Indian Steel Industry

International School of Business & Media; Kolkata

Anindya PalAbhijit Samanta

Kamalika MondalSubhadeep Chakraborty

Saugata Dastidar

Presentation Overview

Steel Industry in India

Sales Trend Analysis

Conclusion

Industry forecast vs Company forecast

Sales Strategies

1

2

3

4

5

In 1992, India produced 14.33 million tones of finished carbon steels and 1.59 million tones of pig iron. In 2008, India produced nearly 46.575 million tones of finished steels and 4.393 million tones of pig iron.

In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the total amount of domestic steel consumption was 43.925 million tones.

While steel continues to have a stronghold in traditional sectors such as construction, housing and ground transportation, special steels are increasingly used in engineering industries such as power generation, petrochemicals and fertilizers.

Steel production in India has increased by a compounded annual growth rate (CAGR) of 8percent over the period 2002-03 to 2006-07. The per capita consumption of steel in India, at around 46 kg, is well below the world average (150 kg) and that of developed countries (400 kg). Indian demand is projected to rise to 200 million tones by 2015.

Indian Steel Industry

Today India is in seventh position among all the crude steel producing countries

Industry Forecast

Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Forecast for Dec-

10

0

10000

20000

30000

40000

50000

60000

5452053064.6666666666

49818.2

Crude Steel Production Forecast

Actual Produc-tion

3 Yr moving average

5 year moving average

'000

tonn

es

Source: IAS, CMIE

Industry Forecast

Source: IAS, CMIE

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Fore

cast f

or Dec-1

00

10000

20000

30000

40000

50000

60000

70000

57164 55256

50295.2

Finished Steel Production Forecast

Actual Production

3 Yr moving average

5 Yr moving average

'000

tonn

es

Production Forecast: Market Leader vs Market Challanger

Source: IAS, CMIE

Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Forecast for Dec-

10

0

2000

4000

6000

8000

10000

12000

14000

16000

12881 13034

12936.6

5019 4678

4455.6

Company wise production forecast statistics

SAIL - Actual Produc-tion

SAIL - 3 Yr MA

SAIL - 5 yr MA

Tata Steel - Actual Production

Tata Steel - 3 Yr MA

Tata Steel - 5 Yr MA

‘000

ton

es

Production Forecast: Market Leader vs Market Challanger

• The actual steel production of SAIL is varrying at a higher rate than of the TATA STEEL

• 3 Yr & 5 Yr moving average of SAIL is showing almost same forecast.• Being a market leader SAIL is having much more production than of

TATA STEEL.

SAIL

• The actual production of TATA STEEL is growting maintaining a constant growth rate and the fluctuation in production is less.

• As compare to SAIL, TATA STEEL is having lower production volume . • In last two years i.e. 2008 & 2009 TATA STELL has managed to

reduce the production gap with SAIL by maintaing a constant growth in their production.

TATA STEEL

Market Share Analysis: 2007-2009

Steel Authority Of India

Tata Steel Ltd.

Essar Steel Ltd.J S W Steel Ltd.

Ispat Industries Ltd.

0.00%

50.00%

100.00%

51.36%

17.22%

17.50%14.13%

12.76%

Market Share 07,08,09

Market Share - 2007

Market Share - 2008

Market Share - 2009

Source: IAS, CMIE

Market Share Analysis: 2007-2009

1. There is a slight fall down in the market share of SAIL in recent years.

2. TATA STEEL is maintaing a constant market share and in recent years there is a slight growth in their overall market share.

3. Essar Steel faced a slight decline in their market share in 2009.

4. JSW Steel maintained a huge growth in 2008 market share but again in 2009 it falled down.

Assumption:We are assuming that these are the major steel manufacturing companies in India.

Steel Industry & Major Consumers of Steel : Trends

Source: IAS, CMIE

Engines Production

Hydro Turbines Production

Compressors Production

Cranes Production

Dump Loaders ProductionMaterial Handling Equipment Production

AC Generators

Total Production (Three Wheelers)

Tractor Production

0.00

0.50

1.00

Steel & Other industry trends

Co Relation between growth of steel production and other relevent products

Steel Industry & Major Consumers of Steel : Trends

1. The chart shows the co-relation between the YOY growth of Steel and Various products of steel.

2. For all the areas the co-relation is +ve which means that the steel production and the productions of steel dependent items have a very significant relationship.

3. Hydro turbine, AC Generators and Automobile Industry is very highly co-related ( Value > 0.5) with steel production. In other words more we produce steel more is the scope of growth of these industries.

SALES TREND ANALYSIS

Steel Industry & Major Consumers of Steel : Trends

Source: IAS, CMIE

0

10000

20000

30000

40000

50000

60000

Sales Trend for SAIL (Rs)

Actual Sale

Exponential (Actual Sale)

R s.

C r o

r e

Steel Industry & Major Consumers of Steel : Trends

Source: IAS, CMIE

Mar-94

Mar-95

Mar-96

Mar-97

Mar-98

Mar-99

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Fore

cast M

ar- 10

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Forecast on the basis of Sale's trend (Rs)

Actual Sales

Exponen-tial (Actual Sales)R

s. C

r o

r e

SALES STRATEGIES

Sales Strategies: Market Leader vs Market Challanger

SAIL(Market Leader)

TATA STEEL(Market

Challenger)

Hold its market share

Increase market

share to become

the leader

SAIL

Colaboration with Posco, South Korea

Producing various grades of auto steel.

Increase Cost Competetiven

ess

Plan value added items in

the product basket

Leveraging marketing network

SAIL : Defensive Strategy

TATA STEEL

Acquisition of Millennium

Steel, Thailand in 2005

Acquisition of NatSteel, Singapore in 2004.

Accuisition of Corus in 2007

TATA STEEL : Offensive Strategy

Conclusion

From the over all analysis of strategies we can see that the market leader always try to defend its own position and market share.

The main objective of all the activities they perform is to be there in the market with their existing position.

On the other hand the market challenger always try to increase the market share. The main thing they try to do is to get into various mergers and acquisitions so that they can create a strong industry base with the other existing players.

THANK YOU!