry Budget Measures Higher allocation towards rural infrastructure and fiscal incentives to infrastructure projects. Basic customs duty on steel reduced from 10% to 5%. Export duty on iron ore, a key input, increased to 20%. Surcharge on domestic companies reduced to 5% from 7.5% Rate of Minimum Alternative Tax (MAT) proposed to be increased from 18% to 18.5% of book profits. Budget Impact Increased focus on infrastructure development would result in development of highways, ports, power projects, bridges etc, which will consequently increase the demand for steel. Increased spending on rural development and low income housing will result in higher steel consumption. Reduction of basic custom duty and levy of higher export duty on iron ore will encourage domestic value addition vis-a-vis imports. It will also remove fiscal anomalies and to provide a level playing field to the domestic industry. Company Impact

Increase in spending on infrastructure and tax benefits due to lower customs duty and surcharge to be beneficial to major steel players like SAIL, Tata Steel and JSW Steel who account for bulk of the total steel production capacity in India. Increased spending on urban and rural development schemes, especially housing and other infrastructure is likely to increase the demand for long steel products, a positive for companies like SAIL and Tata Steel, which have a large dealer network spread across the country. Increase in demand for auto and consumer durables will result in rise in consumption of flat steel products. Companies like Tata Steel, JSW Steel and SAIL are poised to seize the opportunity here.

Indian Steel Industry Outlook to 2012 The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth. The government is backing the industry through favorable industrial reforms, while the private sector is supporting it with investments worth billions of dollars. Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors. With an impressive track record, the country has become a reputed name in the world steel industry. Global steel giants from all over the world have shown interest in the industry because of its phenomenal performance. For instance - the crude steel production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6 Million Metric Tons. On the other side, some Asian countries such as Japan and South Korea saw significant decline in their production levels. This further signifies the resilience and strength of the Indian steel industry against external risk factors.

Further Description: Indian Steel Industry Outlook to 2012 Our new research report Indian Steel Industry Outlook to 2012 says that the global economic slowdown hampered the growth curve of various steel intensive industries such as construction in 2009 and its impact also fell on steel demand. However, the government proactive incentive plans to boost economic growth by injecting funds in various industries like construction, infrastructure automobile and power will help the steel industry to again achieve its previous growth trajectory. The report also reveals that steel consumption in India is expected to grow significantly in coming years since per capita finished steel consumption is far less from its regional counterparts. In 2008, per capita finished steel consumption stood at an estimated volume of around 44 Kg, which represents tremendous growth potential for coming years. Indian Steel Industry Outlook to 2012 is an outcome of an extensive research and conceptual analysis of the steel industry in India. The report provides detailed information of forces which have led to the industry towards remarkable developments in the past few years. The report also gives an insight into the future outlook of various vertical industry segments, including automotive, aerospace, marine, consumer durables, power, railways, telecom and housing. The report classifies the finished steel product market into two categories - alloy and non-alloy. It also covers the information on industry-wise steel demand, overall steel consumption, production and trading

market. Apart from this, it also provides industry forecast (FY 2011-FY 2013) for different market segments.

Riding a rising consumption growth steel prices are set to soar during 2010. Though recession and ensuing economic slowdown considerably dented consumption growth during 2008-09 its unlikely to influence demand-supply gap significantly in coming years. After reaching the highest point during JulyAugust 2008, steel prices declined by more than 50-60% in the aftermath of the global recession. Since then, prices are on a strong upward ride with prices in the international market also firming up. For example, prices of hot rolled coil (HR) which, in the fourth quarter of 2008-09, were ruling at about 29,500 per MT, are currently at around Rs 32,000-35,000 per MT. Thats about an 18% increase. Its highly likely that high prices will persist, given that HR coils are used primarily in the automobile industry. Steel Production : India is the 5th largest steel producer in the world, producing 55 MT steel that accounts for 7% of total global production. Steel production in India has increased by a compounded annual growth rate (CAGR) of 10.03 per cent over the period 2001-02 to 2006-07. During the same period CAGR of world steel production was 8.3%. The National Steel Policy has a target for taking steel production up to 110 MT by 201920. With the current rate of ongoing greenfield and brownfield projects, the Ministry of Steel has projected India's steel capacity is expected to touch 124.06 MT by 201112. Thanks to establishment of new state-of-the-art steel mills, acquisition of global scale capacities by steel makers, continuous modernisation and upgradation of older plants and backward integration into global raw material sources - India today occupies a central position on the global steel map. However, is it enough to quench ever rising thirst for more steel from Indias rapidly growing real estate, consumer goods and infrastructure sectors ? Consumption Growth : In the midst of recession and economic slowdown India consumed 26.49 MT of steel during April September 2009, a growth of 5.7% over same period last year on account of improved demand from sectors like automobile and consumer durables. Today, Indian steel consumption accounts for about 5% of global consumption. A Credit Suisse Group study states that India's steel consumption will continue to grow by 16 per cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion. Given the low percapita steel consumption figure of 35 Kg against 150 kg across the world and 250 kg in China its only logical that steel consumption will rise rapidly in coming years. Steel players like JSW Steel and Essar Steel are increasing their focus on opening up more retail outlets pan India with growth in domestic demand. JSW Steel currently has 50 such steel retail outlets called JSW Shoppe and is planning to increase it to 200 by March 2010. They expect at least 10-15 per cent of their total production to be sold by their retail outlets. Essar Steel which currently has over 300 retail outlets across the country, plans to set up 5,000 outlets of various formats soon. It expects to sell 3MT of steel through the retail route in two years. Demand Supply Mismatch : While demand growth has been robust, supply of steel has been tight in recent years. Structural issues like delay in capacity augmentation, land acquisition difficulties for new

steel projects and other impediments such as floods in Australia and Indonesia, snowstorms in China and floods in Jharkhand and Orissa have played significant role in moderating supply level. Import has been brisk - according to American Iron and Steel Institute (AISI), India imported 52,000 MT of steel during October 2009, a growth of 32% over previous month. However, during the same period United States imported a total of 1,560,000 MT of steel including 1,177,000 MT of finished steel, bringing imports for the two materials up by 29% and 15% Month on Month respectively. This was the highest monthly total import figure since February. With recession ending and global economy picking up imports are rising, firming up steel prices globally. Rising Input Cost: A major reason for increase in steel price is the cost-push effect of higher raw material prices. Contract prices of coking coal and iron ore are set to rise. Prices of iron ore contracts, which are due to be renegotiated early next year, are expected to be finalised at higher levels of anywhere between 10% and 25% over those of 2008-09. Iron ore contract prices in 2008-09 were sealed at $75 a MT, while coking coal prices were sealed at around $300 per MT. While in the current year, long-term coking coal prices have fallen to $128 per MT, in the spot market, prices are ruling slightly higher. Expect Steel Prices to Rise in 2010 : December can easily pass off as a watershed month for long product prices. The thrust of about 9% in the last 4 days (Dec 19-22) has amazed all. Although the reason apparently is a Govt crackdown on illegal mining resulting in shortage of iron ore and sponge iron and a speculative one at that it may as well be harbinger of price trend in new year. Indian Steel Industry World crude steel production declined from 1,344 mn tonnes in CY 2007 to 1,329 mn tonnes in CY 2008China continues to dominate

Global Scenario Worlds crude steel production has reached a level of 1,329 mn tonnes in CY 2008 but declined by 1.1% on YoY basis. During the period CY 2001-2008, the world crude steel production has grown at a Compounded Annual Growth Rate (CAGR) of 7.9%. Growth in crude steel production was mainly driven by emerging countries such as China and India which registered a CAGR of 18.7% and 10.6%, respectively, during the same period.

With global economic meltdown in CY 2008, global crude steel production in each month, post the month of August, has registered a negative growth on YoY basis. China produced about 502 mn tonnes of crude steel but the growth has slowed down to 2.6% as compared to 15.8% recorded in CY 2007 and 18.8% in CY 2006. India remained the fifth-largest crude steel producer, registering a growth of 3.7% on YoY basis.

Domestic Steel Industry Indias finished steel production has increased from 35.4 mn tonnes in FY 03 to 52.8 mn tonnes in FY 08, registering a CAGR of 8.3%. During the same period, finished steel consumption has grown at an incremental CAGR of 11.9%. Demand of steel in the country has been growing at a multiplication factor of approximate 1.2x-1.3x of the growth rate of the economy. Construction sector in the country is the largest consumer of steel and accounted for about 52% of the total finished steel consumption in FY 08.

Indias exports of finished steel have remained almost stagnant in the range of 4-5 mn tonnes in the past six years. But import of finished steel has grown from 1.5 mn tonnes in FY 03 to 6.5 mn tonnes in FY 08, registering a CAGR of 33.8%. In FY 08, India turned into a net importer of finished steel as countrys import rose by almost 46% on YoY basis.

Input Scenario India has self sufficiency in iron ore but for coking coal it has to mainly rely on imports. Iron ore production in the country has increased from 123 mn tonnes in FY 04 to 204 mn tonnes in FY 08, registering a CAGR of 13.9%. In FY08, India produced about 204 mn tonnes of iron ore, out of which the country consumed about 100 mn tonnes and 104 mn tonnes of iron ore was exported out of which about 80% of exports were made to China. Countrys coking coal import has increased almost two fold in the past six years. In FY 08, India imported about 22 mn tonnes of coking coal. Coke which can be directly used in BF is also not available in plenty in the country. Imports of coke in the country have increased from 2.2 mn tonnes in FY 03 to 3.8 mn tonnes in FY 07. Prices Globally, unprecedented demand growth of steel from China in the past few years has played a major role in the movement of international steel prices. Till the first half of CY 2008, globally, steel prices showed a rising trend. Post this period, due to global economic meltdown, steel prices have softened to the extent of US$ 500-600 per tonne.

Domestically, due to government interventions, steel producers were unable to hike steel prices in line with the rise in international steel prices. After voluntarily decline in prices by steel companies in the month of May 08, steel prices in the country have remained almost stable during June-September 2008 quarter. Thereafter to maintain the import price parity and limit steel imports, domestic steel manufacturers slashed steel prices in the first week of November 2008 in the range of about Rs.4,000 to Rs.6,000 per tonne. As a result, margins of steel players are under pressure in FY 09.

Demand for steel is expected to slow down but to grow at a CAGR of 8.0% in FY09-11 CARE Research estimates that during FY 09-11, demand for steel in the domestic market would grow at a CAGR of 8.0%. After registering a healthy CAGR of 11.9% during FY 04-08, the growth would slow down due to the impending downturn in the manufacturing sector and lower economic growth rate. Steel demand from the construction sector is expected grow at a lower CAGR of 9.5%. Poor performance of automobiles sector is expected to result in a fall in steel demand from this sector in FY 09 and remain more or less stable in the norrow range of 2.1 to 2.3 mn tonnes till FY 11.

Internationally, contract prices of coking coal are expected to come down by about 40-50% for the year 2009-10. Also, expected decline in international contract prices of iron ore would lead NMDC to revise domestic iron ore prices downwards. This is expected to provide relief to domestic steel manufacturers especially the non-integrated ones by way of reduction in the cost of production and in turn to improve profitability in FY 10 compared to the previous year. The report elucidates facts on the Indian Steel industry, supplemented by the latest statistics. The report is divided into two sections. Section I mainly covers analysis of past five years data and also performance of the industry in the current fiscal. Section II covers information on some technical aspects about the product and some basics of the steel industry. Following are the few points which are emphasised to accomplish the report.

Section I Performance of the global steel industry over past few years with evaluation of trends of countrywise crude steel production, finished steel consumption and import-export trade of steel products. Evaluation of Overall demand - supply scenario in the country covering various categories of steel products within broad types, flat and long steel products. Domestic prices of various grades of steel products and also the trend of steel prices in the global market. Countrys self sufficiency in terms of iron ore, coking coal, coke etc. is discussed with comprehensive statistics of respective domestic and global scenarios. Brief on backward integration level of domestic steel companies. Projection of steel demand growth rate alongwith bifurcation of steel demand from various demand driving sectors in the next two years. Outlook on steel prices and margins of the industry.

 Operating & financial performance of top players in the industry alongwith the cost structure, capacity expansion plans and future outlook.

Section II Brief on peculiar characteristics of industry, types & applications of various types of steel products and a brief on various steel manufacturing processes. Comprehensive database of financial statistics of different steel companies and key operational statistics of both domestic and international steel industry. Database on key input materials like iron ore, coking coal and sponge iron.

India Steel Industry India is the fifth largest producer of steel in the world. India Steel Industry has grown by leaps and bounds, especially in recent times with Indian firms buying steel companies overseas. The scope for steel industry is huge and industry estimates indicate that the industry will continue will to grow reasonably in the coming years with huge demands for st ainless steel in the construction of new airports and metro rail projects. The government is planning a massive enhancement of the steel production capacity of India with the modernization of the existing steel plants. Industry Statistics Government targets to increase the production capacity from 56 million tones annually to 124 MT in the first phase which will come to an end by 2011 - 12. Currently with a production of 56 million tones India accounts for over 7% of the total steel produced globally, while it accounts to about 5% of global steel consumption. The steel sector in India grew by 5.3% in May 2009. Globally India is the only country to post a positive overall growth in the production of crude steel at 1.01% for the period of January - March in 2009. Export About 50% of the steel produced in India is exported. India's export of steel during April December 2008 was 64.4 MT as against 9.7 MT in December 2007. In February 2009, steel export increased by 17% to 12.MT from 10.8 MT in the same month last year. More than 50% of steel from India is exported to China. The Government's decision to reduce export duty on iron ore lumps from 15% to 5% has given a major boost to the export of steel. Hurdles Power shortage hampers the production of st eel Use of outdated process for production Lags behind in the production of stainless steel Deficiency of raw materials required by the industry Labor productivity is low. It is 144 tons per worker per year against 600 tons in Western Europe as per estimates Inadequate shipment capacity and transport structure Strengths

There are many strong points of the industry that makes it one of the leading names in the global steel industry. The rate of labor wage in India is among one of the lowest in t he world there by making large scale production feasible. The boom witnessed in the automobile industry has ensured that the demand for steel is increasing gradually and will continue to do so in the near future. There is huge manpower in India which is another reason why steel production in India is high and the industry is doing pretty well both nationally and internationally. Investments Numerous steel companies some major projects in the pipeline to invest in India Steel industry. Steel companies have earmarked more than 100 million USD for the setting up of sponge iron units in Koppal and Bellary in Karnataka. As per Investment Commission of India more than 30 billion USD are in the pipeline for investment over the next five years. FDI in Steel Industry The foreign direct investment in India being made in the steel industry of India has been picking up in the recent years as a result of the immense growth potential of the country's steel industry. In the Asian continent India is second only to China in terms of growth potential. The gross domestic product of India has increased in the recent times. This has sparked off the demand for production of steel in the country and the production has increased as well. In the recent times India has been among the top producers of crude steel of the world. All these factors are supposed to be important for attracting foreign direct investment in the Indian steel industry. The Indian national government also has been pretty liberal with their approach to the foreign direct investment being made in the country. The Indian government has also relaxed the various foreign investment laws. This has led to more international steel giants coming to India to tap the abundant resources present in the country. The increased interest shown by such companies has led to a growth in the steel industry of India. Research and studies have shown that Orissa and Jharkhand would be the steel junctions of India. In the recent times these two states, which are located in the eastern part of India, have been experiencing a number of steel projects in India. These projects have been funded by the Indian national government, as well as, a number of companies that are forces to reck on with in the context of the Indian steel industry. Since, the government has also been taking steps to make sure that the production and demand for Indian steel remains high in the international market, it may be assumed that an increasing number of companies from around the world would be interested in the Indian steel industry.

India in Global Crude Steel Production Since independence, the Indian government has concentrated on promoting the development of different industries in the country and the steel industry has always remained in the priority list. The Indian steel industry enjoys a significant position in the global arena and the importance of India in global crude steel production has grown significantly over the years. The efforts to develop the steel industry in India started during the first five year plan but the real developments started happening from 1980s onwards. The development of the sector can be traced from the fact that although the Indian steel industry increased its prod uction, but in the 90s India imported huge quantity of steels to meet the growing demand of steel in the country. This scenario was totally changed in 2004 when India stood at the ninth position in terms of crude steel production in the whole world and in 2006, India was at the seventh place among the crude steel producing companies. According to the released data by the International Iron and Steel Institute, contribution of India in global crude steel production was about 40.9 million tonnes in 2005. Th is quantity was increased by 7.6% in 2006 and the country produced nearly 44 million tonnes of steel. This development of the industry was further speeded up in 2007 and the total production of crude steel was nearly 50 million tonnes. This growth in the production has also helped the country to gain the fifth position among global crude steel producing countries. There are different factors that are responsible for this development. Firstly, the Indian government has taken some reformatory steps that have helped the Indian steel industry to grow at a good pace. The Indian government has set a target to increase the crude steel production and till 2019-20, the Indian steel industry is expected to produce nearly 110 million tonnes of crude steel. Another important reason of this development is the deregulation factor. The national as well as state governments in India are playing the role of a fac ilitator. At the same time, the national policies regarding the steel industry are also r eformed and this has encouraged investments in the industry. Global Demand for Steel and Indian Steel Industry The global demand for steel is at an all time high nowadays. Much of the tremendous demand for steel around the world may be attributed to the numerous construction p rojects that are going on around the world. Much of these projects are taking place in the economically developing countries of the world like India, China and Thailand. China is the place where a lot of construction is being done nowadays and much of the construction is for the purpose of the Olympics to be held in 2008 and the Shanghai World Exposition of 2010.

Along with being one of the major users of steel, China is one of the major producers of steel as well. During March, 2007 China produced a record 40.16 million tonnes of steel. The demand for steel has gone up in the United States of America as well. This may be ascertained from the fact that in 2007 the amount of steel used was 2.2% more than what it was in 2006. Thus it may be ascertained that the supply and the demand for steel is at their respective peaks. This bodes well for the Indian steel industry as India has plenty of steel to meet up with both the domestic as well as international de mand. India has a lot of iron ores. This implies that India has a ready base for producing sufficient amount of steel and the experts are also of the opinion that the Indian steel industry would continue to grow in the coming years. In the recent times th e production of steel has gone up in the country from 17 million tonnes in 1990 to 36 million tonnes in 2003. The Indian steel industry is trying to reach the 66 million tonnes mark in 2011. The high levels of production would allow the Indian steel indus try to establish a stronghold on a number of areas like housing, construction, and ground transportation. The special steel produced by the Indian steel industry is supposed to be used in high end engineering industries like generation of power, fertilizers and petrochemicals. The fact that India is not a voracious consumer of steel like some of the major economies like China and the United States of America means that India would be able to use the surplus steel it produces for exporting to other countrie s so that their demands are met. This would help the Indian steel industry to be regarded as one of the most prominent steel industries if not the leading one.

Growth Potential of Indias Steel Industry India has traditionally been one of the major producers of steel in the world. Till the 1990s the steel industry of India was regulated and controlled by government policies. After the economic reforms of the early 1990s, the Indian steel industry has evolved significantly to conform to global standards. India has set a vision to be an economically developed nation by 2020. The steel industry is expected to play a major role in India's economic development in the coming years. The steel industry of India has a very high growth potential and is expect ed to register significant growth in the coming decades. India is expected to emerge as a strong force in the global steel market in coming years. The two major aspects that are expected to play a significant role in the growth of the steel industry in India are -

Steel production in India has grown from 17 MT in 1990 to 36 MT in 2003. It is expected that by 2011, the steel production in India will grow to 66 MT.

-tech engineering industries such as power generation, petrochemicals, fertilizers The current scenario of the Indian steel industry indicates that there is huge growth potential in this industry. The per capita-consumption of steel in India, according to latest available estimates, is only 29 kg. This is much less compared to the global average of 140kg. The per capita consumption level of developed nations like the United States of America is 400kg. In this respect, one of the major initiatives that need to be taken is to focus on increasing the consumption of steel in the rural areas of India. The potential for the growth of consumption of steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high which needs to be tapped efficiently. In order to realize the growth potential in the steel industry of India, it is essential to ensure that the industry can remain competitive. One of the major aspects in this regard is the availability of inputs. Shortage of inputs like coke has led to increase in costs earlier. Moreover proper infrastructure facilities like transport infrastructure, power etc are of prime importance in maintaining the competitiveness of the industry.

Most developed countries have regulations that are aimed to protect the domestic steel industry. The Indian steel industry has comparatively much lesser protection through regulations. Proper regulatory measures should be adopted by the government to protect the domestic steel industry. Sector structure/Market size The steel industry in India has been moving from str ength to strength and according to the Annual Report 2009-10 by the Ministry of Steel, India has emerged as the fifth largest producer of steel in the world and is likely to become the second largest producer of c rude steel by2015-16. Recently, Steel Minister, Mr Virbhadra Singh said that India will become the world's second largest steel producer by 2012, more than doubling its capacity to 124 million tonnes (MT) as part of the push being given to assist overall infrastructure develop ment. Production Steel production rose 4.2 per cent to reach 60 MT in 2009 -2010, according to the Ministry of Steel. The National Steel Policy 2005 had projected an annual steel consumption growth of 7 per cent based on GDP growth rate of 7-7.5 per cent and production of 110 MT of crude steel by 2019 2020. Nonetheless, with the current rate of ongoing greenfield and brownfield projects, the Ministry of Steel has projected that these growth trends are likely to be exceeded and it is envisaged that in the next five years demand will grow at higher annual average growth rate of over 10 per cent as compared to around 7 per cent growth achieved between 1991 -92 and 2005-06.

Moreover, according to the ministry, the crude steel production capacity in the country by 2011-12 will be nearly 124 MT.

According to the Ministry of Steel, 222 memorandum of understanding (MoUs) have been signed with various states for planned capacity of around 276 MT. Major investment plans are in Orissa, Jharkhand, Chattisgarh, West Bengal, Karnataka, Gujarat and Maharashtra. According to the Annual Report 2009-10 by the Ministry of Steel, domestic crude steel production grew at a compounded annual growth rate of 8.6 per cent during 2004 -05 and 2008-09. Consumption India's steel consumption rose 8 per cent in the year ended March 2010, over the same period a year ago on account of improved demand from sectors like automobile, infrastructure and housing. The countrys steel consumption increased to 56.3 MT in the 12 month s to March 2010 from 52.3 MT in the previous year, as per the Ministry of Steel. Investments A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments. The domestic steel sector has attracted a staggering investment of about US$ 238 billion, according to the Minister of State for Steel, Mr A. Sai Pratha p. This consists of nearly 222 MoUs signed between the investors and various state governments mostly in the states of Orissa, Jharkhand, Chhattisgarh and West Bengal. SAIL is planning to set up a 12-million tonne plant in Jharkhand. s largest engineering conglomerate Larsen & Toubro (L&T) and state owned Nuclear Power Corporation of India Limited (NPCIL) formed a US$ 373.2 million joint venture for specialised steel and forging products. Stainless steel manufacturer and exporter, Va run Industries, is setting up a US$ 171.8 million stainless steel-cum-alloy steel plant at Rohat, Jodhpur.

sales of automotive cold-rolled flat products at Jamshedpur. The JV is expected to invest US$ 400 million to set up an automobile venture in India. Steel major, JSW Steel has earmarked a capex of US$ 1.6 billion for 2010 -11 and plans to increase capacity of its Bellary plant in Karnataka from 7 MT to 10 MT by end of 2010-11.

Government Initiative As per the Press Information Bureau, during 2009, the government took a number of fiscal and administrative steps to contain steel prices. Central value added tax (CENVAT) on steel items was reduced from 14 per cent to 10 per cent with effect from February 2009.

Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the infrastructure sector and has increased the allocation for road transport by 13 per cent to US$ 4.3 billion which will further promote the steel industry. Exchange rate used: 1 USD = 46.36 INR (as on February 2010) 1 USD = 44.42 INR (as on April 2010) http://www.scribd.com/doc/35560092/Project http://www.scribd.com/doc/50199411/industry-analysis-of-steel-sector-2-1 http://www.scribd.com/doc/36501583/Steel-Industry-Business-Op-Port-Unites-and-Identification http://www.scribd.com/doc/36308600/Indian-Economy