Introduction
It is very important for a company to change with time. Success of any company depends upon how well it rectifies the flaws in its system and sees the future trends and adjusts accordingly. Steel industry is one of the major industries in a country more especially in a developing country like India; it has a very wide array of utility. The case here is set in a steel industry in western region of India in Ahmadabad called Ahmadabad Strips Pvt. Ltd. It is an ISO 9001:2000 company manufacturing hot rolled & cold rolled carbon steel products as well as providing various processing services like pickling, cold reduction, annealing, skin passing, slitting and shearing to many companies. (Warren, 2001)
ASPL stands for. That is known as manufacturing company. It provides several kinds of services with respect to processing such as pickling, cold reduction, annealing, skin passing, slitting & shearing to many companies. Ahmadabad Strips Pvt. Ltd. manufactures hot rolled & cold rolled carbon steel products. Ahmadabad Strips Pvt. Ltd. supplies the products and services to the organizations of India as well as to various nations. (Geoffrey tweedale, 2007) Companies are provided by the reliable quality products at lowest costs through deal with the Ahmadabad Strips Pvt. Ltd. It has been exporting products for last three years. The main idea of the Ahmadabad Strips Pvt. Ltd. is to do the business is stable value addition for the consumers and also doing endless effort to improve the level of existing product quality and services. Ahmadabad Strips Pvt. Ltd. is focusing in order to approach the international quality & service level. (Kenneth, 2001)
The Essay on Product and Service
A product is anything that meets the requirements of a particular market, this term involves a lot of dimensions because it is essential to recognize what contributes to the “total product offer”1 in order to be successful in the market or simple to keep our customers satisfy. A service is an intangible economic activity, not stored and does not result in ownership; Services nowadays are becoming ...
Indian Steel
After the independence, government of India places the great focus on the Indian steel industry towards industry’s development. In the five year plan made in the year 1991, there were six most important plants. In these six plants one of the plants was steel production. Five plants were in the public sector but the rest one is the steel industry in which, 4.7 million tons, came from 180 small plants, almost all of which were in the private sector. (David, 2006) During the year 1980 the production of the steel industry was more than double. But the bad thing was that after the huge production the steel industry was not able to fulfill the demand in the FY 1991, and then there were 2.7 million tons were imported. Then at the starting of the 1990s the Indian government was focused on the lookout for some huge private-sector investment in new steel plants. In order to increase production at the large extent they have been set up a 1 million ton steel plant as well as three pig-iron plants in the West Bengal, with total 600,000 tons capacity. It was full of Chinese technical assistance as well as economic investment. (Andrew Carnegie 2006)
Steel Industry in India
In the present era, the steel sector with respect to the Indian market is on the position of upswing. It is not only because of the local demands but global demand is the biggest reason behind it. The huge and speedy economic growth and high demand by several kind of sectors in India such as infrastructure, real estate and automobiles, at home and abroad have been put the better level of the Indian steel industry on the global map. India has got the rank at the seventh position in largest steel manufacturer across the world as per the latest report of Iron and Steel Institute (IISI).
The Term Paper on Introduction to Textile Industry in India
The term 'Textile' is a Latin word originated from the word 'texere' which means 'to weave'. Textile refers to a flexible material comprising of a network of natural or artificial fibers, known as yarn. Textiles are formed by weaving, knitting, crocheting, knotting and pressing fibers together. History of Textile The history of textile is almost as old as that of human civilization and as time ...
The year 1953 can be said as the origin year of the modern steel industry of India. At that time a contract was signed between the germen companies named Fried Krupp und Demag AG and the Indian industry. (Harold c, 1999) At that time in India the work of steel and its construction were done in the state named Rourkela, Orissa. The plant had the overall capacity of 500,000 tons in the one year. But after some time the capacity raised at 1 million tones. Only the plant of Rourkela i.e. Rourkela Steel Plant (RSP) has now the capacity of two million tons, this plant belongs to the SAIL (Steel Authority of India Ltd.) group. In the very earlier time of the steel industry established in India, the USSR and a British consortium also announced about their interest in the India with respect to establish modern steel. This has been resultant in the Bhilai and Durgapur as Soviet-aided building of a steel mill with a capacity of 1 million tones and British-backed construction which also has a million tons capacity respectively. (David s. 2003)
Indian steel industry can be set in the three of the groups such as primary manufacturer, other major manufacturer and the secondary manufacturer. The primary manufacturers and the other major manufactures have incorporated in steel manufacturing facility with the capacity of approximately .5 ton regarding to the plant competence. With respect to Indian steel industry the examples of main manufacturers can be taken as Tata Steel, SAIL, and RINL; at the same time the examples of the other major manufacturer are as ESSAR, ISPAT and JVSL. The secondary sector consists of three major facets:
1) associates provides feedstock for steel producers that is backward linkage from about 120 sponge iron manufacturers that makes use of iron ore as well as non-coking coal.
2) In order to manufacture steels induction furnaces and energy optimizing furnaces that use iron ore, sponge iron and melting scrap and approximately 650 mini blast furnaces.
To make the use for the consumers Forward linkage with about 1,200 re-rollers that roll out semis into finished steel products. (Landes, 2003)
Structural Weaknesses of Indian Steel Industry
Even though this nation is modernized its steel making by a huge way, on the other hand approximately six percent crude steel is even in present time manufactured by using the methods which is the outdated open-hearth procedure.
The Essay on How Has the Personification of India and the Indian Woman Been Reflected in the Various Paintings of Mother India?
“I am India. The Indian nation is my body. Kanyakumari is my foot and the Himalayas my head. The Ganges flows from my thighs. My left leg is the Coromandal Coast, my right is the Coast of Malabar. I am this entire land. East and West are my arms. How wondrous is my form! When I walk I sense all India moves with me. When I speak, India speaks with me. I am India. I am Truth, I am God, I am Beauty.” ...
The efficiency is so less with respect to the labor. As per the estimation of crude steel output a larger steel organizer in India is even roughly 144 tones per worker per year. On the other hand the figure is 600 tones in the Western Europe.
In order to manufacture stainless steel there is need to do a lot effort. That is the requirement of the plant and equipment, pharmaceutical and chemical industries.
The production is also affected by the weak position because of shortage of power.
Insufficient freight capacity and transport infrastructure impediment to hamper the growth of Indian steel industry. (Andrew Carnegie, 1999)
India has less resources of raw material and that is the biggest need of the steel sector. Deposited iron ore are limited and there are lots of difficulties in the mining because of sufficient amounts. And the quality is also very low with respect to hard coal.
Not enough capacity of freight and transport networks barriers in the way of the enlargement of Indian steel industry.
Strengths of Indian Steel Industry
In India the organization can get work force at fewer wages.
They have qualitative human resource.
Well organized production base.
Booming automobile sector.
Manufacturing sector has optimistic stimuli. (Peter, 2002)
Outlook
Overall we can say that the picture of Indian steel sector is truly bright. India has lower cost with respect to the labor and also has positive energy prices that will lead in order to make substantial cost advantages as comparison with the manufacture facilities in (Western) Europe as well as in US. It is also anticipated that the steel sector will be go through a process of consolidation because of the organizers in the industry are engaged in an open rush for scale. The enhancement of the current manufacturing system makes availed to steel organizations of India in order to get better quality of the steel products as well as develop the export prospects. (Hasegawa, 2001)
The Essay on Top Companies in Indian Steel Industry
The performance of the Indian steel industry has been quite satisfactory over the last decade. Aided by the cutting-edge technology, the steel industry in Asia has made advancements in all areas of operation. There has been a substantial increase in demand for Indian steel products in the global market in the recent times. This has helped in the growth of Indian steel industry. The industry ...
Future expectation from the Indian market:
India being considered as among one of the World’s top and most growing economies. Since, ten years the blooming economy has seen the growth of about 6% p.a. With the liberalization, privatization and globalization of the economy the country has seen the rapid growth in the industrial sector. This has open the new ways for the country to enter into the global economy. In an area where the economic situation is in favor of the rapid expansion the most essential sector that is steel industry is also grooming. In India the demand for the steel is going up like anything the various projects being carried out in India requires steel for construction, power plants, railways, ship and automotive industry along with this uses of steel, it is also requires in making household products etc. this requirement of the steel as the important raw material in various other sectors is increasing the demand and market for steel. (Warren, 2001)
From the past years the Indian steel industrial sector has exposed the world’s second highest growth in the Asian region after following China. The industrial development as well as the economic growth has led to the increased demand for the steel in India and among other economy. The opportunities arising in the economy has focused to study the future prospect and trends of the Indian steel industry. In order to analyze and study the future trend and prospect of the steel sector it is important to consider the various factors affecting the industry such as production, consumption, quantity of steel engaged in export and import, raw material to be required by the other sectors. The detailed analysis of the following factors will assist in understanding the future prospect of the steel industry in India. (Kenneth, 2001)
Sustained dynamic Indian economy:
India is the developing economy with the continuous growth as the business environment is highly dynamic in nature. The various factors which have led to the economic development of the country are increase in savings and investments, upgrading of human resources etc. The analysis undertaken by various economists revealed the GDP growth rate with 5% p.a. of India from 2006 and 2020. (Andrew Carnegie 2006)
The Essay on IMpact of industrialisation in indias economy
Industrialization plays a vital role in the economic development of an underdeveloped country. The historical facts reveal that all the developed countries of the world broke the vicious circle of underdevelopment by industrialization. Pakistan being a developing country also wants to achieve higher standard of living for its masses. It has therefore, embarked upon various programmers of ...
In the analysis, including 34 economies having 85% of the total GDP globally. In spite of the continuous increase in India’s population, the per-capita GDP according to purchasing power parity should increase up by around 4% per annum by the year 2020. But the following model have not considered the adequate data of the country’s key sectors in the infrastructural area and the average growth rate by the year 2020 will be approx 6% and through this rapid increase in growth India will overcome Japan in economic growth race. The important factor revealing future prospectus of steel industry is the amount to be invested in steel in the infrastructural facility. The construction industry takes into account the major share of steel that is 43%, followed by mechanical engineering (32%) and automotive engineering (5%).
(David, 2006)
The steel industry all over the globe is getting bigger. For various years it has been advancing the Asian economies like India and China. The modernization of these economies is boosting the demand for steel. In Indian economy this increase is probably to be higher than average. Thus it is forecasted that Indian crude steel production will rise from 38 million tonnes in 2005 to 68 million tonnes by the end of year 2015 which is about 6% of total increase. This wide-ranging increase of steel is planned for the concerned period. The output of steel should be raised less dynamically during this period (probably 5% p.a.) to 1,800 million tonnes. However, this increase is still comparatively less as compared to China’s share of 41% of total steel production. (Harold c, 1999) Continuous change in technology is providing new ways for the economic growth. The major factor affecting the efficiency of the steel industry is due to increased and continuous research and development activities. The share of total Indian steel production has risen from 38% in the year-1990s to 66% now. India is thus sound enough on its approach to join the lists of the chief steel producers in the world. On the other hand, in India about 6% of crude steel is still produced by using the outdated open-hearth process that shows that there is reorganization potential in the economy. The steel Companies of India are bursting on the global market. (Landes, 2003) However the Indian steel ministry has also planned to raise the export share of steel from 15% at present to 24% in the coming 15 years. India’s steel industry facilities are mainly resolute in the east, south and the west regions of the country. The incorporated foundries are positioned in the east; where as the electric steel is produced mostly in the southern and the western Indian regions. Thus providing more scope for the steel industry in the overall economic growth. (Andrew Carnegie, 1999)
The Essay on India, China Economic Growth
India with about 1. 2 million populations and china with about 1. 3 billon population are two big demographic and emerging countries in the world . Over a past few decade India’s combination into the economic has been accompanied by remarkable economic growth (World Bank 2011¬). India is having the 3th position on the economy in purchasing power parity (PPP) terms (The Economic Times, 2012). ...
Rationale for the study:
The reason that I am selecting this topic is that this company is a family owned business and so it will help me to better understand the organization when I join it after completing my masters. My aim is to take my company to global standards and for that I need to study it properly. It is also my passion to succeed in this field of business and help it achieve new heights. I would like to bring the knowledge gained through the masters’ course in the university into my business to make it grow. (Peter, 2002)
The problems given here are the real management problems, which exist in the company, so this paper can help in dealing with them and finding solutions for it. The project will showcase the ability to put theoretical knowledge into practice in real life situation and using them to solve management problems. It will also show the analytical skills and also how to extract true and fair picture of the organization from its workers and managers.
The findings and the research done in this paper will also be beneficial to other organizations in the same industry to know better about their market conditions and how to deal with problems and grow. The said organization will benefit the most from this research as it will help them to identify and eliminate the factors which are hampering their growth.
METHODOLOGY:-
In this paper the data will be collected through several sources including both the primary and the secondary sources, the first and the foremost is the information gathered by interviewing the personnel of the company, this will give an insight of the problems faced by the management. Then there are the company documents and reports showing the company’s performance and growth, these will be the indicators of stagnancy and slow pace of growth in the company with regard to the boosting steel industry. The research will be carried out both on the field and also on the desk. Field research will include collecting data and information about the market situation and also about the organization from different resources. It will also include taking interviews from the employees of the company and its top-level management. Desk research will involve analyzing the data collected from different resources like Internet, company reports and documents and also analyzing the interviews. The data collected from the company documents and reports will be completely reliable Interview will provide with the primary data through which the faults of the company can be identified. Interview will be taken of director, departmental heads, supervisors, managers and workers. (Kenneth, 2001)
Interaction with other organizations involved in the steel industry of that region will also be carried out to know about their expectations and their agendas, this can be the customers, competitors, suppliers or even potential customers for the company.
Research will also be carried out using the internet and other sources such as newspaper articles and magazines to know about the trends and future predictions about the steel industry. (David, 2006)
RESEARCH QUESTION:
This paper will analyze the surrounding in which the company is operating and will look up at the management of the company as to how it can be improved so as to achieve a desirable growth rate. It will look for the current problems in the organizations and will suggest steps to rectify them. The paper will also look upon other steel industry in the region who can be either customers or sellers; this will help to better understand the market situation in that region. (Andrew Carnegie 2006)
Here are some of the problems that are seen in the organization during initial analysis: –
– Managerial problems: – Lack of delegation: Currently most of the key activities are controlled by member of the family. Hence to expand business there is need to delegate control to professional people as the activities are limited by knowledge & skill of family members.
– Quality Control: need to implement stricter controls to reduce rework.
– Shift from Breakdown maintenance to Preventive maintenance to reduce downtime & increase output.
– Improve Production planning to achieve more than 90% on time delivery targets.
– HRM problems like lack of performance based incentives & clarity on roles & responsibilities.
– Order management: prioritizing orders to ensure better order servicing of key customers.
– Need major improvement in housekeeping.
As seen above most of the problems stated are of managerial nature, these problems are the hamper to future growth of the company. The main purpose of this research is to identify such problems in all the departments of the company and make it of global standards. The market demand of the industry should also be analyzed and steps to penetrate new markets both in other regions and also export opportunities will be addressed. (Harold c, 1999)
Conclusion:
India being one of the world’s fastest and growing economies and which provides that economic region which is undertaking the continuous growth Over the last ten years this thriving economy has resulted in the real growth along with the economy the steel industry sector is also intensifying all over the world. India is the economic region that has enjoyed the world’s most. (Andrew Carnegie, 1999)
Thus after complete evaluation, it can be said that the concerned study can be categorized under the subject of Business Strategy. This paper will be very helpful for the industries looking for a future growth. This study will provide the detailed analysis of future prospects of steel industry in western India. The following study will look into the factors that have influenced the industry over a period of time, such as steel production and raw materials, steel consumption, and export-import of steel products etc. thus, providing a complete and detailed analysis on the changing performance of the Indian steel industry. (Peter, 2002)
Apart from this there is one fall back in this topic which is that there isn’t much literature reviews to write in this topic as most of them will be information provided by the company and analysis will be carried out on it. But that won’t be a problem as the gap will be filled by accurate and correct data and information. (Landes, 2003)
CHAPTER – LITERATURE REVIEW
2.1Introduction
2.1.1 Global Scenario of Steel Industry:
global steel consumption is likely to grow at a much faster rate than the 13% growth forecast of the World Steel Association. Between January and November, crude steel production was up by 16%. This is despite the seasonal drop in steel production in regions such as Europe. Global crude steel production fell by 2.8% on a sequential basis in the November quarter. China’s output was stagnant in November, after rising by 5% in October over the previous month. The country’s steel output has been under pressure for months, due to the government’s attempt to prevent the economy from overheating. Europe’s steel production fell by 5.3% and by a much lower 1.5% in North America.
India’s steel output was down by 3.2%, though large steel makers have been talking about buoyant demand. One reason could be the shutdown of Ispat Industries Ltd’s steel plant since early November. The plant has been restarted recently. Another reason could be higher iron ore prices and lower conversion margins between sponge iron and billets, leading to smaller steel companies selling sponge iron instead of steel, according to a Motilal Oswal Securities Research report.
The global steel scenario is in favour of steel producers, as restocking in countries such as Europe and North America has led to a recovery in 2010, after the slump in 2009. If there are worries, these are on the raw materials front; both iron ore and coal prices have begun to increase again in recent months. But companies have used the stronger demand environment to hike prices to end users, which should offset the impact of higher costs on margins, to some extent. Companies have also been disciplined in keeping production under check, with utilization falling to the 73%-75% range in the second half of 2010, compared with the highs of 83% seen in April.
The long-term outlook for steel production is bright and, should rise by a 3.6% compounded annual growth rate between 2010 and 2020. The medium-term outlook is still uncertain. Arcelor Mittal said that real demand is growing at a slower pace, due to uncertainty over the economic outlook for 2011, in a recent investor presentation. On the positive side, it believes that steel inventories in the US and Europe are at relatively low levels, which will be a positive when demand recovers.
2.1.2 Indian 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 stainless 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 12.6 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 steel
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 the world thereby 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.
Indian steel industry plays a significant role in the country’s economic growth. The major contribution directs the attention that steel is having a stronghold in the traditional sectors, such as infrastructure & constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainless steel is finding innovative applications due to its corrosion resistive property. India is the fifth largest steel producer at the global front and struggling to become the second largest producer in the coming years.
The country has acquired a central position on the global steel map with its giant steel mills, acquisition of global scale capacities by players, continuous modernization & up gradation of old plants, improving energy efficiency, and backward integration into global raw material sources. Global steel giants from across the world have shown interest in the industry due to its phenomenal performance. For instance – the crude steel production in India registered a year-on-year growth of 6.4% in 2010 and reached 66.8 Million Metric Tons.
Indian steel companies are in a comfortable position, as lower Chinese output has brought down the threat of imported steel flooding the market. In November, steel imports were down by 62% over the year-ago period. Also, the ban on iron ore exports has given steel makers an edge. Since their capacities are not enough to meet domestic demand, they will depend on steel prices rising to see their performance improve in fiscal 2012 as well. That depends on a few key factors: chiefly whether developed economies recover and when China returns to its earlier high growth levels.
The iron and steel industry presents one of the most energy intensive sectors within the Indian economy and is therefore of particular interest in the context of both local and global environmental discussions. Increases in productivity through the adoption of more efficient and cleaner technologies in the manufacturing sector will be effective in merging economic, environmental, and social development objectives. A historical examination of productivity growth in India’s industries embedded into a broader analysis of structural composition and policy changes will help identify potential future development strategies that lead towards a more sustainable development path.
Issues of productivity growth and patterns of substitution in the iron and steel sector as well as in other energy intensive industries in India have been discussed from various perspectives. Historical estimates vary from indicating an improvement to a decline in the sector’s productivity. The variation depends mainly on the time period considered, the source of data, the type of indices and econometric specifications used for reporting productivity growth. Regarding patterns of substitution most analyses focus on inter-fuel substitution possibilities in the context of rising energy demand. Not much research has been conducted on patterns of substitution among the primary and secondary input factors: Capital, labor, energy and materials. However, analyzing the use and substitution possibilities of these factors as well as identifying the main drivers of productivity growth among these and other factors is of special importance for understanding technological and overall development of an industry.
We will introduce the iron and steel industry in more detail taking into account industry specific aspects such as structural composition, production, technologies, energy consumption within processes, environmental impacts, sector specific policies etc. The results will then be interpreted within a broader context of structural and policy changes in the sector as well as other sector specific aspects.
Future energy use and carbon emissions depend on the level of production and the technologies employed. Furthermore, different economic and policy settings affect structures and efficiencies within the sector. The final section therefore examines the ongoing changes in the iron and steel industry structure. It will compare world best technologies to Indian technologies and identify potentials and barriers to the adoption of such efficiency improvements. A scenario analysis will conclude the report in highlighting the energy efficiency and productivity improvements that could be achieved by employing more efficient technologies.
a. Steel industry reforms –
Particularly in 1991 and 1992 there was a strong and sustainable growth in India’s steel industry.
Since its independence, India has experienced steady growth in the steel industry, thanks in part to the successive governments that have supported the industry and pushed for its robust development. Later on various steel plants were started in India and it could be possibl with immense technology and foreign direct investment in this zone. With the starting of 1991, Indian government implied various reforms that increase various industries in India and mostly the steel industry in India is enhanced immediately. It includes that there is no need for any license for capacity formation except some locations. With increased foreign direct investment in Indian steel industry, it boosts the steel industry and its development in India.
Again a reform came in India in the year 1992, according to this all controls and barriers are removed in the pricing and distribution and thus it changes Indian steel industry into a competitive industry. The international trade barriers are removed and duties on import becomes very less and tax is also became simpler. With the help of these free policies of trade there was an immense growth in Indian steel industry such as in the year 1992, 14.33 million tones carbon steels are produced and 1.59 million tones pig ore is produced in India. Then onwards the capacity of steel formation in India got boost up since 1991 to 2008 and India produced 46.675 million tones of finished steel and 4.393 million tones of pig iron. In the year 2008, the consumption of steel got a phenomenal growth such as 43.925 million tones.
The steel industry is often considered to be an indicator of economic progress, because of the critical role played by steel in infrastructural and overall economic development. The per capita usage of steel gives an indication of the technological advancement of a nation.
b. The present scenario of the industry
India has one of the richest reserves of all the raw materials required for the industry, namely land, capital, cheap labour, iron ore, power, coal etc. Yet we are 5th in the world ranking for production of steel. We produced 66.8 million tonnes in 2010-11, while China, at the top of the list, produced 626.7 million tonnes. Our per capita consumption of steel in India (at 50 kg per annum) is well below the world average (at about 200 kg per annum) and much below that of the developed world (around 350 kg per annum).
Vision 2020 of the Steel Industry in India
The National Steel Policy – 2005 aims at increasing the total steel production of the country to 110 million tonnes per year (in 2019-20) from 38 million tonnes (in 2004-05).
This was supposed to require a compounded annual growth of about 7.3%. The total production in 2010 was 66.8 million tonnes. The compounded annual growth from 2005 to 2010 has been more than 9% which is better than the expected growth. But most of these are a result of the brownfield expansion projects of the existing steel companies. But to continue with the same growth rate, we need new Greenfield projects.
The problems faced by the industry in present times
Many steel giants signed MoUs with several state governments (especially Jharkhand, Odisha, Chattisgarh and West Bengal) for new projects but none of them have materialised. It has taken 5 long years for Tata Steel’s Kalinganagar (Odisha) project to complete the rehabilitation and resettlement process. JSW’s proposed Salboni plant (W.B) hasn’t been allotted the required amount of land, and moreover the government, recently, took control over about 400 acres of land bought by the company because of a state rule that any outsider can’t buy more than 24 acres of village land. POSCO is facing massive resistance from the natives of Jagatsinghpur (Odisha) for land acquisition while many other steel plants are awaiting aid from the government in terms of either land or infrastructure.
What are we losing?
The steel industry has given rise to a good number of townships which are rich, advanced, well maintained and has better lifestyles than the rest of the country.Jamshedpur, Vijaynagar, Bokaro Steel City, Rourkela, Bhilai, Vishakhapatnam are just a few to name. There are many more cities waiting to be added onto this elite list. Other infrastructural development (roads, railways, ports, power) would take place owing the development of the steel industry. Huge amount of employment (10 lakhs jobs per year) would be generated because of this.
But this is sure to take longer than the speculated time if the present rate ofland acquisition and the government’s listlessness continues. The government ensuring faster support (in terms of permissions, lands etc.) would mean a faster growth rate of the country, and a step closer to becoming the superpower of the world. Thus one thing which seems very clear is that if Vision 2020 needs to be achieved, then steel industry is where we need to focus.
c. Five Trends in Indian Steel Industry:
Growth for India’s steel industry has been hampered by regulatory and environmental hurdles, land acquisition delays and social opposition.
But players are finding ways to expand capacities as demand for steel races in one of the fastest growing economies of the world. India targets 120 million tonnes of domestic steel output at the end of 2012 from nearly 70 million tonnes in 2009/10.
Following are five trends seen in the industry:
Consolidation
Analysts say buyouts could be an easy way of getting hold of land and regulatory approvals by companies seeking growth.
“Over the next couple of years, there could be mergers and acquisitions, particularly in the sponge iron sector,” said Arun Kejriwal of Kejriwal Research & Investment Services, referring to the hundreds of small units, many of which are unviable.
In December, JSW Steel agreed to buy a controlling stake in loss-making rival Ispat Industries that would push its capacity to the top most position. It also agreed to buy Bellary Steel.
Doggedness of foreign firms
South Korean POSCO got an approval for its 12 million tonne plant in eastern Orissa state last month after waiting since 2005, and its plans for a another plant in Karnataka and a joint venture with Steel Authority of India (SAIL) in Jharkhand remain.
The world’s top steelmaker ArcelorMittal has also waited years to build plants in Jharkand, Orissa and Karnataka and has a stake in Uttam Galva Steel.
“Foreign players have taken the difficulties in their stride,” said Manish Pande, regional director of CRU Strategies.
“As the industry expands, there will be opportunities for them to come in as joint venture partners, technology partners or on their own.”
The delays have not discouraged the industry and other foreign players who have set foot in India are:
– Japan’s Nippon Steel in joint venture with Tata Steel for making cold rolled sheets.
– Japan’s JFE Holdings in talks with JSW for a stake buy.
– Japan’s Kobe Steel and SAIL in talks for a joint venture.
– Russia’s Severstal and NMDC in joint venture to a build steel plant.
Relocation, smaller plants
ArcelorMittal, POSCO, Bhushan Steel and JSW have chosen Karnataka state in the south for making new steel plants, away from east India that is mineral rich, but fraught with social and land-acquisition problems.
“If you can’t get your steel plant simply because you can’t get the land, it doesn’t matter whether you have got an iron ore deposit nearby,” Neil Bristow of H&W Worldwide Consulting told Reuters on the sidelines of the Global Steel seminar last month.
Bristow said investors may even look to the west coast that has less iron ore, but is closer to Africa from where coking coal is imported.
ArcelorMittal has also spoken about a shift towards smaller modular sites as against mega projects.
Use of low grade raw materials
Traditional steel blast furnaces can take only iron ore lumps and coking coal. But now, industry members are looking at technology that will enable them to use iron ore fines and non coking coal as they are abundantly available in India.
A big part of India’s over 200-million tonne iron ore output is the powdery iron ore fines while coal production of over 500 million tonnes is mostly non coking coal.
“Raw material costs account for 50% to 55% of the total cost of steel production. We need to utilize low grade raw materials available locally,” CS Verma, chairman of SAIL , said in a speech at the Global Steel seminar.
SAIL’s joint venture plan with POSCO is for using the Finex technology that can use iron ore fines directly in the blast furnace.
Environmental awareness
With stricter implementation of environmental rules, and a new mining bill that seeks to have companies pay 26 of their profits to displaced locals, companies are expected to spend more on environment and society, analysts say.
“I expect the industry to be more cognizant towards social responsibility,” said Anjani Agrawal, national leader-mining and metals at Ernst & Young.
“So I expect people to not just spend more, but spend appropriately.”
d. Role of Iron and Steel Industry in India GDP:
The Role of Iron and Steel Industry in India GDP is very important for the development of the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron and steel are among the most important components required for the infrastructure development in the country.
Role of Iron and Steel Industry – Facts:
· The Iron and Steel Industry in India is one of the fastest growing sectors
· The demand drivers for the Indian Iron and Steel industry are increase in the activities of the automobiles industry, real estates industry, transportation system, aircraft industry, ship building industry, etc.
· India ranks 5th in the world in terms of production of steel
· The amount of crude steel produced in 2006-07 was 50.71 million tonnes
· The amount of finished steel produced in 2006-07 was 51.9 million tonnes
· The production of finished steel was increased by 16.52%
· The production of finished carbon steel was 24.8 million tonnes in the year 2006-07
· It is expected that India would become the second biggest producer of steel within the year 2016 and the production per year would be 137 million tonnes
· The exports pertaining to the steel industry was 6.26 % during the period 2006-07
Role of Iron and Steel Industry in India’s GDP consumption:
· The domestic consumption of steel has grown by12.5% in the past three years
· The domestic steel consumption in the year 2006-07 was 41.14 million tonnes
· The average growth rate of the Indian Iron and Steel Industry is 11.36%
· The construction projects all over India are major consumer of steel
· The per capita consumption of steel in India is 35kgs
· As the per capita consumption of steel is lower than other countries, so the steel industry has huge opportunities in the future
Role of Iron and Steel Industry in India GDP – growth in future:
· The Arcelor Mittal, which is the largest steelmaker in the world, has plans of establishing two Greenfield steel projects with capacity of 12 million tonnes annually, in India
· Acerinox SA, one of the important stainless steel manufacturers in collaboration with Nisshin Steel, Japan is setting up a steel plant in India
· The Tata Steel ranks 5th in the world steel production and the company have plans of expanding its capacity by the year 2015
· SAIL, India’s biggest producer of steel has plans of increasing the production to 24.98 million tonnes annually
· Sinosteel Corp, China are planning to invest US$ 4 billion to set up a 5 million tonnes capacity Greenfield steel plant
· The acquisition of the Corus, the Anglo-Dutch steel manufacturer by the Tata Steel
· The Algoma Steel, Canada was acquired by Essar Global for US$ 1.63 billion
