IRON &

STEEL

Roll No’s
11,16,17,21,22,23,24,34,56
INTRODUCTION & INDUSTRY
OVERVIEW
Swapnil Gujar
Roll No : 11
OVERVIEW
 Industry Overview
 Structure Of Indian Steel Industry

 Consumption Of Indian Steel Industry

 Supply of Steel in Indian Market

 Export of Iron and Steel

 Market Share of Different Companies

 Competition Analysis

 Mergers and Acquisitions

 Expected Growth & Outlook.

 Factors Holding back Indian Steel Industry

 Government Subsidies & Geographical Area Advantage.

INTRODUCTION
 Background
 Beginning of Industry.
 Liberalization of Indian Steel Sector.
 New Industrial policy.
 Crucial to development of the economy.
 Important indicator of socio-economic development.

Future
Trends
Post
Liberalizati
on
After
Independen
ce

Ancient
MAIN AND SECONDARY PRODUCERS
 Primary Producers (Iron Ore)
 Major Players : SAIL, TISCO and Rashtriya Ispat Nigam Limited
(RINL).
 Secondary Producers(Melting scrap or sponge iron or a mixture)
 Major Players: Essar Steel, Ispat Industries and Lloyds steel.
 Production of Finished Carbon Steel & Pig Iron

Year Finished Pig Iron

Carbon Steel
2005-06 40.055 3.228
2006-07 44.544 4.695
2007-08 55.416 4.993
2008-09 58.233 5.314
2009-10 59.02 5.289
PRODUCTION - BY COMPANY

Rank Company Million Metric Tons

1 ArcelorMittal 77.5
2 Baosteel 31.3
3 POSCO 31.1
4 Nippon Steel(1) 26.5
5 JFE 25.8
6 Jiangsu Shagang(2) 20.5
7 Tata Steel(3) 20.5
16 SAIL 13.5
34 JSW 5.5
35 Essar 5.5
CAPACITY UTILIZATION

 Capacity utilization is the (weighted)

average of the ratio between the actual
output of firms to the maximum that
could be produced per unit of time,
with existing plant and equipment.
 Various factors influencing Capacity
Utilization.
 Current figures 86% for China and
80% for India, compared with the
world average of 64%. Currently
European region has the least CU.
SIZE AND COMPOSITION
 India is ranked 5th among the top steel producers - 53MT.
 The steel industry of India has capital investments of more than Rs 100,
000 crores.
 The total employment in the industry is more than 2 million (including
direct and indirect employment).
 Out of India’s annual iron ore production of more than 200 MT, about 50
per cent is exported.
 Accounts for over 7 per cent of the world's total production.
 Accounts for around 5 per cent of the global steel consumption.
INVESTMENTS

 Big Barons like ArcellorMittal and Posco enter India

 Investments projected to the tune of US$ 30 billion

MANAGERIAL ECONOMICS-
IRON AND STEEL
INDUSTRY
By ,
Amrita Karwadkar -17
TOPICS COVERED
 Industry Structure
 Production

 Consumption

 Major Developments coming ahead

 Challenges and Government Initiatives .

 INDUSTRY STRUCTURE :

Indian Iron And

Steel Industry

Public Sector Private Sector

Integrated Secondary Integrated Secondary

Producers Producers Producers Producers

This industry has been set up as a private sector by the government through the
new Industrial policy .
INDIA POSITION IN STEEL
PRODUCTION
Year Rank
2003 8
2006 7
2010 4
2015 1(Expected Growth)

Year Capacity in MT
2002-03 39.22
2005-06 46.46
2006-07 57.66
2009-10 72.9
2011 -12 124
PRODUCTION CAPACITY AND SALES

Industry Expected Growth Cost Incurred in

Billions
Steel Authority of 12.84 Mt to 21.40 US$ 15.23
India Ltd. (SAIL) MT

Rashtriya Ispat 2.9 MT of crude US$ 26.60

Nigam Ltd. (RINL) steel production to
6.3 MT
NMDC 3 MT US$ 33.78
Industry Growth in Sales
Tata Steel 5.9 MT
Steel Authority of India Ltd 3.25 MT
(SAIL)
  JSW Steel’s 1.636 MT
CONSUMPTION OF STEEL BY INDUSTRIES

Year Metric Ton

2010 29.81
2009 27.15
 MAJOR DEVELOPMENTS COMING
AHEAD…
Steel Plant Investment Area of Development

Tata Steel US$ 22.5 Set up Ferroalloys plant and bar mill at
Gopalpur and a greenfield steel plant at
Kalinga Nagar .
Tata Steel US$ 537.37 Planned a joint venture with Japan-based
Nippon Steel Corporation (NSC) with a
50:50 holding .

JSW Steel plans US$ 16.86 Will ramp up its capacity from 7.8
MTPA to 32 MTPA through Greenfield
and brown field projects
Japan's Nippon Steel US$ 537.37 Manufacturing of Steel Pipes in India

Visakhapatnam Steel Plant US$ 3.7 &US$ Entered a MOU with Central Public
(VSP) 1.70 Works Department (CPWD). develop a
new stockyard here near Ukkunagaram
township and augment its facilities at
Hyderabad stockyard.
MAJOR DEVELOPMENTS COMING
AHEAD CONTD….
Steel Plant Area of Development
Essar Steel Entered into a memorandum of understanding
(MoU) to produce autograde Kobe Steel of Japan

Steel Authority of India Ltd Entered into an MOU with Japanese steelmaker
Kobe Steel Ltd for a comprehensive strategic
collaboration
India's largest miner NMDC Signed a pact with Russian steel and mining major
Severstal to set up a 5 million tonne per annum
steel plant in Karnataka

Sunflag Iron and Steel Ltd Announced a technical tie-up with Japanese
speciality steel maker Daido Steel Ltd
CHALLENGES FOR GROWTH &
GOVERNMENT INITIATIVES
Scope for Growth :
India’s per capita consumption of steel stood at 47 kg in 2008
as compared to the world average of150 kg

Challenges for Growth

 Higher production of value-added products,
 Capacity expansion, up gradation of production process
 Achieving cost effective production in an environment friendly
manner

Government Initiatives
 Cost of raw materials  
 Reduction of taxes
 Allocation of Budgets
 New Research Projects
MANAGERIAL ECONOMICS-
IRON AND STEEL
INDUSTRY
By ,
Kiran Lohani -23
TOPICS COVERED
 Major Consumers
 Reasons for High Consumption

 Challenges faced due to high Consumption

 Recycling steel
MAJOR CONSUMERS
 The Iron and Steel Industry in India is one of the fastest
growing sectors

 The demand drivers

• Automobiles Industry
• Real Estates Industry
• Transportation System
• Aircraft Industry
• Ship Building Industry
REASONS FOR HIGH STEEL
CONSUMPTION
 Cheap Cost
 Long Lasting Strength

 It is Fire Resistant

 High Quality Of The Steel

 Stand Up To Some Pretty Harsh Weather

 Steel Recycling

 Contributes to resource conservation

INDIA’S FINISHED STEEL CONSUMPTION
SURGES 9.4%, SAYS STEEL MINISTER
 Steel Minister Virbhadra Singh stated that the consumption of the
finished steel in India has gone up by 9.4% during the five month
period ended
August 30 (Apr-Aug).

 But, the production grew only by 2.6%

during the period under review (Apr-Aug).

 He added that the exports have to be slowed down.

 Administration has taken measures to deject unnecessary exports

and increase availability of steel in the domestic market by lifting up
export duty on lump ores to 15%
RECYCLED STEEL USED IN STEEL MAKING
AND ITS CONSUMPTION

Recycled Steel Consumption

Central/South America 14.3

Asia 189.2
World 481.9
PRODUCTION , IMPORT AND
EXPORT OF STEEL
Kartik
WORLD STEEL PRODUCTION1950 TO
2009
CRUDE STEEL PRODUCTION AND USE
IN
1999 AND 2009
FINISHED STEEL IN USE IN
1999 AND 2009
MAJOR STEEL PRODUCING COUNTRIES
2008 AND 2009
Million metric tons crude steel production
Country Rank mmt(2009) Rank mmt(2008)
(2009) (2008)
China 1 567.8 1 500.3
Japan 2 87.5 2 118.7
India 3 62.8 5 57.8
Russia 4 60.0 4 68.5
US 5 58.2 3 91.4
South Korea 6 48.6 6 53.6

Germany 7 32.7 7 45.8

Ukraine 8 29.9 8 37.3
Brazil 9 26.5 9 33.7
Turkey 10 25.3 11 26.8
CRUDE STEEL PRODUCTION BY
PROCESS,2009
Productio Oxyge Electr Open Other Total
n n ic hearth %
million % % %
metric
tons
China 567.8 91.5 8.5 - - 100
Japan 87.5 78.1 21.9 - - 100
India 62.8 38.2 60.1 1.7 - 100
Russia 60.0 63.4 26.9 9.8 - 100
US 58.2 38.3 61.7 - - 100
South 48.6 57.0 43.0 - - 100
Korea
Germany 32.7 65.3 34.7 - - 100
Ukraine 29.9 69.3 4.5 26.3 - 100
Brazil 26.5 76.1 23.9 - - 100
Turkey 25.3 29.9 70.1 - - 100
MAJOR IMPORTERS AND EXPORTERS
LIST OF PUBLIC SECTOR UNDERTAKINGS
AND COMPANIES UNDER THE ADMINISTRATIVE
CONTROL OF THE MINISTRY OF STEEL
Sno Name of the Company HeadQuarters
1 Steel Authority Of India Ltd New Delhi.
Plants (Bhilai,
Rourkela,Durgapur, Bokaro
and Burnpur.
2 Rashtriya Ispat Nigam Ltd Vishakapatnam
3 NMDC LTD Hyderabad
4 Maganese Ore (India) Ltd Nagpur
5 MSTC LTD Kolkatta
6 Hindustan SteelWorks Construction Ltd Kolkatta

7 Mecon Ltd Ranchi(Jharkhand)

8 Sponge Iron India Ltd Hyderabad
9 KIOCL Ltd Banglore
10 Govt Managed Companies-Bird of kolkatta
Companies
PRIVATE SECTOR COMPANIES
Sno Company HeadQuartes
1 TATA STEEL LTD Jamshedpur
2 JSW STEEL LTD Vijayanagar
3 JINDAL STEEL & POWER LTD. Raigarh

4 ESSAR STEEL LTD. (ESL) Gujarat

5 ISPAT INDUSTRIES LTD Dolvi,Raigad District
6 MONNET ISPAT & ENERGY LTD. Raipur,Raigarh
(MIEL)
7 BHUSHAN POWER & STEEL Chandigarh and
LTD. Derabassi
8 BHUSHAN STEEL LTD. Orissa
ESTIMATED DOMESTIC DEMAND AND
SUPPLY BALANCE IN 2011-2012

Product Demand Supply

Non-Flat 29.0 36.1

Flat 41.3 41.3
Total 70.3 77.4
NOVEMBER 27, 1967: LEVELLING WORK IN
PROGRESS AT THE SITE FOR SAIL’S BOKARO
STEEL PLANT
A VIEW OF A COKE OVEN BATTERY IN A
SAIL STEEL PLANT.
A PANORAMIC VIEW OF THE BLAST
FURNACES THAT FORM THE SKYLINE OF
SAIL’S BHILAI STEEL PLANT.
IRON ORE BEING DESPATCHED FROM A
MECHANISED MINE OF SAIL.
5 MTPA (PHASE-I) PELLET PLANT
COMPLEX OF JSPL AT BARBIL IN
ORISSA.
MERGER & ACQUISITION IN
STEEL INDUSTRIES
Rajani Patil
Roll No-34
MERGERS & ACQUISITION IN STEEL INDUSTRIES
No Original Company Marge with /Acquired
1 Arbed Arcelor
2 Arcelor Mittal
3 Inland Steel Company Mittal
4 International Steel Group ISPAT (Mittal)
5 Youngstown Sheet and Tube ISG (Mittal)
6 Weirton Steel ISG (Mittal)

7 Republic Steel ISG (Mittal)

8 Bethlehem Steel Corporation ISG (Mittal)

9 Corus Group Tata Group

10 ISPAT JSW
HISTORY
 Mittal Steel Company :
 Founded: 1976 in Calcutta, India,
 In 1989 as Ispat International in Sumatra, Indonesia
 Headquarters: Rotterdam, Netherlands
 Key people: Lakshmi Mittal, Founder, Chairman and CEO
 Products: Steel, Flat Steel products, Coated Steel, Tubes and Pipes
 Revenue: $28.132 billion USD
 Operating Income: $4.746 billion
 Net Income: $3.365 billion
 Employees: 3,20,000

 Arcelor S.A:
 Founded : Arbed in 1911,
Aceralia in 1902
Usinor in 1948
Arcelor on 18 February 2002
 Headquarters: Luxembourg
 Key people Lakshmi Mittal, CEO of the Arcelor Mittal
 Revenue: € 32.611 billion
 Employees: 94,000
HISTORY OF MITTAL & ARCELOR
THE MERGER PROCESS OF
ARCELOR & MITTAL
 January 2006:- Historic moment for the Global
Steel Industry
 February 2006:- Expansion and strong results

 May 2006:- US clears the way for bid

 June 2006:- Historic agreement to create the

No.1 Global Steel Company
 September 2006:- New dividend policy

 December 2006:- Deals, deals, deals!

HISTORY OF TATA & CORUS (TATA STEEL
EUROPE)
 TATA CORUS ACQUISITION
 On October 17, 2006, Tata Steel made an offer of 455 pence a share in cash valuing the
acquisition deal at US$ 7.6 billion. Corus responded positively to the offer on October 20,
2006.
 On 19 November 2006, the Brazilian steel company CSN launched a counter offer for
Corus at 475 pence per share, valuing it at $8.4 Billion.
 On 10 December 2006, Tata preemptively upped the offer to 500 pence
 On 11 December 2006, CSN announced a formal offer for the Company at an offer price of
515 pence per Corus Share, valuing the deal at $ 9.6 Billion.
 On 19 December 2006, Corus announcement
 on 19 December 2006, UK Watchdog the Panel on Takeovers and Mergers announced that
the last date for each of Tata and CSN to announce revised offers for the Company, should
they wish to do so, is 30 January 2007
 On 31 January 2007 the auction process conducted by the Panel, Tata Steel announced the
proposed acquisition of Corus Group at 608p per share, that being 5p more than CSN's top
offer of 603p. The £6.7 billion deal includes £500 million of debt
 On 27 September 2010 Corus announced that it was changing its name to Tata Steel
Europe and adopting the Tata logo
LATEST ACQUISITION IN STEEL
INDUSTRY IN INDIA
 Sajjan Jindal-controlled JSW Steel is bailing out the
beleaguered ISPAT Industries by picking up a majority
stake of 41% in the company, which is owned by Pramod
Mittal and Vinod Mittal, the younger siblings of Lakshmi
Nivas Mittal of Arcelor Mittal.
MARKET SHARE /
COMPETITION ANALYSIS
Rupesh Lahane
TOPICS COVERED
 Market Share of Leading players
 Concentration Ratio

 Oligopoly

 Indian Comparison

 Economies of Scale

 Economies of Scale and Oligopoly

MARKET SHARE OF LEADING PLAYERS

Company Production of Steel in Market Share in

Million tonnes Percentage terms
SAIL 13.5 32%
TISCO 5.2 11%
RNIL 3.5 8%
ESSAR,ISPAT,JSWL 8.4 19%
Others 14.5 30%
TOTAL 45.1 100%
CONCENTRATION RATIO
 Used as an indicator of the relative size of firms in relation to
the industry as a whole.
 May also assist in determining the market form of the
industry.
 One commonly used concentration ratio is the four-firm
concentration ratio
 Consists of the market share, as a percentage, of the four
largest firms in the industry.
 In general, the N-firm concentration ratio is the percentage of
market output generated by the N largest firms in the industry.
CONCENTRATION RATIO & OLIGOPOLY

 The 4 firm concentration ratio of the Iron and Steel Industry

is 71%
 This implies that there is oligopoly in the industry as it is
dominated by few major players.
 Major percentage of market output is generated by the 4
largest firms in the industry
 INDIA COMPARISION

Tata Steel SAIL JSW Essar Steel

Yr of 1907 1954 2003 1975

Establishment

Products Construction Rods, Pipes and Hot and Cold Iron Ore Pellets
bars,Wires and Rails Rolled Sheets
Tubes and Coils
Hot and Cold Hot and Cold
Rolled Sheets Rolled Sheets
and Coils and Coils

Production in 3.8 9.15 3.5 3.3

mT
% of 9 22 8 8
Production
ECONMIES OF SCALE
 Defined in terms of the average cost per unit of output
produced.
 When the average cost is declining, the producer of the
product under consideration is reaping efficiency gains
due to economies of scale.
 So long as the average cost of production is declining the
firm has an obvious advantage in increasing the output
level (provided, there is demand for the product).
 Ideally, the firm would like to be at the minimum
average cost point.
ECONMIES OF SCALE
 However, in the short run, the firm may have to produce
at an output level that is higher than the one that yields
the minimum average total cost.
 When a firm has to add to production capacity in the
long run, this may be done by either duplicating an
existing fixed input (for instance, a plant) or increasing
the size of the plant.
 Usually, as the plant size increases, a firm is able to
achieve a new minimum average cost point (lower than
the minimum average cost achieved with the previous
smaller capacity) plant.
ECONMIES OF SCALE & OLIGOPOLY
 An oligopoly is a market form in which there are only a
few sellers of similar products.
 Low costs of production (cost per unit or the average
cost) can only be achieved if a firm is producing an
output level that constitutes a substantial portion of the
total available market.
 This, in turn, leads to a rather small number of firms in
the industry, each supplying a sizable portion of the total
market demand.
FACTORS HOLDING BACK
STEEL INDUSTRY
Santosh M
FACTORS HOLDING BACK STEEL
INDUSTRY
 Conservation of resources and safeguarding the
environment
 POWER
 Energy supply
 Getting hold of adequate resources of iron ore and coal

 Problems procuring raw material inputs

 Inefficient transport system
 Plant size & size coke oven
 Plant utilization factor
 Political incentive structure for adoption of technology
updates & modernization
FACTORS HOLDING BACK STEEL
INDUSTRY
 Low Labour productivity
 SAIL is 75 t/man year
 TATA Steel is & 100 t/man year
 BUT,FOR POSCO, KOREA & NIPPON, JAPAN its 1345 & 980
t/man year
 High cost of basic Inputs and services
 Cost of Elec. is 10 cents in INDIA
 Cost of Elec. is 3 cents in USA
 Poor quality of basic infrastructure like road , port etc..
 Lack of expenditure in R&D.
 Delay in absorption in technology by existing units.
 Challenge of attracting and retaining the requisite talent.
 A potential slow down could be a serious threat to the steel industry as a
whole.
R&D IN RASHTRIYA ISPAT NIGAM LTD.
(RINL)
 At RINL, R&D initiatives are directed towards meeting
the challenges and providing technical inputs to the
plant.
 Focuses on areas like process improvement, waste
management, cost reduction, and environment
protection.
 Research activities undertaken during 2009-10
 Process improvement
 Waste management
 Cost reduction
 Environment protection
 Development of new grades/products
EXPECTED GROWTH &
OUTLOOK
Anish Kulkarni
ROLE OF IRON AND STEEL INDUSTRY IN
INDIA GDP-GROWTH IN FUTURE
 In India the growth will be more prominent because of
the growth in Real estate, Aviation, Manufacturing,
Automobile sectors.
 The Tata Steel ranks 5th in the world steel production
and the company have plans of expanding its capacity by
the year 2015
 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


ROLE OF IRON AND STEEL INDUSTRY IN
INDIA GDP-GROWTH IN FUTURE
 Acerinox SA, one of the important stainless steel
manufacturers in collaboration with Nisshin Steel, Japan
is setting up a steel plant in India
 SAIL, India's biggest producer of steel has plans of
increasing the production to 24.98 million tonnes
annually
 The acquisition of the Corus, the Anglo-Dutch steel
manufacturer by the Tata Steel
 EXPECTED GROWTH &
OUTLOOK
Bharat
GOVT. INITIATIVES FOR STEEL
PRICES:

 Price regulation of iron & steel was abolished on 16.1.1992. Since then
steel prices are determined by the interplay of market forces.
 There has been an up-trend in the domestic steel prices since 2006-07 and
the trend accentuated since January this year.
 Rise in raw material prices, strong demand in the international and domestic
market and up-trend in the global steel prices have been some of the reasons
cited by the industry for increase in the steel prices in the domestic market.
 The mismatch in demand and supply is considered to be the main reason on
the demand side for the rise in steel prices. Honourable Steel Minister has
held discussion with all major steel investors including Arcellor-Mittal,
POSCO, Tata Steel, Essar, Ispat and also SAIL, RINL to explore the
possibility of expediting the ongoing as well as envisaged steel projects.
GOVT INITIATIVES FOR STEEL
PRICES:

 The Government also took various fiscal and other measures for
stabilizing the steel prices like exempting pig iron, non alloy steel
and steel making inputs like zinc, ferro-alloys and metcoke from
customs duty; withdrawing DEPB benefits on export of various
categories of steel products and bringing back railway freight on
iron ore from classification 180 to 170 for domestic steel producers.
 In May 2008, the Government imposed 15% export duty on semi-
finished products, and hot rolled coils/sheet, 10% export duty on
cold rolled coils/sheets and pipes and tubes and 5% export duty on
galvanized steel in coil/sheet form in order to further curtail rising
prices and increase supply of steel in the domestic market.
THE NEW INDUSTRIAL POLICY
REGIME

 The New Industrial policy has opened up the iron and

steel sector for private investment by
 (a) removing it from the list of industries reserved for
public sector and
 (b) exempting it from compulsory licensing. Imports of
foreign technology as well as foreign direct investment
are freely permitted up to certain limits under an
automatic route. Ministry of Steel plays the role of
facilitator, providing broad directions and assistance to
new and existing steel plants, in the liberalized scenario.