project on steel company

7/30/2019 Project on Steel Company

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AA

PROJECT REPORT ONPROJECT REPORT ON

FUNDAMENTAL ANALYSISFUNDAMENTAL ANALYSISOFOF

STEEL INDUSTRYSTEEL INDUSTRY(WITH REFERENCE TO SAIL, TATA STEEL &(WITH REFERENCE TO SAIL, TATA STEEL &

ESSAR STEEL COMPANIES. )ESSAR STEEL COMPANIES. )

BACHELOR OF BUSINESS ADMINISTRATIONBACHELOR OF BUSINESS ADMINISTRATION

[B.B.A][B.B.A]

SEMESTER-SEMESTER-VI (FINANCE)VI (FINANCE)

SUBMITTED BYSUBMITTED BY

MEPAL M. VANANIMEPAL M. VANANI

T.Y.B.B.AT.Y.B.B.A

ROLL NO: [71]ROLL NO: [71]

SUPERVISING TEACHERSUPERVISING TEACHER

Mr. RAJESH DESAIMr. RAJESH DESAI

AMBABA COMMERCE COLLEGE,AMBABA COMMERCE COLLEGE,

MANIBA INSTITUTE OF BUSINESSMANIBA INSTITUTE OF BUSINESS

MANAGEMENT & B.C.A COLLEGEMANAGEMENT & B.C.A COLLEGE

SABARGAMSABARGAM

[2011-2012][2011-2012]


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Research MethodologyResearch Methodology

Problem Definition:Problem Definition:

I have selected study on steel industry. But I am not capable to study of wholeI have selected study on steel industry. But I am not capable to study of whole

steel company of steel industry. So, I selected SAIL, TATA Steel, and ESSAR Steelsteel company of steel industry. So, I selected SAIL, TATA Steel, and ESSAR Steel

Company. My project report time duration is 05/12/2011 to 05/03/2012. So I haveCompany. My project report time duration is 05/12/2011 to 05/03/2012. So I have

limited time for finish my project.limited time for finish my project.

Research design:Research design:

Exploratory Research: -Exploratory Research: -

It is focus on the discover of new ideas. It is study of unfamiliar problem andIt is focus on the discover of new ideas. It is study of unfamiliar problem and

the preliminary investigation.the preliminary investigation.

Descriptive Research: -Descriptive Research: -

When the researcher is interested in knowing the characteristic of certainWhen the researcher is interested in knowing the characteristic of certain

groups such as age, sex, educational level, occupation and income etc.groups such as age, sex, educational level, occupation and income etc.

Causal Research: -Causal Research: -

As the name implies a causal design investigates the cause and effectAs the name implies a causal design investigates the cause and effect

relationship between two or more variable.relationship between two or more variable.

At initial stage, the research design is exploratory because the researchAt initial stage, the research design is exploratory because the research

statement was developed on the basis of the review of literature that was available onstatement was developed on the basis of the review of literature that was available on

internet, in books and journals.internet, in books and journals.

Data collection:Data collection:

PRIMARY DATA: -PRIMARY DATA: -

AMBABA COMMERCE COLLEGE, MIBM & B.C.A COLLEGE, SABARGAM.


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Primary data means data which are a fresh or they are collected for the firstPrimary data means data which are a fresh or they are collected for the first

time and thus happen to be original in character and considered as first hand data andtime and thus happen to be original in character and considered as first hand data and

data collected specifically for the study currently undertaken is called as primarydata collected specifically for the study currently undertaken is called as primary

data.data.

SECONDARY DATA: -SECONDARY DATA: -

Secondary data means data which are collected by any one for a particularSecondary data means data which are collected by any one for a particular

research purpose and which are used by others for different purpose. Primary dataresearch purpose and which are used by others for different purpose. Primary data

collected by one person may become secondary data for another.collected by one person may become secondary data for another.

The sources of secondary data collection are the literature review as the booksThe sources of secondary data collection are the literature review as the books

and industrial magazine that were referred. Internet was also one of the main sourcesand industrial magazine that were referred. Internet was also one of the main sources

of secondary data collection.of secondary data collection.

Data Analysis:Data Analysis:

Data Analysis will be done using SPSS software (Stastical Package for SocialData Analysis will be done using SPSS software (Stastical Package for Social

Science). This will be used because it gives us accurate and fast result. Also multipleScience). This will be used because it gives us accurate and fast result. Also multiple

features of SPSS will help in applying various tests to reach to accurate conclusions.features of SPSS will help in applying various tests to reach to accurate conclusions.

Objective of Study:Objective of Study:

To get proper way of study.To get proper way of study.

To carry the different aspects and method of data collection.To carry the different aspects and method of data collection.

To know the Current economy, Industrial growth cycle and Company analysis.To know the Current economy, Industrial growth cycle and Company analysis.

To study the financial scenario of the Steel Sector in India.To study the financial scenario of the Steel Sector in India.

To find out suitable investment opportunity in Steel company in India.To find out suitable investment opportunity in Steel company in India.

Analyze the information collected on sales, profit, earning per share, marketAnalyze the information collected on sales, profit, earning per share, market

price, ratio analysis for the selected, etc.price, ratio analysis for the selected, etc.

To make valuation of selected companies and to give suggestion and advice toTo make valuation of selected companies and to give suggestion and advice to

the investors to invest or notthe investors to invest or not



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Scope of the study:Scope of the study:

If we study on actual result or statement of the companies, we can get theIf we study on actual result or statement of the companies, we can get the

better results and scope for further research in future.better results and scope for further research in future.

INRODUCTION OF INDUSTRYINRODUCTION OF INDUSTRY

Scenario of Steel industry in the worldScenario of Steel industry in the world

PerspectivePerspective

History of the Steel Industry dates back to the ancient times in ArmeniaHistory of the Steel Industry dates back to the ancient times in Armenia

which is approximately around three thousand and five hundred Before Christ. Steelwhich is approximately around three thousand and five hundred Before Christ. Steel

is nothing but the alloy of iron and carbon. But the History of the Steel Industry inis nothing but the alloy of iron and carbon. But the History of the Steel Industry in

the modern times was initiated during the medium half of nineteenth century (duringthe modern times was initiated during the medium half of nineteenth century (during

1850s to be precise). The initiator of it was a person named Mr. Henry Bessemer of1850s to be precise). The initiator of it was a person named Mr. Henry Bessemer of

England. At the same time, another person named Mr. William Kelly, a resident ofEngland. At the same time, another person named Mr. William Kelly, a resident of

United States, has also started the production of steel and was completely anUnited States, has also started the production of steel and was completely an

independent approach from Mr. Bessemer This helped the steel industries to produceindependent approach from Mr. Bessemer This helped the steel industries to produce

steel in large quantities and also at comparatively low costs.steel in large quantities and also at comparatively low costs.

History of the Steel Industry was enriched and modernized through theHistory of the Steel Industry was enriched and modernized through the

introduction of Open-Hearth process of steel production which made the industries tointroduction of Open-Hearth process of steel production which made the industries to

produce steel out of domestic iron ores. This process was first adopted by the steelproduce steel out of domestic iron ores. This process was first adopted by the steel industries situated in United States of America in the year 1888. This time saw rapidindustries situated in United States of America in the year 1888. This time saw rapid

innovations in the processes of steel production which got its impetus from theinnovations in the processes of steel production which got its impetus from the

increased want for steel from various industries namely, railway industry, automobileincreased want for steel from various industries namely, railway industry, automobile

industry, industry involved in construction of bridges, etc. During this time period,industry, industry involved in construction of bridges, etc. During this time period,

the enhanced demand as well as supply of steel pushed the ranking of USA to thethe enhanced demand as well as supply of steel pushed the ranking of USA to the

first position, in terms of the steel production.first position, in terms of the steel production.



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In the History of the Steel Industry it can be observed that the with theIn the History of the Steel Industry it can be observed that the with the

passage of time, the quantity of production by USA has decreased with relation topassage of time, the quantity of production by USA has decreased with relation to

total world production of steel. After the 1980s, China came strongly enough andtotal world production of steel. After the 1980s, China came strongly enough and

became the largest producer of steel. India is also showing good performance in thisbecame the largest producer of steel. India is also showing good performance in this sector in the recent times.sector in the recent times.

Point of ViewPoint of View

Investments:-Investments:-

China Steel Corporation (CSC), one of the largest integrated steel makers inChina Steel Corporation (CSC), one of the largest integrated steel makers in

Taiwan, together with its co-investors, will invest US$ 178 million in a new plant toTaiwan, together with its co-investors, will invest US$ 178 million in a new plant to

produce electrical steels in Bharuch district of Gujarat, according to Francis Kuo-produce electrical steels in Bharuch district of Gujarat, according to Francis Kuo-

Hsin Liang, Vice-Minister, Ministry of Economic Affairs, Taiwan.Hsin Liang, Vice-Minister, Ministry of Economic Affairs, Taiwan.

Global Scenario:-Global Scenario:-

In 2007 the World Crude Steel output reached 1343.5 million metric tons andIn 2007 the World Crude Steel output reached 1343.5 million metric tons and

showed a growth of 7.5% over the previous year. It is the fifth consecutive yearshowed a growth of 7.5% over the previous year. It is the fifth consecutive yearthat world crude steel production grew by more than 7%.that world crude steel production grew by more than 7%. (Source: IISI)(Source: IISI)

China remained the worlds largest Crude Steel producer in 2007 also (489.00China remained the worlds largest Crude Steel producer in 2007 also (489.00

million metric tons) followed by Japan (112.47 million metric tons) and USAmillion metric tons) followed by Japan (112.47 million metric tons) and USA

(97.20 million metric tons). India occupied the 5(97.20 million metric tons). India occupied the 5 thth position (53.10 million metricposition (53.10 million metric

tons) for the second consecutive year.tons) for the second consecutive year. (Source: IISI)(Source: IISI)

The International Iron & Steel Institute (IISI) in its forecast for 2008 hasThe International Iron & Steel Institute (IISI) in its forecast for 2008 has

predicted that 2008 will be another strong year for the steel industry withpredicted that 2008 will be another strong year for the steel industry with

apparent steel use rising from 1,202 million metric tonnes in 2007 to 1,282apparent steel use rising from 1,202 million metric tonnes in 2007 to 1,282

million metric tonnes in 2008 i.e. by 6.7%. Further, the BRIC ( Brazil, Russia,million metric tonnes in 2008 i.e. by 6.7%. Further, the BRIC ( Brazil, Russia,

India and China) countries will continue to lead the growth with an expectedIndia and China) countries will continue to lead the growth with an expected

increase in production by over 11% compared to 2007.increase in production by over 11% compared to 2007.

The Growth Profile:-The Growth Profile:-

At present, total (crude) steel making capacity is over 34 million tonnes andAt present, total (crude) steel making capacity is over 34 million tonnes and

India, the 8th largest producer of steel in the world, has to its credit, the capability toIndia, the 8th largest producer of steel in the world, has to its credit, the capability to



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produce a variety of grades and that too, of international quality standards. As per theproduce a variety of grades and that too, of international quality standards. As per the

ratings of the prestigious World Steel Dynamics", Indian HR Products are classifiedratings of the prestigious World Steel Dynamics", Indian HR Products are classified

in the Tier II category quality products a major reason behind their acceptance inin the Tier II category quality products a major reason behind their acceptance in

the world market. EU, Japan have qualified for the top slot, while countries likethe world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.South Korea, USA share the same class as India.

Financial position:-Financial position:-

World crude steel production declined 8% from 1,329 m tonnes in 2008 to 1,223World crude steel production declined 8% from 1,329 m tonnes in 2008 to 1,223

m tonnes for the year of 2009. Steel production declined in nearly all the majorm tonnes for the year of 2009. Steel production declined in nearly all the major

steel producing countries and regions including the EU, North America, Southsteel producing countries and regions including the EU, North America, South

America and the CIS in 2009. However, Asia, in particular China and India, andAmerica and the CIS in 2009. However, Asia, in particular China and India, and

the Middle East showed positive growth in 2009. the Middle East showed positive growth in 2009. Asia produced 799 m tonnes ofAsiaproduced 799 m tonnes of

crude steel in 2009crude steel in 2009, an increase of 3.6% compared to 2008; its share of world steel, an increase of 3.6% compared to 2008; its share of world steel

production increased to 65% in 2009 from 58% in 2008.production increased to 65% in 2009 from 58% in 2008.

The global economic and financial crisis impacted steel consumption.The global economic and financial crisis impacted steel consumption.

Consumption declined 6.7% from 1,202 m tonnes in 2008 to 1,121 m tonnes inConsumption declined 6.7% from 1,202 m tonnes in 2008 to 1,121 m tonnes in

2009. Of the consumption, 50% was flats (largely consumption led demand) and2009. Of the consumption, 50% was flats (largely consumption led demand) and

50% was long products (largely infrastructure driven demand). World50% was long products (largely infrastructure driven demand). World

consumption of finished steel excluding BRIC countries registered a decline ofconsumption of finished steel excluding BRIC countries registered a decline of

26.8% in 2009. Steel consumption of BRIC countries grew 18% largely due to the26.8% in 2009. Steel consumption of BRIC countries grew 18% largely due to the

massive consumption of steel from China to satiate stimulated domestic demand.massive consumption of steel from China to satiate stimulated domestic demand.

Prospects:-Prospects:-

Going forward, we remain apprehensive about the continuation of the strongGoing forward, we remain apprehensive about the continuation of the strong

performance by steel companies. We believe that volume growth would be visible inperformance by steel companies. We believe that volume growth would be visible in

the years to come, largely due to the continuation of infrastructure spendingthe years to come, largely due to the continuation of infrastructure spending

(including housing), strong demand from the auto sector, which could help in driving(including housing), strong demand from the auto sector, which could help in driving

demand for value added steel products like CR (cold roll) steel and exports. Wedemand for value added steel products like CR (cold roll) steel and exports. We

expect realisations to remain under pressure on account of excessive supplies.expect realisations to remain under pressure on account of excessive supplies.

However, a recovery in steel prices could be sooner if steel producers across theHowever, a recovery in steel prices could be sooner if steel producers across the globe take continuous efforts at curtailing production.globe take continuous efforts at curtailing production.

http://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industryhttp://www.equitymaster.com/detail.asp?date=8/25/2010&story=2&title=The-tables-have-turned-in-the-steel-industry


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Scenario of Steel industry in IndiaScenario of Steel industry in India

PerspectivePerspective

The Indian steel industry plays an important role in the country's economicThe Indian steel industry plays an important role in the country's economic

growth. The country has also gained an important position on the global steel mapgrowth. The country has also gained an important position on the global steel map

due to its giant steel mills, acquisition of global scale capacities by players,due to its giant steel mills, acquisition of global scale capacities by players,

continuous modernization & up gradation of old plants, improving energy efficiency,continuous modernization & up gradation of old plants, improving energy efficiency,

and backward integration into global raw material sources. Global steel giants fromand backward integration into global raw material sources. Global steel giants from

across the globe have shown keen interest in the steel industry due to its phenomenalacross the globe have shown keen interest in the steel industry due to its phenomenal performance. A lot of new steel plants have been set up in the country due to hugeperformance. A lot of new steel plants have been set up in the country due to huge

foreign investments and state-of-the-art technology. Tata steel was the first steelforeign investments and state-of-the-art technology. Tata steel was the first steel

plant established in the year 1907 in India. Some of the other steel plants in theplant established in the year 1907 in India. Some of the other steel plants in the

country include Bhilai Steel Plant at Chattisgarh, Rourkela Steel Plant at Orissa,country include Bhilai Steel Plant at Chattisgarh, Rourkela Steel Plant at Orissa,

Durgapur Steel Plant at West Bengal to name a few. In 2010 India was ranked as theDurgapur Steel Plant at West Bengal to name a few. In 2010 India was ranked as the

fourth largest producer of steel by the World Steel Association.fourth largest producer of steel by the World Steel Association.

India is the world's fourth largest producer of iron ore. It has about 25 billionIndia is the world's fourth largest producer of iron ore. It has about 25 billion

tonnes of good quality iron ore reservesthe sixth-highest in the worldwith atonnes of good quality iron ore reservesthe sixth-highest in the worldwith a

reserves base of 9.8 million. Although lower than Brazil and Australia, this isreserves base of 9.8 million. Although lower than Brazil and Australia, this is

considered abundant and is one of the important advantages of India's domestic steelconsidered abundant and is one of the important advantages of India's domestic steel

industry.industry.



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Seeing the growth potential of the steel industry in India, many global steelSeeing the growth potential of the steel industry in India, many global steel

players have been planning to enter the market or have announced their expansionplayers have been planning to enter the market or have announced their expansion

plans for their Indian businesses. Arcelor Mittal and POSCO have planned megaplans for their Indian businesses. Arcelor Mittal and POSCO have planned mega

Greenfield projects at various locations in India. Some other global players have asloGreenfield projects at various locations in India. Some other global players have aslo also entered strategic partnerships or joint ventures (JV) with Indian steel giants toalso entered strategic partnerships or joint ventures (JV) with Indian steel giants to

capitalize on their existing client base in the region.capitalize on their existing client base in the region.

Point of ViewPoint of View

Investments:-Investments:-

Tata Steel is planning to set up a six million tonne (MT) steel plant TheTata Steel is planning to set up a six million tonne (MT) steel plant The

proposed six million tonne (MT) steel plant which Tata Steel is setting up at Kalingaproposed six million tonne (MT) steel plant which Tata Steel is setting up at Kalinga

Nagar, Orissa, will concentrate entirely on flat steel products, catering to the needs ofNagar, Orissa, will concentrate entirely on flat steel products, catering to the needs of

the automotive industry and white goods. The first phase of this plant is expected tothe automotive industry and white goods. The first phase of this plant is expected to be operational by February 2014 and will see a total investment of up to Rs 25,000be operational by February 2014 and will see a total investment of up to Rs 25,000

crore (US$ 5.02 billion) of which the steel maker has already invested over Rscrore (US$ 5.02 billion) of which the steel maker has already invested over Rs

10,000 crore (US$ 2 billion).10,000 crore (US$ 2 billion).

RINL, the corporate entity that runs the Vizag steel plant, has inaugurated aRINL, the corporate entity that runs the Vizag steel plant, has inaugurated a

series of auxiliary units to expand its plant's capacity to 6.3 MT The project has beenseries of auxiliary units to expand its plant's capacity to 6.3 MT The project has been

executed by Instrumentation Ltd, Kota and involved a cost of around Rs 10 croreexecuted by Instrumentation Ltd, Kota and involved a cost of around Rs 10 crore

(US$ 2.25 million).(US$ 2.25 million).

Varia Engineering Works Pvt Ltd, Ahmedabad-based rolling millsVaria Engineering Works Pvt Ltd, Ahmedabad-based rolling mills

manufacturing company, is setting up India's first 6-stand continuous cold rollingmanufacturing company, is setting up India's first 6-stand continuous cold rolling

mill for stainless steel.mill for stainless steel.

Domestic Scenario:-Domestic Scenario:-

The Indian steel industry have entered into a new development stage from 2005-The Indian steel industry have entered into a new development stage from 2005-

06, riding high on the resurgent economy and rising demand for steel. Rapid rise06, riding high on the resurgent economy and rising demand for steel. Rapid rise

in production has resulted in India becoming the 5in production has resulted in India becoming the 5 thth largest producer of steel.largest producer of steel.



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It has been estimated by certain major investment houses, such as Credit SuisseIt has been estimated by certain major investment houses, such as Credit Suisse

that, Indias steel consumption will continue to grow at nearly 16% rate annually,that, Indias steel consumption will continue to grow at nearly 16% rate annually,

till 2012, fuelled by demand for construction projects worth US$ 1 trillion. Thetill 2012, fuelled by demand for construction projects worth US$ 1 trillion. The

scope for raising the total consumption of steel is huge, given that per capita steelscope for raising the total consumption of steel is huge, given that per capita steelconsumption is only 40 kg compared to 150 kg across the world and 250 kg inconsumption is only 40 kg compared to 150 kg across the world and 250 kg in

China.China.

The National Steel Policy has envisaged steel production to reach 110 millionThe National Steel Policy has envisaged steel production to reach 110 million

tonnes by 2019-20. However, based on the assessment of the current ongoingtonnes by 2019-20. However, based on the assessment of the current ongoing

projects, both in greenfield and brownfield, Ministry of Steel has projected thatprojects, both in greenfield and brownfield, Ministry of Steel has projected that

the steel capacity in the county is likely to be 124.06 million tonnes by 2011-12.the steel capacity in the county is likely to be 124.06 million tonnes by 2011-12.

The Growth Profile:-The Growth Profile:-

The liberalization of industrial policy and other initiatives taken by theThe liberalization of industrial policy and other initiatives taken by the

Government have given a definite impetus for entry, participation and growth of theGovernment have given a definite impetus for entry, participation and growth of the

private sector in the steel industry. While the existing units are beingprivate sector in the steel industry. While the existing units are being

modernized/expanded, a large number of new/greenfield steel plants have also comemodernized/expanded, a large number of new/greenfield steel plants have also come

up in different parts of the country based on modern, cost effective, state of-the-artup in different parts of the country based on modern, cost effective, state of-the-art

technologies.technologies.

Financial position:-Financial position:-

Steel being at the core of economic activity witnessed an unprecedentedSteel being at the core of economic activity witnessed an unprecedented

downturn in 2009. Advanced economies buckled under pressure of large inventoriesdownturn in 2009. Advanced economies buckled under pressure of large inventories

coupled with standstill demand; the rest of the world (excluding China and India)coupled with standstill demand; the rest of the world (excluding China and India)

suffocated under low domestic demand; their high degree of export dependency onsuffocated under low domestic demand; their high degree of export dependency on

the advanced world added to their woes.the advanced world added to their woes.

Prospects:-Prospects:-

Steel prices are expected to move northward in 2010 due to increased demand andSteel prices are expected to move northward in 2010 due to increased demand and

higher input prices. Economic recovery across the globe is expected to generatehigher input prices. Economic recovery across the globe is expected to generate

real demand pull. There would also be a demand pull led by inventory restocking.real demand pull. There would also be a demand pull led by inventory restocking.

While the former is expected to be generated from investment in infrastructure andWhile the former is expected to be generated from investment in infrastructure and

private consumption, the latter is expected to emanate from creating inventoriesprivate consumption, the latter is expected to emanate from creating inventories

which were used up by the economies across the globe in 2009. Dollar dynamicswhich were used up by the economies across the globe in 2009. Dollar dynamics



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which regulate the steel trade and price intensity are expected to work in favour ofwhich regulate the steel trade and price intensity are expected to work in favour of

global steel trade. The depreciating dollar is expected to fuel capital investmentglobal steel trade. The depreciating dollar is expected to fuel capital investment

and consumption expenditure pulling up steel demand.and consumption expenditure pulling up steel demand.

Coking coal spot prices have skyrocketed to US$ 300 per tonne. The same trend isCoking coal spot prices have skyrocketed to US$ 300 per tonne. The same trend is

noticed in Iron ore prices too. More importantly, the decade-long practice of long-noticed in Iron ore prices too. More importantly, the decade-long practice of long-

term agreements for coal and iron procurement has now been altered to quarterlyterm agreements for coal and iron procurement has now been altered to quarterly

contracts bringing more uncertainty and volatility.contracts bringing more uncertainty and volatility.

The Indian steel sector may face threat from cheap imports, now that the importThe Indian steel sector may face threat from cheap imports, now that the import

duties on steel in India are amongst the lowest in the world. Import pressures couldduties on steel in India are amongst the lowest in the world. Import pressures could

consequently lead to pressure on margins of the domestic companies on account ofconsequently lead to pressure on margins of the domestic companies on account of

lower steel realisations. However, if the Indian government increases the importlower steel realisations. However, if the Indian government increases the import

duty on steel products, domestic steel industry could get protection to an extent.duty on steel products, domestic steel industry could get protection to an extent.

But since India has already agreed to the WTO norms, it might become difficultBut since India has already agreed to the WTO norms, it might become difficult

for the government to increase duties substantially.for the government to increase duties substantially.

The government over the last couple of years has continued to lay emphasis onThe government over the last couple of years has continued to lay emphasis on

continuation of infrastructure activities in the country. Increased spending oncontinuation of infrastructure activities in the country. Increased spending on

infrastructure will be a key positive for the steel sector as the demand for steel willinfrastructure will be a key positive for the steel sector as the demand for steel will

get a boost. The continuance of tax sops to the housing sector is another positiveget a boost. The continuance of tax sops to the housing sector is another positive

for steel demand.for steel demand.

Government Initiatives:-Government Initiatives:-

The industrial policy that was announced in July 1991, removed iron and steelThe industrial policy that was announced in July 1991, removed iron and steel

from the list of industries reserved for the public sector and was also exemptedfrom the list of industries reserved for the public sector and was also exempted

from the provisions of compulsory licensing under the Industries (Developmentfrom the provisions of compulsory licensing under the Industries (Development

and Regulation) Act, 1951and Regulation) Act, 1951

From May 24, 1992 the iron and steel industry was included in the list of highFrom May 24, 1992 the iron and steel industry was included in the list of high

priority' industries for automatic approval for foreign equity investment up to 51priority' industries for automatic approval for foreign equity investment up to 51

per cent and this limit has since been raised to 100 per cent.per cent and this limit has since been raised to 100 per cent.

Pricing and distribution of steel were deregulated from January, 1992.Pricing and distribution of steel were deregulated from January, 1992.

Additionally, it was ensured that priority continued to be accorded for meeting theAdditionally, it was ensured that priority continued to be accorded for meeting the

requirements of small-scale industries, exporters of engineering goods and Northrequirements of small-scale industries, exporters of engineering goods and North

Eastern region, in addition to strategic sectors such as Defence and Railways.Eastern region, in addition to strategic sectors such as Defence and Railways.

The import regime for iron and steel has undergone major liberalisation. This hasThe import regime for iron and steel has undergone major liberalisation. This has



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been made possible by total freeing of iron and steel imports from licensing,been made possible by total freeing of iron and steel imports from licensing,

canalization and lowering of import duty levels. Export of iron and steel items hascanalization and lowering of import duty levels. Export of iron and steel items has

also been freely allowed.also been freely allowed.

Duties on raw materials for steel production were reduced. These measuresDuties on raw materials for steel production were reduced. These measuresreduced the capital costs and production costs of steel plants.reduced the capital costs and production costs of steel plants.

Freight equalization Scheme was withdrawn in January, 1992 - with the coming upFreight equalization Scheme was withdrawn in January, 1992 - with the coming up

of new steel plants in different parts of the country, iron and steel products areof new steel plants in different parts of the country, iron and steel products are

freely available in the domestic market.freely available in the domestic market.

Currently, the import duty on steel items is 5 per cent. The import duty on rawCurrently, the import duty on steel items is 5 per cent. The import duty on raw

materials like melting scrap, coking coal, metcoke is NIL and for other rawmaterials like melting scrap, coking coal, metcoke is NIL and for other raw

materials such as Zinc, Iron Ore and Ferro Alloys it ranges from 2 per cent to 5 permaterials such as Zinc, Iron Ore and Ferro Alloys it ranges from 2 per cent to 5 per

cent. There is no export duty on any steel items. However, Government hascent. There is no export duty on any steel items. However, Government has

imposed ad-volorem export duty of 15 per cent on iron ore lumps and 5 per centimposed ad-volorem export duty of 15 per cent on iron ore lumps and 5 per cent

ad-volorem export duty on iron ore fines in order to conserve the mineral for longad-volorem export duty on iron ore fines in order to conserve the mineral for long

term requirements of the domestic steel industry.term requirements of the domestic steel industry.

Excise duty for steel is currently 10 per cent.Excise duty for steel is currently 10 per cent.

To ensure sufficient domestic availability and curb the rising price of hot-rolledTo ensure sufficient domestic availability and curb the rising price of hot-rolled

coils in the domestic market, its imports have been freed by the government.coils in the domestic market, its imports have been freed by the government.

Road Ahead:-Road Ahead:-

According to the latest report by RNCOS titled "Indian Steel Industry OutlookAccording to the latest report by RNCOS titled "Indian Steel Industry Outlook

to 2012", the Indian crude steel production will grow at a compound annual growthto 2012", the Indian crude steel production will grow at a compound annual growth

rate (CAGR) of around 10 per cent during 2010-2013. Moreover, the Government israte (CAGR) of around 10 per cent during 2010-2013. Moreover, the Government is

proactively providing incentives to boost economic growth by injecting funds inproactively providing incentives to boost economic growth by injecting funds in

various industries, such as construction, infrastructure, automobile, and power willvarious industries, such as construction, infrastructure, automobile, and power will

drive the steel industry in future. The report also shows that, steel consumption indrive the steel industry in future. The report also shows that, steel consumption in

India is expected to grow considerably in coming years as perIndia is expected to grow considerably in coming years as percapita finished steelcapita finished steelconsumption is far less than its regional counterparts.consumption is far less than its regional counterparts.

Production of Steel:-Production of Steel:-

Last Ten years Finished (Carbon) Steel Production is given below:-Last Ten years Finished (Carbon) Steel Production is given below:-

PRODUCTION OF FINISHED CARBON STEELPRODUCTION OF FINISHED CARBON STEEL (In million tonnes)(In million tonnes)



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YearYearMainMain

ProducersProducersSecondarySecondary

ProducersProducersGrandGrand

TotalTotal% of share of% of share of

Secondary ProducersSecondary Producers

2001-20022001-2002 13.0513.05 17.5817.58 30.6330.63 57.40 %57.40 %

2002-20032002-2003 14.3914.39 19.2819.28 33.6733.67 57.27 %57.27 %

2003-20042003-2004 15.1915.19 21.0021.00 36.1936.19 58.03 %58.03 %

2004-20052004-2005 15.6115.61 24.4424.44 40.0540.05 61.02 %61.02 %

2005-06 (Prov.)2005-06 (Prov.) 16.23616.236 26.40026.400 42.63642.636 61.92 %61.92 %

2006-20072006-2007 17.39017.390 37.75637.756 55.14655.146 68.46 %68.46 %

2007-20082007-2008 17.76517.765 40.56540.565 58.23358.233 69.54 %69.54 %

2008-20092008-2009 17.21617.216 46.22946.229 63.44563.445 72.86%72.86%

2009-20102009-2010 18.03818.038 51.09351.093 69.13169.131 73.9 %73.9 %

2010-20112010-2011 18.28018.280 57.46157.461 75.74175.741 75.86%75.86%



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project on steel company

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