Industry Analysis of Steel Sector-India
-
Upload
sandeep7162 -
Category
Documents
-
view
222 -
download
0
Transcript of Industry Analysis of Steel Sector-India
-
8/3/2019 Industry Analysis of Steel Sector-India
1/20
Industry Analysis
STEEL INDUSTRY
SCHOOL OF PETROLEUM MANAGEMENT
1
Anand Singh Sandeep Prasad
-
8/3/2019 Industry Analysis of Steel Sector-India
2/20
Content
Introduction
Economic Trait
Competition Analysis
Driving ForceCompetitive Position
Competitive Moves
Success Factors
Prospects
2
-
8/3/2019 Industry Analysis of Steel Sector-India
3/20
Introduction
3
Initial phase, - the Tata Iron & Steel Company, the Indian Iron and Steel
Company and Visveswaraya Iron & Steel Ltd.
India is the 5th largest producer of crude steel in the world and is
expected to become the 2nd largest producer by 2015-16.
Total finished steel during April - December 2010 :
Production for sale was at 47.30MT growth of 7.9 per cent
Steel exports increased by 17.3 per cent as it reached an estimated 2.46
million tonne while steel imports were at an estimated 5.36 million tonne,a growth of 2.8 per cent.
India is net importer of steel
-
8/3/2019 Industry Analysis of Steel Sector-India
4/20
Industry Economic Traits India 5th largest producer in world
Per capita consumption lowest in world 50kg per
Capita VS 190 kg global average
Indian steel industry during 2005-2010 registered
8.4% growth in production and 9.7% consumption
Major players are-
4
TISCO 6.85 MT Rs 76745 Cr
SAIL 14.35 MT Rs 57234 Cr
JSW 14.3 MT Rs 29176 Cr
Source: Money control & company website
-
8/3/2019 Industry Analysis of Steel Sector-India
5/20
Competition Analysis
5
Threat from new entrant-
Low to Moderate
- Industry is Capital Intensive
- Regulatory Environment
Supplier -Moderate to High
-Availability of Iron but price as perinternational benchmark
-Coking Coal supplier have considerablepower
Threat form Substitute
Low
-Carbon fiber , plastic, aluminum
Bargaining Power of BuyerModerate
- Demand is high outpaces supply
- Access to global market
Rivalry Low to Moderate- Steel attribute by 4 major co.
- Excess demand met by import
- Commodity
- High cost of exit
-
8/3/2019 Industry Analysis of Steel Sector-India
6/20
Driving forces Total investment in infrastructure sector in the
Eleventh Five-Year Plan will be around Rs 20.6 trillion
Approximately INR 45 trillion will be invested in Twelfth
Five-Year Plan
Automobile grew by 26% in FY10-Low cost passenger
car
Many automobile manufacturers increasing capacity &
(or) establishing manufacturing operations in India
International steel majors are expanding their presence
in India
Arcelor Mittal acquired large stake in Uttam Galva
JFE acquired 15% equity of JSW Steel
6
-
8/3/2019 Industry Analysis of Steel Sector-India
7/20
Driving forces
7
Companies are increasing their focus on downstream and solutions
driven products for their higher value add.
Example: SAIL produce 40% value added steel
Technology improvement
Boiler project expected to generate 350000 pounds of steam/Hour, produce 38
mw on site.
COREX: dont require coking coal use thermal coal directly (coking & sinteringplant not required)
FINEX :molten iron is produced directly using iron ore fines and non-coking coal
(sintering and coke making not required)
The ministry of steel has approved 59 R&D projects costing Rs.408crores
Merger and Acquisition has evolved to be one of the major growth
drivers in the industry leading to economic of scale.
-
8/3/2019 Industry Analysis of Steel Sector-India
8/20
Competitive position
Company Name Total Asset in Crores INR Sales Turnover in Crores INR Net Profit in Crores INR
Tata Steel 127242 118753 8983
Steel Authority of India 81484 33905 3374.13
JSW Steel 29176 23368 2010
Jindal Steel & Power 20804 9534 2064
Essar Steels Limited 20000 8851
Ispat Industries Ltd 8706 8226 1805
Rashtriya Ispat Nigam Limited 9569 7755 1432.6
Bhushan Steel 22489 7000 1033
-
8/3/2019 Industry Analysis of Steel Sector-India
9/20
Competitive moves
Tata Steel
Annual crude steel making capacity of 6.8 million tonne
TATA Steel is continuing with its program of expansion of hot
metal and steel making capacity by 3 million tonne to reach 10
million tonne
Massive expansion of its capacities through various greenfield
projects at Saraikela (Jharkhand), Kalinganagar (Orissa) and
Bastar(Chhattisgarh)
-
8/3/2019 Industry Analysis of Steel Sector-India
10/20
Competitive moves
Steel Authority of India Ltd
Produced 3.2 million tonne of hot metal, 3.2 million tonne ofcrude steel by achieving 2%, 1% & 1% growth over thecorresponding period of the previous year
SAIL and M/s Rail India Technical and Economic Services (RITES)have entered into a Joint Venture Agreement for setting up of awagon manufacturing facility in Kulti, Bardhman Dist. of WestBengal
-
8/3/2019 Industry Analysis of Steel Sector-India
11/20
Competitive moves
JSW Steel
One of the lowest cost steel producers in the world
Formed a joint venture for setting up a steel plant in Georgia
Acquired a controlling stake in Ispat Industries Ltd.
Acquired mining assets in Chile, USA and Mozambique
Entire gamut of steel products - Hot Rolled, Cold Rolled, Galvanized,Galvalume, Pre-paintedGalvanised, Pre-painted Galvalume, TMTRebars, Wire Rods & Special Steel Bars, Rounds & Blooms
-
8/3/2019 Industry Analysis of Steel Sector-India
12/20
Competitive moves
Jindal Steel & Power Ltd
One of the fast growing major steel units in the country
Raigarh plant of JSPL has a present capacity of
1.37 MTPA sponge iron plant 2.40 MTPA Steel Melting Shop (SMS),
1.0 MTPA Plant Mill,
2.30 sinter plant,
0.8 MTPA coke oven and a
330 MW captive power plant
Capacity addition plan at Raigarh to enhancement the present steel capacityfrom 2.4 million tonne to 6.0 MT in a phased manner by 2011
The Company has also commenced hot trials of its 0.6 MTPA Wire Rod Mill atPatratu, Jharkhand
-
8/3/2019 Industry Analysis of Steel Sector-India
13/20
Competitive moves
Essar Steel Ltd
Essar produced 3.39 MT flat product and achieved a sales of 3.24 MTshowing an improvement of 8% and 6% respectively over the last fiscal
Transportation by the slurry pipe line from Kirandul to Vizag
Expanding its production capacity at its Hazira plant to a capacity ofnearly 10 million tonnes
Essar has plans to set up steel units in other parts of the country for 6.0 million tonnes at Paradip in Orissa
3.0 million tonnes in Jharkhand
3.2 million tonnes in Chhattisgarh and
6.0 million tonnes in Karnataka
-
8/3/2019 Industry Analysis of Steel Sector-India
14/20
Competitive moves
Ispat Industries Ltd
IIL has set up one of the largest integrated steel plants with acapacity to manufacture 3 million TPA of Hot Rolled Steel Coils
The integrated steel plant uses the Converter cum Electric ArcFurnace Route (CONARC process) for producing steel
IIL has the state-of-the art technology called compact stripproduction (CSP) process, installed for the first time in India
Produces high quality and specifically very thin gauges of HotRolled Coil
-
8/3/2019 Industry Analysis of Steel Sector-India
15/20
Competitive moves
Rashtriya Ispat Nigam Ltd
First shore based integrated steel plant at Visakhapatnam in Andhra Pradesh
Started with a capacity of 3 million tonnes per annum (MTPA) of liquid steel
International standards with state-of-the-art technology, incorporatingextensive energy saving and pollution control measures
Doubled it's capacity to 6.3 MTPA of liquid steel and the new units are set tocome on stream progressively from 2011-12
RINL-VSP is the first PSE & first in Steel sector in India to get BS EN 16001(Energy Management system) certification on 28.12.10
-
8/3/2019 Industry Analysis of Steel Sector-India
16/20
Competitive moves
Bhushan Power & Steel Ltd
Units in Chandigarh & Derabassi, one in Kolkata and the groupowns three overseas plants in Nepal, Nigeria & Sudan
The company is further expanding the capacity from 1.80 MTPAto 2.30 MTPA
The Company is also setting up Galvanising, Galvolume, ColourCoating, Precision Tube, Black Pipe & GI Pipe
The company is going one step backward and planning to set upIron Ore Beneficiation Plant of 6.50 MTPA, Pellet Plant of 3.8MTPA and further value added products both flat and long
-
8/3/2019 Industry Analysis of Steel Sector-India
17/20
Success factors
Availability of iron ore and processed inputs like Sponge Iron
Low labor cost
Skilled manpower and managerial capabilities
Ongoing modernization of existing / old plants
High cost of energy
Poor infrastructure and high transaction costs
Poor quality of domestic coking coal
Relatively high cost of capital
Dependence on imports for steel manufacturing equipments andtechnology
Slow statutory clearance for development of mines
Low R&D investments
Potentially huge domestic demand
Unexplored rural market
capacity creation to serve the domestic and overseas markets
Slow growth in infrastructure development
Possibilities of export growth from China
Global economic slow down
Unrestricted export of iron ore and other exhaustible mineralresources
SWOT
-
8/3/2019 Industry Analysis of Steel Sector-India
18/20
Future prospects
National Steel Policy (NSP) announced on 3 rd November, 2005 aims atbuilding a modern and efficient domestic steel industry of global standards
India has the potential to emerge as global player in steel making if itsinherent advantages of availability of quality iron ore, cheap labor, technicalmanpower and growing domestic demand are properly leveraged
The Indian steel industry is currently going through an expansionary phasebacked by a liberalized policy environment
Prospects of domestic demand appear to be excellent driven by highinvestment rate, accelerated growth in the manufacturing industry andexpansion in physical infrastructure creation
Crude steel production grew at the rate of 6.4%
18
-
8/3/2019 Industry Analysis of Steel Sector-India
19/20
Future prospects
Indian crude steel production will grow at a CAGR of around 10%during 2010-2013
India is the fifth largest steel producer at the global front andstruggling to become the second largest producer in the coming years
construction, infrastructure, automobile, and power will drive thesteel industry in future
per capita finished steel consumption is far less than its regionalcounterparts
Future potential of various vertical industry segments, includingautomotive, aerospace, marine, consumer durables, power, railways,telecom, and housing
19
-
8/3/2019 Industry Analysis of Steel Sector-India
20/20
20
Thank You