Amar Singh Bhati

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INDUSTRY PROFILE

INDUSTRY PROFILEIndian steel Industry:-India is the eighth largest producer of crude steel in the world, accounting for3.37% of the global steel production in 2005. Indias finished carbon steelproduction grew to reach an estimated 42.63mmt in 2005-06; primary producersalone contributed about 38% whereas secondary producers contributed the rest.With reference in changes in economy Indian steel industry is poised formassive expansion. Dramatic consumption growth over the last few years hasstimulated enormous expansion plans, facilitated by a relatively unexploitediron ore raw material base. India is now being hailed as the new China, wherecrude steel production soared from less than 100m tonnes in 1995 to over 400mtonnes in 2006.This report focuses on detailed study about the Indian SteelIndustry. Steel became an integral part of development. It discusses basic steelmanufacturing processes like Blast Furnace and, Electric arc Furnace, industryvalue chain with a special reference to major raw material trends and pricetrends of steel products. Demand supply dynamics has been discussed alongwith key growth drivers and Export-Import scenario. It also talks about Issues &challenges of the steel industry, mergers and acquisitions, government policiesand regulations. Top 10 Leading Players in steel Industry have been profilednamely Steel Authority of India (SAIL), Tata Steel, ESSAR Steel and JSWSteel in this report and analyzed on the basis of financial and operational

performance and compares their Competitive Positioning along with futureoutlook in the light of increasing trend in investments in the domesticindustry .Steel Industry in India is on an upswing because of the strong globaland domestic demand. India's rapid economic growth and soaring demand bysectors like infrastructure, real estate and automobiles, at home and abroad, hasput Indian steel industry on the global map. According to the latest report byInternational Iron and Steel Institute (IISI), India is the seventh largest steelproducer in the world. With reference to development which revised Indian infrastructure, the origin of the modern Indian steel industry can be traced back to 1953 when a contract for the construction of an integrated steelworks in Rourkela, Orissa was signed between the Indian government and the German companies Fried Krupp undDemag AG. The initial plan was an annual capacity of 500,000 tonnes, but thiswas subsequently raised to 1 million tonnes. The capacity of Rourkela SteelPlant (RSP), which belongs to the SAIL (Steel Authority of India Ltd.) group, ispresently about 2 million tonnes. At a very early stage the former USSR and aBritish consortium also showed an interest in establishing a modern steelindustry in India. This resulted in the Soviet-aided building of a steel mill with acapacity of 1 million tonnes in Bhilai and the British-backed construction inDurgapur of a foundry which also has a million tonne capacity. The Indian steelindustry is organized in three categories i.e., main producers, other majorproducers and the secondary producers. The main producers and other majorproducers have integrated steel making facility with plant capacities over 0.5

mT and utilize iron ore and coal/gas for production of steel. The main producersare Tata Steel, SAIL, and RINL, while the other major producers are ESSAR,ISPAT and JVSL. The secondary sector is dispersed and consists of: (1)Backward linkage from about 120 sponge iron producers that use iron ore andnon-coking coal, providing feedstock for steel producers; (2) Approximately650 mini blast furnaces, electric arc furnaces, induction furnaces and energyoptimizing furnaces that use iron ore, sponge iron and melting scrap to producesteel; and (3) Forward linkage with about 1,200 re-rollers that roll out semis intofinished steel products for consumer use. The history of steel making in India can be traced back to 400 BCwhen the Greek emperors used recruit Indian archers for their army who used arrowstipped with steel. Many more evidences are there of Indians perfect knowledge of steel-making long before the advent ofChrist. Archeological finds in Mesopotamia and Egypt testify to the fact that of iron and steel was known to mankind for more than six thousand years and that some of the best products were made in India. Among the widely - known relics is the iron pillar near Qutb Minar inDelhi.The pillar, built between 350 and 380 AD, did not rust so far an engineering marvel that baffles the scientist even today. Yet another engineering feat is the famous sun temple at konark in Orissa, built around 1200AD, where steel structural were used for the first time in the world. These were the halcyon days when India flourished in all direction and when its prosperity was a matter of envy for the foreigners. But as ill luck would have it. Indias prosperity gave way to poverty after the advent of the foreign rule. Indias indigenous industry languished because of a deliberate policy of the colonial rulers to make country only a supplier of raw materials. Steel Role plays a vital role on the development of any modern economy. The per capita consumption of steel is generally accepted as yardstick to measure the level of social-economic development and living standards of the people. As such, no developing country can afford to ignore the steel industryWORLD STEEL PRODUCTION IN THE 20th CENTUTYOver the course of the 20th century, production of crude steel has risen at an astounding rate, now fast approaching a production level of 800 million tons per year. Today, it is difficult to imagine a world without steel.

During the 20th century, the consumption of steel increased at an average annual rate of 3.3%. In 1900, the USA was producing 37% of the worlds steel. With post war industrial development in Asia that region now (at the turn of the century) accounts for almost 40%, with Europe (including the former Soviet Union) producing 36% and North America 14.5%.

Steel consumption increases when economies are growing, as governments invest in infrastructure and transport, and build new factories and houses. Economic recession meets with a dip in steel production as such investments falter. If you were to overlay the above graph with a time sheet showing major historical events, the peaks and dips become meaningful. Note for example the peaks corresponding to the years of the two World Wars, followed each time by a dip, and soon after by strong climbs as the major economies recovered from the war and entered new periods of prosperity and growth, most notably in the 1950s and 1960s. The trend over the past three decades can also be seen to be in line with cyclical economic trends, with alternating periods of prosperity and recession..)That was the period when the steel industry developed in Western Europe and the USA followed by the Soviet Union, Eastern Europe and Japan. However, steel consumption in the developed countries has reached a high stable level and growth has tapered off.

After being in the focus in the developed world for more than a century, attention has now shifted to the developing regions. In the West, steel is referred to as a sunset industry. In the developing countries, the sun is still rising, for most it is only a dawn.

Towards the end of the last century, growth of steel production was in the developing countries such as China, Brazil and India, as well as newly developed South Korea. Steel production and consumption grew steadily in China in the initial years but later it picked up momentum and the closing years of the century saw it racing ahead of the rest of the world. China produced 220.1 million tonnes in 2003, 272.2 million tonnes in 2004 and 349.36 million tonnes in 2005. That is much above the production in 2005 of Japan at 112.47 million tonnes, the USA at 93.90 million tonnes and Russia at 66.15 million tonnes.

GROWTH AND DEVELOPMENT OF INDUSTRYAmongst the other newly steel-producing countries, South Korea has stabilised at around 46-48 million tonnes, and Brazil at around 30 plus million tonnes. This brings the focus of the industry to India. Considering a steel consumption of 300kg per man per year to be a fair level of economic development, India will have to come up to somewhere around 300 million tonnes, if it is to fulfil its ambitions of being a developed country. That of course is a long journey from the present production level of around 50 million tonnes but one must consider its past before coming to a conclusion about its potential. India was producing only around a million tonnes of steel at the time of its independence in 1947. By 1991, when the economy was opened up steel production grew to around 14 million tonnes. Thereafter, it doubled in the next 10 years, and then it is doubling again, maybe over a slightly longer span. Steel Production in India is expected to reach 124 million tons by 2012 and 275 million tons by 2020 which could make it the second largest steel maker. In the developed countries, the trend is on consolidation of industry. Cross-border mergers have been taking place for several years. The focus is on technological improvements and new products.

Globally, the steel industry became a billion tonne industry in 2004. How much more it will grow will depend primarily on how much more steel is consumed in the developing countries.

STEEL MANUFACTURING COMPANIES IN INDIAThere are several Companies who are continuously working in this sector and are continuously meeting the growing demand all over the country.

SAIL/Steel Authority of India Limited TATA TISCO

RNILEssar SteelJindal SteelISPATSaesa GoaNippon Denro IspatUsha IspatLanco Industries LimitedGOVERNMENT POLICIES FOR STEEL INDUSTRYSome of the important policy measures have been framed by the Ministry of Steel and they assist about these policies to the private com