Industry the growth of the Indian steel industry.

Industry
Overview

Steel is integral to the
development of any modern economy and is considered to be the backbone of human
civilization. The level of per capita consumption of steel is treated as an
important index of the level of socio-economic development and living standards
of the people in any country. India’s economic growth is contingent upon the
growth of the Indian steel industry. Consumption of steel is taken to be an
indicator of economic development.

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Steel has been used in many
industries such as construction, housing and ground transportation, special
steels are increasingly being used in engineering industries such as power
generation, petrochemicals and fertilizers. Growth in the private sector is
expected to be increased by the new policies on Make in India, import of
foreign technology and foreign direct investment. The Government has proposed a
perspective plan to boost domestic steel capacity to 300 million tonnes per
annum by 2025.

India was the 3rd largest producer
of crude steel in 2015 as well as in 2016. India was the largest producer of
sponge iron or DRI in the world during the period 2003-2015 and emerged as the
2nd largest global producer of DRI in 2016 (after Iran). India is also the 3rd
largest finished steel consumer in the world and maintained this status in 2016.
These rankings are based on provisional data released by the World Steel
Association for the years mentioned above. The key players in the Indian steel
sector industry are TATA Steel Ltd, SAIL, JSW Steel Ltd, Welspun-Gujarat Stahl
Rohren Ltd, Bhushan Steel Ltd and Visa Steel Ltd.

 

Following table shows India’s steel
production over the years:

 

 

 

 

In India, Iron and Steel are freely
importable and exportable as per the extant policy. For the year 2016-17, India
emerged as a net exporter of total finished steel. Following two tables show
the total finished steel import and export data over the last 5 years.

 

 

 

India occupies a central position
on the global steel map, with the establishment of new state-of-the-art steel
mills, acquisition of global scale capacities by players, continuous
modernization and up gradation of older plants, improving energy efficiency and
backward integration into global raw material sources. There lies tremendous
opportunity for the Indian steel industry to prosper and grow exponentially.

 

Company
Overview

JSW Steel Ltd., which is the
flagship company of the $11 billion conglomerate JSW Group, is one of India’s leading
steel manufacturers. It is one of India’s most fast-growing companies with a
capacity of about 18 MTPA and reach in over 140 countries.  After JSW Steel’s merger with ISPAT Steel, it
has become India’s 2nd largest private sector steel company with a
current capacity of 18 million tonnes per annum.

The JSW Group has presence across
countries such as India, USA, South America and Africa. It is a part of the
O.P. Jindal Group and functions across core economic sectors namely Steel,
Infrastructure, Energy, Cement, Ventures and Sports.  In 1982, JSW set up its first steel plant at
Vasind near Mumbai. The Jindal Group obtained Piramal Steel Limited since it
had wide experience in the steel industry. Piramal operated a small steel mill
at Tarapur in Maharashtra and renamed it as
Jindal Iron and Steel Company (JISCO).

In 1994, Jindal Vijayanagar Steel
Ltd. (JVSL) set up its plant in Toranagallu in
the Bellary-Hospet and External Areas of Andhra
Pradesh. It is 340 kms (210 mi) from Bangalore, and is well connected
with the Goa Port and Chennai Port. JISCO and JVSL merged to form JSW Steel
Ltd in 2005.

Other than its mergers and
acquisitions in India, JSW Steel has also formed a joint venture for steel
plant in Georgia. JSW has also tied up with JFE Steel
Corp, Japan for manufacturing high grade automotive steel. The Company has also
obtained mining assets in Republic of Chile, United
States and Mozambique.

Emerging
Trends in the Industry

There has been a significant
emphasis on technological innovations in the industry and some of the notable
steps being taken in relation to this are as follows:

 

·        
In
order to enhance their productivity and compete with the international players,
Indian steel companies have now started benchmarking their facilities and
processes against global standards. This is expected to help Indian companies
improve consumption of raw material and energy as well as improve compliance
with environmental and pollution yardsticks.

·        
Companies
are attempting coal gasification and gas-based Direct-Reduced Iron (DRI)
production. Other alternative technologies that are being adopted to produce
hot metal are Hlsmelt, Finex and ITmk3.

·        
Ministry
of Steel has issued necessary direction to the steel companies to frame a
strategy for taking up more research and development projects by spending at
least 1 per cent of their sales turnover on R&D to facilitate technological
innovations in the steel sector.

·        
Ministry
of Steel has also established a task force to identify the need for
technological upgradation and research and development.

·        
Ministry
of Steel has adopted energy efficiency improvement projects for mills operating
with obsolete or near obsolete technologies.

·        
Tata
Steel’s Noamundi iron ore mine introduced drone technology in mine monitoring in
January 2017.

 

The continuous increase in
investments have played a major role in the growth of this industry. Some of
the notable investments that undertook in the past few years are:

·        
In
order to be more cost efficient, majority of the companies in the steel
industry are investing in modernization and expansion of plants. E.g. SAIL has
invested in 6 of its plants for expansion and modernization.

·        
A
body functioning under Ministry of Steel, named Inter-Ministerial Group (IMG),
has undertaken the role of monitoring and coordinating major steel investments
in the country so that growth and investment can be ascertained in a proper
manner.

·        
With an aggregate
investment of US $24.88 Billion, SAIL is expected to increase its production
capacity from 13 million tonnes per annum to 50 million tonnes per annum.

 

Strategic Alliances have been key
to the synergies that have been created and have resulted in a significant
contribution to the growth of this industry. Some of them are as follows:

·        
International
Coal Ventures Pvt Ltd was set up for acquisition of coal mines overseas. It
comprised of SAIL, RINL, CIL, NTPC and NMDC.

·        
The
syndicate of SAIL and National Fertiliser Ltd. (NFL) has been selected for
revival of Sindri Unit of the Fertiliser Corporation of India Ltd.

·        
RINL,
Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd
(POWERGRID) signed a Memorandum of Understanding to set up a joint venture to
manufacture transmission line towers and tower parts including research and
development of new high-end products.

The entry of international
companies has played a major role in the growth of the Indian steel sector
industry. Various global steel players are planning to enter the industry owing
to the immense growth potential in the industry. NMDC, National Mineral Development
Corporation, has signed a memorandum of understanding with Severstal, which is
the 3rd largest steelmaker in Russia, for a Greenfield plant in
Karnataka. 

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