The Affect of Recession

ON

INDIAN
STEEL
SECTOR :

07/16/09 1
 The Presentation Put
Together By
• Aman Shrivastava
• Kamta Prasad
• Piyush Tandon
• Subhash Sahu
• Anil Kumar
• Shikha Bakshi

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 INTRODUCTION

STEEL SECTOR IN BRIEF

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• Steel- The backbone of human
civilization
• Very crucial to the development of
any modern economy
• Its per capita consumption shows the
living standards of the people in any
country

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 HISTORY

Source: IISI

Stages in Global Production of Steel

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 CONTRIBUTION OF COUNTRIES TO GLOBAL
STEEL INDUSTRY

Contributions
JAPAN
8%
USA INDIA
6% 4%

OTHERS
48%

CHINA
34%

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 Countries in the world
Country Rank 2008 2007
China 1 502.0 489.2
Japan 2 118.7 120.2
US 3 91.5 98.2
Russia 4 68.5 72.4
India 5 55.1 53.1

(Production figures in million

tonnes)

Source: Steel and Natural

Resources Strategy Research
(SNRSR)

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 MAJOR PLAYERS

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07/16/09 9
 MARKET SHARE OF LEADING PLAYERS
IN IRON AND
STEEL INDUSTRY

COMPANY PRODUCTION OF MARKET SHARE in

STEEL (In MILLION %
TONNES)
SAIL 17.63 32%

TATA STEEL 6.06 11%

RINL 4.41 8%

ESSAR,ISPAT,JSWL 10.46 19%

OTHERS 16.53 30%

TOTAL 55.1 100%

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 COMPARITIVE STUDY
(Rupees in Crores)
2006-07 2007-08 2008-09
SAIL
Net Sales 35026.21 40214.16 44023.08
Net Profit 6202.29 7536.78 6188.41
EPS 15.02 18.25 14.98
TATA STEEL
Net Sales 25213.31 131535.88 145686.32
Net Profit 4165.61 12321.76 4849.24
EPS 73.06 177.18 66.07
JSW STEEL
Net Sales 8594.44 12456.65 15934.84
Net Profit 1303.89 1658.47 242.73
EPS 80.86 90.30 12.88
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 SAIL TATA JSW
STEEL STEEL
BSE NSE BSE NSE BSE NSE

Open 154.5 148.5 369.75 369.8 534.7 531.7

Day High 154.5 154.25 369.75 369.8 534.7 537.35

Day Low 153.6 146.2 365.1 364.25 528.6 528.3

Previous
Close 152.95 153 364.2 364.05 527.2 526.65

52-Week
high 186 263 783.9 925.5 1049.9 1205

52-Week
low 55.25 55.25 146.35 137.5 161.15 160.1

P/E 10.21 10.21 5.19 5.18 35.87 35.83

Market Cap
(Rs cr) 63504.9 63195.12 26761.5 26673.8 9923.01 9899.62

Volume 22268 11361791 67064 150491 17243 57971

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(Source : www.nseindia.com)
 MAJOR CONSUMERS OF STEEL
Consumer%

Others
20%
Automotive
Engeneering Construction
5% 43%
Mechanical
Engeneering
32%

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 TRENDS

INDIAN SCENARIO

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 PRODUCTION IN INDIA
60
Quantity (in million tonnes)

50

40

30

20

10

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
YEAR

Source: Joint Plant Committee

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Consumption trends in India

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IMPORT AND EXPORT OF STEEL

5
Quantity (in million tonnes)

3
IMPORTS
2
EXPORTS
1

0
2003-04 2004-05 2005-06 2006-07
YEAR

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07/16/09 18
 INDIAN TRENDS
• Average growth rate for past 15
years 7% pa
• Improved rank to 5th place
• Projected growth rate 7.3% pa
• Expected to be world's 2nd largest
steel producer by 2018

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 GLOBAL TRENDS
• The global consumption of steel has
increased at a pace of 7%

• Chinese steel industry is booming

• World’s big producers are all pursuing

large-scale investment projects in India

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 Race for the capacity
• 16% CAGR over 5 years

• Steam still left in the super cycle

• Steel companies in India to

outperform

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 SWOT FOR INDIAN STEEL
SECTOR
Strength Weakness
• Availability of iron • Controlled by Govt.
ore and coke • Coking coal import
• Low wage labour dependence
availability • Low R&D
investment
• Quality manpower
• High cost of debt
• Mature production • Inadequate
base infrastructure
• Automation • Unscientific mining
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 SWOT contd..
Opportunities Threats
• Unexplored rural • China becoming
markets net exporter
• Growing domestic • Dumping by
demand
competitors
• Exports
• Protectionism from
• Consolidation
the West

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 Marketing Strategy
• Developed such a system so that
company production and customer
specification can be met at the same
time or(Customization).
• Giving quality and specification
which is of world level.
• To create competitive differentiation
they are adopting focused marketing
approach.
07/16/09 24
• Advertisement
2.Sail:- SAIL came out with a new
ad/slogan ‘there is a little bit of SAIL
in everybody’s life.
3.Tata:- “we also make steel”
4.ESSAR:- 24 Carat Steel tag line.

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 STRATEGIES FOR GROWTH

On the demand side

• Extensive promotional campaigns
• Strengthening of rural delivery chain
• Encouraging infrastructure
development

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On the supply side

• Creation of additional capacity

• Removal of bottlenecks in the
availability of raw material
• Encourage R&D
• Invest to create professional
technical man power

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 RECENT HAPPENINGS &
FORECASTS

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07/16/09 29
 Foreign Direct
Investments
• MoU signed between POSCO and Govt. of
Orissa for opening steel plant
• Mittal has set up 2 steel plants in
Jharkhand and Orissa with a capacity of 24
MT
• According to the Investment Commission
of India investments of over US$ 30 billion
in steel are in the pipeline over the next 5
years.
• Japan's Sumitomo Metal Industries is
planning to build a blast furnace steel
plant in India with mid-tier producer
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• Arcelor-Mittal, the largest steel
maker of the world, is planning to set
up a captive port near Paradip in
Orissa. The port will be used to serve
two mega integrated steel plants of
the company proposed in Orissa and
Jharkhand.

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 FACTORS HOLDING BACK THE INDIAN
STEEL
INDUSTRY
• Energy supply
• Problems procuring raw material inputs
• Inefficient transport system
• Govt. rules and regulations

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 RECENT
ARTICLES
• India aiming to double steel production by
2011-12
• “I strongly believe, that India steel consumption
will continue to grow at a pace varying between 6
per cent and 8 per cent during the current
financial year, fully supported by the various
fiscal, monetary and administrative measures
taken by the Government from time to time,”
Mr.
Virbhadra Singh
Union
Minister of Steel

• According to the Steel Secretary, P.K. Rastogi,

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 Cont….
• Mr. B. Muthuraman, Managing Director, Tata
Steel, said the company would be increasing
production by 25 per cent this year from its
current capacity of 6.8 million tonnes a year.

• The Steel Authority of India, while increasing

prices on certain flat steel products by about Rs.
500-700, has reduced prices on long products by
Rs. 1500- 2000, or about 5 per cent.

• According to the Chairman, Mr. S.K. Roongta, this

was in view of the slowing down of construction
activities due to the monsoon.
(Source : Business Line)
07/16/09 34
 Government Initiative
• The Indian government plans to invest
over US$ 350 billion in industries related
to infrastructure and construction which
will give a fillip to the steel sector.
• Indian government has announced some
changes in customs duty rates, which
were effective from November 2008.
• The government has removed full
exemption of customs duty on some
industrial and agricultural commodities.
Iron and steel products like pig iron, semi-
finished products, flat products and long
products are now subject to a basic
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 Road ahead
• While the demand for steel will continue to grow
in traditional sectors such as infrastructure,
construction, housing automotive, steel tubes and
pipes, consumer durables, packaging, and ground
transportation, specialized steel will be
increasingly used in hi-tech engineering
industries such as power generation,
petrochemicals, fertilizers, etc. The new airports
and railway metro projects will require a large
amount of stainless steel.
• According to an estimate, with the growing need
for oil and gas transportation infrastructure, a
US$ 118 billion opportunity is waiting to be
tapped by steel manufacturers in the next five
years.
07/16/09 36
•
 Bibliography
• www.google.com
• www.wikipedia.com
• www.moneycontrol.com
• www.nseindia.com
• http://steel.nic.in/
• www.indianindustry.com
• ANNUAL REPORT OF MINISTRY OF
STEEL
07/16/09 37
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