• Steel production in India has increased at a CAGR of 7.9 per cent over FY2009–14 to Fourth-largest producer 81.54 million tonnes per annum (MTPA). The country is slated to become the second- of crude steel largest steel producer by 2016, as large public and private sector players strengthen steel production capacity in view of rising demand • Huge scope for growth is offered by India’s comparatively low per capita steel Strong growth consumption and the expected rise in consumption due to increased infrastructure opportunities construction and the thriving automobile and railways sectors Technological • Increased government and corporate sector focus on using innovative production advancements techniques for enhancing operational as well as financial performance is a positive • Domestic players’ investments in expanding and upgrading manufacturing facilities are Rising domestic and expected to reduce reliance on imports. In addition, the entry of international players* international would provide benefits in terms of capital resources, technical knowhow and more investments competitive industry dynamics Source: Ministry of Steel 2011 GrowingRobust demanddemand Increasing investments 2016E • Demand would be supported by • To achieve steel capacity build-up Market growth in the domestic market of 300 million tonnes per annum Market (MTPA) by 2025, India would need value: • Infrastructure, oil & gas and value: to invest USD210 billion over the automotives would drive the USD95.3 USD57.8 next decade billion growth of the industry billion • 301 MoUs have been signed with various states for planned capacity of about 486.7 MT Advantage India Competitive advantage Policy support • India is the world’s fourth-largest • 100 per cent FDI through the producer of crude steel (up from automatic route is allowed eighth in 2003); the country is • Large infrastructure projects in the expected to become the second- Public-Private Partnership (PPP) largest producer of steel by 2016 mode are being formed • Easy availability of low-cost • National Steel Policy (NSP) manpower and presence of implemented to encourage the abundant iron ore reserves make industry to reach global benchmarks India competitive in the global set up Notes: FDI - Foreign Direct Investment, MT - Million Tonnes, MoUs - Memorandum of Understanding, 2016E - Estimated figure for the year 2016; These estimates are from Data monitor 1993–2012 1973–1992 1954–1964 • Foreign players • Reduction in basic 1923–1948 • SAIL was began entering the custom duty on the created in 1973 Indian steel market plants and • Hindustan Steel as a holding • No license equipments Ltd and Bokaro company to requirement for required for initial Steel Ltd were oversee most of capacity creation set up or expansion 1907–1918 • Mysore Iron setup in 1954 and India's iron and of iron ore pellet and Steel • Imposition of export 1964, respectively steel production plants & iron ore Company was duty on iron ore, to beneficiation plants, set up in 1923 • In the early 1990s, • In 1989, SAIL focus more on the public sector acquired catering growing to encourage • According to • Production dominated steel Vivesvata Iron beneficiation and the new domestic demand of steel production and Steel Ltd pelletisation of iron started in Industrial Policy • Decontrol of • Private players • In 1993, the ore fines in the India (TISCO Statement domestic steel were in government set country was setup in (1948), new prices downstream plans in motion 1907) ventures were • Launch of Scheme only production mainly to partially for promotion of • IISC was set producing finished privatise SAIL up in 1918 to undertaken by Research and the central steel using crude Development in compete steel products with TISCO government Iron & Steel sector Notes: TISCO - Tata Iron and Steel Company; IISC - Indian Iron & Steel Company; SAIL - Steel Authority of India Ltd Steel Form Composition End use Liquid steel Crude steel Finished steel Non-alloy Structural Alloy steel steel Low carbon Construction Stainless steel steel Ingots Flat Silicon Medium Rail steel electrical carbon steel Semis Non-flat High carbon Source: Report on Indian steel steel industry by Competition Commission High speed of India, Aranca Research Total crude steel production rose at a CAGR of 7.9 per cent over the last five years to reach 81.54 MT in FY14 Finished steel production increased 4.1 per cent to 85.0 MT in FY14; analysts expect production figures to improve rapidly over the next five years, with the Ministry of Steel forecasting production levels at 115.3 MT by FY17 Total crude steel production (million tonnes) Total finished steel production (million tonnes) 53.7 57.3 49.1 55.4 61.0 42.1 47.6 45.8 44.5 47.3 16.4 16.7 17.0 16.5 12.5 12.7 13.0 13.2 12.4 9.4 FY09 FY10 FY11** FY12* FY13* FY09 FY10 FY11 FY12* FY13* Public sector Private sector Public sector Private sector Source: Ministry of Steel, Aranca Research; Notes: FY - Indian Financial Year (April – March); MT - Million Tonnes, * - Provisional; ** Revised Figures; CAGR - Compound Annual Growth Rate; FY13* (Data from Apr-Dec) SAIL is the leader in India’s steel sector; in FY14, the company accounted for 12.6 per cent of the country’s finished steel production Tata Steel, another household name in the country, leads private sector activity in the steel sector. During 2014, the firm accounted for 9 per cent of finished steel production India crude steel market share by production India finished steel market share by production – FY13* (Apr–Dec) – FY14 10.0% 8.9% Tata Steel 3.3% Tata Steel 4.1% 12.6% RINL RINL 17.3% SAIL SAIL 68.6% Other 75.2% Other Source: JPC India Steel, Ministry of Steel, Aranca Research; Notes: RINL - Rashtriya Ispat Nigam Limited, * - Provisional In 2011, the Indian steel sector’s total market value was Market value of the Indian steel sector USD57.8 billion (USD billion) The sector has benefitted from hike in prices and 120 production, especially since the beginning of the 100 95.3 millennium 80 Over 2007–11, the sector’s market value is estimated to CAGR: 17.7% 57.8 have posted a strong CAGR of 17.7 per cent 60 46.8 43 36.5 40 30.1 20 0 2007 2008 2009 2010 2011 2016E Source: Datamonitor, Aranca Research Note: E - Estimates Total consumption of steel grew to 73.9 MT in FY14 against Real consumption of steel (in million tonnes) 73.5 MT in FY13; over FY08–14, consumption has expanded at a CAGR of 6 per cent 80 73.9 CAGR: 6% 70.92 73.5 70 66.42 Driven by rising infrastructure development and growing 59.34 60 demand for automotives, steel consumption is expected to 52.13 52.35 grow at an average rate of 6.8 per cent, reaching 104 MT by 50 2017 40 30 20 10 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Source: JPC India Steel, Ministry of Steel, Aranca Research Note: MT - Million Tonnes With growth in demand for steel outpacing growth in Steel exports and imports (in million tonnes) domestic production over the last few years, import dependency has increased 9.0 8.0 Imports have decreased from 7.9 mtpa during FY13 7.0 to about 5.4 mtpa in FY14 due to increase in the 6.0 country’s production capacity 5.0 4.0 Total domestic demand for steel estimated at 113.3 mtpa by 3.0 2016-17 2.0 1.0 0.0 FY08 FY09 FY10 FY11** FY12 FY13 FY14 Imports Exports Source: Ministry of Steel, JSPL presentation, Aranca Research Notes: FY - Indian Financial Year (April - March), E – Estimates, * - Provisional, ** - Revised Figures, FY13* (Apr-Dec 2012) Infrastructure is India’s largest steel consumer, accounting Sector-wise steel consumption FY12 for 63 per cent of total consumption in FY11 2% This is not surprising given the heavy use of steel in 3% Infrastructure this sector and soaring construction and 10% infrastructure activity in the country over the past Engineering and decade fabrication Autos Engineering and fabrication is the next largest consumer, 22% with 22 per cent of total consumption 63% Packaging Transportation Source: JSPL May 2013 presentation, Aranca Research Company Products Tata Steel Ltd Finished steel (non-alloy steel) SAIL Finished steel (non-alloy steel) JSW Steel Ltd Hot-rolled coils, strips and sheets Jindal Steel & Power Ltd Iron and steel Ispat Industries Ltd Hot-rolled coils, strips and sheets Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes Bhushan Steel Ltd Cold-rolled coils, strips and sheets Carbon, Alloy, Stainless and Facor Steel Ltd Special steel Source: Aranca Research • SAIL has modernised and expanded its integrated steel plants in Bhilai, Bokaro, Rourkela, Durgapur, Burnpur and Salem Growing investments • The company has expanded its crude steel production capacity to 21.4 MTPA in 2013 • Completed mega expansion of Rashtriya Ispat Nigam Limited (RINL) to more than double capacity of plant (from 2.9 MT to 6.3 MT) from 2013-14 • International Coal Ventures Pvt Ltd, comprising SAIL, RINL, CIL, NTPC and NMDC, has been set up for acquisition of coal mines overseas • The consortium of SAIL and National Fertiliser Limited (NFL) has been nominated for Strategic alliances revival of Sindri Unit of the Fertiliser Corporation of India Limited • RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed an MoU to set up a joint venture company to manufacture transmission line towers and tower parts including R&D of new high-end products • Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market Entry of international • National Mineral Development Corporation (NMDC) has signed an MoU