STEEL September 2017 - IBEF Presentataion
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STEEL For updated information, please visit www.ibef.org September 2017
Table of Content Executive Summary……………….….…….3 Advantage India…………………..….……..4 Market Overview …………………….……..6 Recent Trends and Strategies …….……..17 Growth Drivers…………………….............22 Opportunities…….……….......……………30 Success Stories……………....……………33 Industry Associations……………....……...36 Useful Information……….......…………….38
EXECUTIVE SUMMARY
Total finished steel production in India has increased at a CAGR of 5.45 per cent during FY12–17, with
country’s steel production reaching to 97.385 million tonnes per annum (MTPA) in FY17.
2rd largest producer of The country became the 2nd largest crude steel producer in 2017, as large public and private sector players
crude steel strengthen steel production capacity in view of rising demand.
Moreover, capacity has increased to 126 million tonnes (MT) in FY17, which is 3.3 per cent more than FY16,
while in the coming ten years the country is anticipated to produce 300 MT of steel
India’s comparatively low per capita steel consumption and expected growth in consumption due to growing
Strong growth infrastructure construction, automobile and railways sectors has offered scope for growth
opportunities National Mineral Development Corporation is expected to increase the iron ore production 75 million tonnes
per annum (MTPA) until 2021 indicating new opportunities in the sector
Domestic players’ investments in expanding and upgrading manufacturing facilities are expected to reduce
Rising domestic and
reliance on imports. In addition, the entry of international players would provide benefits in terms of capital
international investments
resources, technical know how and more competitive industry dynamics
Note: 1) April-December 2015 MTPA – Million Tonnes Per Annum
Source: World Steel Association, Ministry of Steel, Aranca Research
3 Steel For updated information, please visit www.ibef.org
Steel ADVANTAGE INDIA
ADVANTAGE INDIA
Demand would be supported by growth in To achieve steel capacity build-up of 300
the domestic market million tonnes per annum (MTPA) by 2025,
Infrastructure, oil and gas and automotives India would need to invest US$ 210 billion
would drive the growth of the industry over the next decade
Lower per capita consumption compared to 301 MoUs have been signed with various
international average states for planned capacity of about 486.7
MT.
Steel production in India is forecast to double
by 2031, with growth rate expected to go Ministry of Steel plans to set up Steel
above 10 per cent in FY18 Research and Technology Mission in India
to promote R&D activities in the sector
ADVANTAGE
INDIA
As of 2017, India is the world’s 2rd largest 100 per cent FDI through the automatic
producer of crude steel (up from 8th in route is allowed . Large infrastructure
2003); projects in the PPP mode are being formed
Easy availability of low-cost manpower National Steel Policy (NSP) implemented to
and presence of abundant iron ore encourage the industry to reach global
reserves make India competitive in the benchmarks
global set up Policy clarity and stability expected in
respect of mining leases and forest
clearances
20 per cent safeguard duty on steel imports
Notes: FDI - Foreign Direct Investment, MT - Million Tonnes, E- Estimated
MoUs - Memorandum of Understanding, 2016E - Estimated figure for the year 2016; These estimates are from Data monitor, PPP - Public-Private Partnership
Source: Metallurgical and Materials Engineering Division Board, Aranca Research
5 Steel For updated information, please visit www.ibef.orgSteel MARKET OVERVIEW
EVOLUTION OF THE INDIAN INSURANCE SECTOR
Foreign players began entering the Indian steel
Hindustan Steel Ltd and Bokaro Steel Ltd market
were setup in 1954 and 1964, respectively
Production of steel started in No license requirement for capacity creation
In the early 1990s, the public sector
India (TISCO was setup in 1907) Imposition of export duty on iron ore, to focus more
dominated steel production
IISC was set up in 1918 to on catering growing domestic demand
Private players were in downstream
compete with TISCO Decontrol of domestic steel prices
production mainly producing finished steel
using crude steel products Launch of Scheme for promotion of Research and
Development in Iron and Steel sector
1907-18 1923-48 1954-64 1973-92 1993-2014 2015-17
SAIL was created in 1973 as a holding company In 2017, India ranked as the 2nd
Mysore Iron and Steel Company
to oversee most of India's iron and steel largest crude steel producer in the
was set up in 1923
production world, leaving behind United States.
According to the new Industrial
In 1989, SAIL acquired Vivesvata Iron and Steel The total finished steel production of
Policy Statement (1948), new
Ltd TISCO in FY17(1) stood at 83.10
ventures were only undertaken by
In 1993, the government set plans in motion to MT.
the central government
partially privatise SAIL During FY17, 8.24 MT of steel was
Notes(1): TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd; exported from India.
7 Steel For updated information, please visit www.ibef.orgSTRUCTURE OF THE STEEL SECTOR
Steel
Form Composition End use
Liquid Steel Finished Alloy Non-alloy
Crude Steel Structural Steel
Steel Steel
Low
Ingots Flat Stainless carbon Construction Steel
Steel
Medium
Silicon Rail Steel
Semis Non-flat carbon
electrical
Steel
High
High
Carbon
Speed
Steel
Source: Report on Indian steel industry by Competition Commission of India, Aranca Research
8 Steel For updated information, please visit www.ibef.orgSTEEL PRODUCTION IN INDIA HAS BEEN GROWING
AT A FAST PACE
In FY17, crude steel production in India was 97.42 MT, with the total Total crude steel production (million tonnes)
crude steel production growing at a CAGR of 5.49 per cent over the
last 6 years. 120
100
The steel sector contributes over 2 per cent to the GDP of the nation
80 18.48
and provides 20 lakh jobs in the country. 17.21 17.92
16.77
78.91
60 16.48 16.48
71.87
71.77
16.99
64.92
During April-August 2017, crude steel production in India stood at
61.94
57.81
53.68
40
41.05 MT.
20
As of March 2017, the capacity utilisation of steel producers is set to 0
increase with strong export demand and signs of revival in domestic FY11 FY12 FY13 FY14 FY15 FY16 FY17
sales. Companies like JSW and Essar Steel have experienced a Private Sector Public Sector
sharp increase in steel manufacturing in the last 2 months
Steel manufacturing output of India is expected to increase to 128.6
Total finished steel production (million tonnes)
MT by 2021, accelerating the country’s share of global steel
production from 5.4 per cent in 2017 to 7.7 per cent by 2021. 100
13.44 12.83 12.97
80
12.82
12.52
79.34
10.74
78.00
74.24
60 13.25
68.86
63.18
63.22
55.37
40
20
0
FY11 FY12 FY13 FY14 FY15 FY16 FY17
Private Sector Public Sector
Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; (1) - April to January 2017 ,
Figures mentioned are as per latest data available
Source: Ministry of Steel Annual Report
9 Steel For updated information, please visit www.ibef.orgSHARES IN PRODUCTION: SAIL AND TATA LEAD THE
WAY
Total proposed crude steel capacity during 2016-172 by the private India’s crude steel market share by production – FY171
investors is expected to rise by 76.8 MT
As of FY17(1), SAIL dominated India’s steel sector, with the company
accounting for 11.47 per cent of country’s finished steel production 14.80%
SAIL
and 14.8 per cent of country’s crude steel production.. During
FY17(1), Tata Steel accounted for 10.84 per cent of finished steel 11.72% TATA
production and 11.72 per cent of the country’s crude steel production
RINIL
4.04%
In January 2017, Indian government inaugurated Universal Rail Mill
OTHERS
(URM) worth US$ 178.49 million at SAIL’s Bhilai steel plant. The
69.45%
production of the world’s longest single rail of 130 meters from the
new URM also commenced in the new mill
India’s finished steel market share by production – FY171
11.47%
SAIL
10.84% TATA
RINIL
3.05%
OTHERS
53.96%
Notes: RINL - Rashtriya Ispat Nigam Limited, (1) - April to December 2016; (2) – Provisional; Figures mentioned are as per latest data available
Source: Ministry of Steel Annual Report 2016-17, Aranca Research
10 Steel For updated information, please visit www.ibef.orgGROWTH IN MARKET VALUE OF THE INDIAN STEEL
SECTOR HAS ALSO BEEN STRONG
The sector has benefitted from the hike in prices and production, Market value of the Indian steel sector (US$ billion)
especially since the beginning of the millennium
Over 2007–16(E), the sector’s market value is estimated to have 120 CAGR 18.7%
posted a strong CAGR of 18.7 per cent
100
95.30
87.9
80
81
60
57.8
46.8
40
43
36.5
30.1
20
0
FY07 FY08 FY09 FY10 FY11 FY14 FY15E FY16E
Note: E - Estimates
Source: Ministry of External Affairs, Aranca Research
11 Steel For updated information, please visit www.ibef.orgDEMAND HAS OUTPACED SUPPLY OVER THE LAST
FIVE YEARS
Total consumption of steel was 83.9 MT in FY17 as compared to Real consumption of steel (in million tonnes)
81.5 MT in FY16.
Driven by rising infrastructure development and growing demand for 90 CAGR 5.44%
automotives, steel consumption is expected to reach 104 MT by
83.9
2017 80
81.52
76.99
It is expected that consumption per capita would increase supported
74.1
73.5
70
by rapid growth in the industrial sector and rising infra expenditure
71
66.4
projects in railways, roads and highways, etc.
60
The consumption of real steel has grew at a CAGR of 5.44 per cent
59.3
during FY08-FY17 50
52.4
52.1
40
30
20
10
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Note: MT - Million Tonnes; FY17(1) – April -December 2017
Source: JPC India Steel, Ministry of Steel, Aranca Research
12 Steel For updated information, please visit www.ibef.orgTRENDS IN IMPORTS AND EXPORTS OF STEEL
In April - August 2017, consumption of finished steel grew at a rate of Steel exports and imports (in million tonnes)
4.4 per cent to reach 35.33MT as against 33.83 MT during the same
period in 2016. 14.0
In order to reduce imports and boost domestic steel manufacturing
industry, the Central Government extended the minimum import 12.0
price (MIP) on 19 products, till February 4, 2017. These products 11.7
include semi-finished products of iron or non-alloyed steel, flat-rolled 10.0
products of different widths, bars and rods
9.3
According to DGFT, the minimum import price (MIP) for these 8.0
8.2
products would range between US$ 643-752 per tonne 7.9
7.4
Indian Government imposed Anti-Dumping Duty on 47 steel products 6.0
6.0
for five years beginning from August 2016. 5.4 5.5 5.6
In FY 2016-17, the country’s steel exports has increased by 102.1 4.0 4.6
4.1
per cent year-on-year to 8.24 million tonnes (mt), as compared to
4.07 mt in 2015-16 2.0
In FY 2016-17, the country’s steel imports fell by 36.6 per cent year-
0.9
on-year to 7.42 million tonnes (mt), as compared to 11.7 mt in 2015- 0.0
FY17
FY12
FY13
FY14
FY15
FY16
16
Imports Exports
Note: FY - Indian Financial Year (April - March), DGFT - Directorate General of Foreign Trade
Source: Ministry of Steel, JSPL Presentation, Aranca Research
13 Steel For updated information, please visit www.ibef.orgKEY PLAYERS OF THE INDUSTRY
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 and 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
Visa Steel Ltd Ferro Chrome, coke and special steel
Source: Aranca Research
14 Steel For updated information, please visit www.ibef.orgKEY STEEL PLANTS IN INDIA
Steel integrated plants
under SAIL (Bhilai, Rourkela,
Bokaro, Durgapur and
Burnpur)
Tata Steel’s largest steel
plant, based in Jamshedpur
Alloy and special steel plants
under SAIL (Bhadrawati and
Salem); iron and steel plant RINL steel plant in
at Visvesvaraya Vishakhapatnam
Source: Company websites, Aranca Research
15 Steel For updated information, please visit www.ibef.orgPORTER’S FIVE FORCES FRAMEWORK
Threat of Substitutes
Low - Aluminium and plastics are being
used in few cases in automotive and other
consumer durable sectors. However, it
still does not pose significant threat to
steel
Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers
Medium - Large integrated companies Medium - The steel industry is highly Medium - Major steel consumption
have their own mines to source key raw concentrated, with the top five players sectors, such as automobiles, oil and gas,
materials accounting for more than 70 per cent of shipping, consumer durables and power
the market share generation, enjoy high bargaining power
Steel companies usually compete on the and get favourable bulk deals. Smaller
basis of production capacity, economies customers, however, do not enjoy this
of scale, access to raw material, etc. benefit
Threat of New Entrants
Low - Capital intensive, industry players
are large and enjoy economies of scale.
Positive Impact Some have their own mines for sourcing
key raw materials
Neutral Impact
Several regulatory clearances required,
Negative Impact including environmental, land acquisition,
etc.
16 Steel For updated information, please visit www.ibef.orgSteel RECENT TRENDS AND STRATEGIES
NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY
… (1/2)
Most of the companies in the industry are undertaking modernisation and expansion of plants to be more cost
efficient. E.g. SAIL has undertaken modernisation and expansion for its 6 plants
An Inter-Ministerial Group (IMG) functioning under the Ministry of Steel, is monitoring and coordinating major
Growing investments
steel investments across the country
The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with the total
investment of US$ 24.88 Billion
International Coal Ventures Pvt Ltd, comprising SAIL, RINL, CIL, NTPC and NMDC, set up for acquisition of
coal mines overseas
The consortium of SAIL and National Fertiliser Ltd. (NFL) has been nominated for revival of Sindri Unit of the
Strategic alliances Fertiliser Corporation of India Ltd
RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed an
MoU to set up a JV 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
Entry of international to enter the market
companies National Mineral Development Corporation (NMDC) has signed an MoU with Russia’s 3rd largest steelmaker,
Severstal, for a greenfield steel plant in Karnataka
Notes: MOUs - Memorandum of Understanding, MT - Million Tonnes
Source: Ministry of Steel, Ministry of Railways, Aranca Research
18 Steel For updated information, please visit www.ibef.orgNOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY
… (2/2)
Indian steel companies have now started benchmarking their facilities and processes against global standards,
to enhance productivity
These steps are expected to help Indian companies improve raw material and energy consumption 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 such as Hlsmelt, Finex and ITmk3 being adopted to produce hot metal
Increased emphasis on
technological innovations Ministry of Steel has issued necessary direction to the steel companies to frame a strategy for taking up more
R&D projects by spending at least 1 per cent of their sales turnover on R&D to facilitate technological
innovations in the steel sector.
Ministry has established a task force to identify the need for technology development and R&D
Ministry has adopted energy efficiency improvement projects for mills operating with obsolete technologies
In January 2017, Noamundi iron ore mine of Tata Steel introduced drone technology in mine monitoring
Source: Ministry of Steel, Aranca Research
19 Steel For updated information, please visit www.ibef.orgSTRATEGIES ADOPTED
Companies in the steel industry are investing heavily in expanding their capacity. Major public and private
companies, including Tata Steel, SAIL and JSW Steel, are expanding their production capacity. Steel
production is expected to reach 200 mtpa by 2020
India is the 2nd-largest crude steel producer in the world with production reaching 96 million tonnes in 2016.
The government has stepped up infrastructure spending from the current 5 per cent of GDP to 10 per cent by
2017and the government has planned to invest US$ 61.8 billion in infrastructure in the Union Budget 2017-18.
Capacity expansion Considering 15 per cent as steel component in the total investment, the initiative has a potential to generate an
additional demand for steel of 18.75mtpa
The Ministry of Steel is encouraging R&D activities by providing financial assistance from Steel Development
Fund (SDF) and Plan Scheme of the Central Government. Furthermore, the government has allowed 100 per
cent FDI through the automatic route in the Indian steel sector
A long term perspective is to achieve capacity of 300 mtpa by 2025
SAIL is increasing its production capacity by 60-70 per cent in the last leg of its US$10.79 billion programme.
In the last few years, rapid and stable growth in demand has also prompted domestic entrepreneurs to set up
Greenfield projects – fresh greenfield projects in different states of the country. Mittal Steel announced two 12 mtpa greenfield steel
focus on downstream projects, 1 each in Jharkhand and Orissa
value-added products
As India surges ahead in building infrastructure, investments in steel pave the way ahead
Source: CCI, Ministry of External Affairs
20 Steel For updated information, please visit www.ibef.orgSTRATEGIES ADOPTED
Steel companies are strengthening their position through cross border mergers and acquisitions. The focus is
on improving existing technology to upgrade production process and developing new value added-products.
In 2014, Arcelor Mittal along with Nippon Steel and Sumitomo Metal Corporation acquired ThyssenKrupp
Steel USA. Notable deals include Essar Global’s acquisition of Canada-based Algoma Steel.
On 1st August 2016, Kirloskar Ferrous Industries Ltd has announced to acquire pig iron plant of VSL Steels
Ltd. for US$ 23.68 million. Also on 18 August 2016, JSW Steel Ltd. has acquired 74 per cent stake of Praxair
Oxygen Pvt. Ltd. in their joint venture for US$ 36 million
As on December 01, 2016, JSW Steel, the flagship steel company of JSW Group, entered into a consortium to
acquire 35 per cent stakes of Ilva steel plant, in Italy.
Mergers and Acquisition Tata Steel has executed an agreement with Creative Port Development (CPDPL) for the acquisition of the
majority stakes, i.e., 51 per cent in CPDPL in January 2017
Italy’s Marcegaglia ArcelorMittal have offered to buy Italy’s troubled Ilva steel plant, for an amount of US$ 2.4
billion and will boost production
In March 2017, Central Government permitted sale of SAIL’s 3 units including Alloy Steels Plants,
Visvesvaraya Iron and Steel Plant, Salem Steel Plant with the transfer of management in these plants for the
strategic disinvestment.
ArcelorMittal SA is looking to set up a joint venture (JV) factory in India with state-owned Steel Authority of
India Ltd (SAIL), to manufacture high-end steel products which could be used in defence and satellite
industries.
Source: CCI, Ministry of External Affairs
21 Steel For updated information, please visit www.ibef.orgSteel GROWTH DRIVERS
STRONG DEMAND AND POLICY SUPPORT DRIVING
INVESTMENTS
Growing demand Policy support Increasing investments
Growing demand in the 100 per cent FDI in the steel Rising investments from
construction industry sector domestic and foreign players
Resulting in
Inviting
Encouragement of sector-based Increasing number of MoUs
Growing demand in the
R&D activities by the signed to boost investment in
automotives sector
government steel
Foreign investment of nearly
Rising demand for consumer Reduced custom duty and other
US$ 40 billion committed in the
durables and capital goods favourable measures
steel sector
Note: FDI - Foreign Direct Investment
23 Steel For updated information, please visit www.ibef.orgCAPITAL GOODS, CONSUMER DURABLES AND
AUTOMOTIVES FURTHER DRIVING STEEL GROWTH
Over FY05–20F, the consumer durables sector will expand at a Consumer durables market size (US$ billion)
CAGR of 12.54 per cent as growth in disposable income is expected
to result in increase in demand for such products 25 CAGR 12.54%
The consumer durables market is expected to reach US$ 12.5 billion 20
20.60
in FY16 and is projected to reach US$ 20.6 in FY20
15
The capital goods and consumer durables sectors are expected to 10
12.50
grow at 7.5–8.8 per cent over 2012–21
9.70
9.00
7.30
7.40
5
7.3
5.2
6.3
FY07 4.2
FY08 4.7
FY06 3.8
Automotive production in India expanded at a CAGR of 8.76 per cent
FY05 3.5
0
during FY10–17
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY20F
Over FY14–21, the automotive sector is projected to rise at a CAGR
of 10.2 per cent
Total automobile production in India (million units)
25
19.45 19.76 20.71
20 16.58 17.71
16.31
14.15
15 11.13
10
3.79
3.41
3.23
3.22
3.15
3.09
2.98
2.36
0.93
0.83
0.81
0.78
0.76
0.57
0.7
0.7
5
0
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Passenger Vehicles Commercial Vehicles Two & Three Wheelers
Notes: E - Estimate; F- Forecast, FY - Indian Financial Year (April - March)
Source: SIAM, JSPL presentation, Corporate Catalyst India, Aranca Research
24 Steel For updated information, please visit www.ibef.orgPOLICY SUPPORT AIDING GROWTH IN THE STEEL
SECTOR … (1/2)
New National Steel Policy has been formulated by the Ministry of Steel in 2016, which will retain the objectives
included in National Steel Policy (NSP) 2005. It aims at covering broader aspects of steel sector across the
country including environment and facilitation of new steel projects, growth of steel demand in India and raw
materials
Under the policy, the central government stated that all the government tenders will give preference to
domestically manufactured steel and iron products. Moreover, Indian steel makers importing intermediate
National Steel Policy 2017 products or raw materials can claim benefits of domestic procurement provision by adding minimum of 15 per
cent value to the product.
The New steel policy, 2017 aspires to achieve 300MT of steel making capacity by 2030. This would translate
into additional investment of Rs 10 lakh Crore (US$ 156.08 billion) by 2030-31.
New Steel Policy seeks to increase per capita steel consumption to the level of 160 kgs by 2030 from existing
level of around 60 kg.
A new scheme, ‘The scheme for the promotion of R&D in the iron and steel sector’, has been approved with
budgetary provision of US$ 24.6 million to initiate and implement the provisions of the scheme as per the 11th
R&D and innovation Five-Year Plan which has continued in the 12th Five Year Plan
The development of technology for Cold-Rolled Grain Oriented (CRGO) steel sheets and other value-added
products is also included under the policy purview and is allocated US$ 6.7 million
Source: Ministry of Steel, Aranca Research
25 Steel For updated information, please visit www.ibef.orgPOLICY SUPPORT AIDING GROWTH IN THE STEEL
SECTOR … (2/2)
The government hiked the export duty on iron ore to 30 per cent ad valorem on all varieties of iron ore (except
Rise in export duty pellets)
The government has reduced the basic custom duty on the plants and equipments required for initial set up or
expansion of iron ore pellets plants and iron ore beneficiation plants from 7.5/5 per cent to 2.5 per cent
Customs duty on imported flat-rolled stainless steel products has been increased to 10 per cent from 7.5 per
Reduction in custom duty
cent
on plants and equipment
Basic customs duty on steel grade dolomite and steel grade limestone is being reduced from 5 per cent to 2.5
per cent. Basic customs duty is being reduced from 10 per cent to 5 per cent on forged steel rings used in the
manufacture of bearings of wind-operated electricity generators
Push due to Make in India Going forward, the Make in India initiative and policy decisions taken under it are expected to augment the
initiative country’s steel production capacity and resolve issues related to the mining industry
Foreign Direct Investment 100 per cent FDI through the automatic route is allowed in the Indian steel sector
Source: The Economic Times, Ministry of Steel, Business Standard, Make In India, Aranca Research
26 Steel For updated information, please visit www.ibef.orgSTEEL SEZs IN INDIA
Developer Location Product
Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products
SAIL Salem SEZ Pvt Ltd Salem, Tamil Nadu Steel
Orissa Industrial Infrastructure Development Metallurgical-based engineering and
Jaipur, Orissa
Corporation ancillary/downstream industry
Tata Steel Special Economic Zone (TSSEZ) Gopalpur, Odisha Steel and allied downstream industries
Source: Formal approvals granted in the Board of Approvals after the SEZ rules coming into force, Special Economic Zones in India website, www.sezindia.nic.in
27 Steel For updated information, please visit www.ibef.orgTHE SECTOR WITNESSED RISING INVESTMENTS IN
THE LAST DECADE
Date announced Acquirer name Target name Value of deal (US$ million)
Aug-16 JSW Steel Ltd Praxair Oxygen Pvt. Ltd. 36
Aug-16 Kirloskar Ferrous Industries Ltd VSL Steels Ltd. 23.68
Aug-14 JSW Steel Ltd Welspun Maxsteel Ltd 165.85
Apr-14 JSW Steel Ltd Vallabh Tinplate Pvt Ltd 7.63
Mar-14 Lalitanjali Group Pvt Ltd Centom Industries Ltd -
Dec-13 Venus Insec Pvt Ltd Goodluck Steel Tubes Ltd 23.73
Oct-13 JSW Projects Ltd IST Steel and Power Ltd
Aug-13 Readymade Steel India Ltd Kridhan Infra Solutions Pvt
Jul-13 Swelect Energy Systems Ltd Amex Alloys Pvt Ltd
Apr-13 Metallurgica Siderfoge S.r.l AMW-MGM Forgings Pvt Ltd
Feb-13 Wayzata II Indian Ocean Ltd Ramkrishna Forgings Ltd 51.90
Nov-12 Rabale Engineering India Ltd Pradeep Metals Ltd 6.85
Nov-12 Suncoke Energy Inc Visa Steel Ltd-Coke division
Oct-12 Aum Saw Pipes and Industries Pvt Greenearth Resources 2.77
Cumulative FDI inflows
Period: April 2000 to June 2017
Sector
• Metallurgical industries US$ 10.39 billion
• Per cent of total FDI inflow 3.03
Source: Thomson ONE Banker, “Fact Sheet on Foreign Direct Investment (FDI)”, Department of Industrial Policy and Promotion
28 Steel For updated information, please visit www.ibef.orgPLANNED CAPACITY ADDITIONS BY 2017-18
Crude steel capacity addition plans up to FY2017-18 (in MTPA) for private sector companies
Company Existing capacity Brownfield expansion Greenfield expansion Total capacity addition
Tata Steel Ltd 12.50 0.4 0 12.59
Essar Steel Ltd 10.00 0 0 10.00
JSW Steel Ltd 18.00 0 0 18.00
Jindal Stainless Limited 1.00 0.15 0 1.15
Jindal Stainless (Hissar) Ltd 0.78 0.08 0 0.86
Bhushan Steel Ltd 5.60 0 0 5.60
Bhushan Power and Steel Ltd 2.50 0 0 2.5
Monnet Ispat and Energy Ltd 1.80 0 0 1.80
Electrosteel Steel 1.88 0 0 1.88
Visa Steel Ltd 0.50 0 0 0.50
Notes: MTPA - Million Tonnes Per Annum
Source: Ministry of Steel Annual Report, Joint Plant Committee
29 Steel For updated information, please visit www.ibef.orgSteel OPPORTUNITIES
OPPORTUNITIES … (1/2)
Automotive Capital goods Infrastructure Airports
The automotive industry is The capital goods sector The infrastructure sector More and more modern and
forecasted to grow in size by accounts for 11 per cent of accounts for 9 per cent of steel private airports are expected to
US$ 74 billion in 2015 to US$ steel consumption and consumption and expected to be set up
260-300 billion by 2026 expected to increase 14/15 per increase 11 per cent by 2025-
In FY17, passenger traffic at
cent by 2025-26 and has the 26.
With increasing capacity Indian airports stood at 264.99
potential to increase in
addition in the automotive Due to such a huge investment million and number of
tonnage and market share
industry, demand for steel from in infrastructure the demand operational airports stood at 94
the sector is expected to be Corporate India’s capex is for long steel products would in July 2017.
robust expected to grow and generate increase in the years ahead
Development of Tier-II city
greater demand for steel
In 2016, Indian automotive airports would sustain
sector is estimated to be 3rd consumption growth
largest automotive market, by
Estimated steel consumption in
volume
airport building is likely to grow
more than 20 per cent over
next few years
Source: Capex – Capital Expenditure, P - Provisional
Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India
31 Steel For updated information, please visit www.ibef.orgOPPORTUNITIES … (2/2)
Railways Oil and gas Power Rural India
The Dedicated Rail Freight Oil and gas amongst major The government targets Rural India is expected to
Corridor (DRFC) network end-user segment accounted capacity addition of 100 GW reach per capita consumption
expansion would be enhanced for ~34.4 per cent of primary under the 13th Five-Year Plan of 12.11 kg to 14 kg for
in future energy consumption in FY16 (2017–22) finished steel by 2020.
Gauge conversion, setting up This would lead to an increase Both generation and Policies like Food for Work
of new lines and electrification in demand of steel tubes and transmission capacities would Programme (FWP) and Indira
would drive steel demand pipes, providing a lucrative be enhanced, thereby raising Awaas Yojana, Pradhan Mantri
opportunity to the steel steel demand from the sector Gram Sadak Yojana are
Indian Railways started the
industry driving growing demand for
PPP mode of funding and has Conventional power capacity
construction steel in rural India
already awarded projects addition of 23.98 GW has
worth around US$ 1.73 billion registered to be the highest in In FY16, per capita
during the 1st 7 months (April- FY16 consumption of steel in rural
October) of FY16 India is estimated at 60 kg,
which is lower in comparison
In January 2017, Crisil
with the global average of 216
estimated that the railways
kg
sector could create business
opportunities worth US$ 99.65
billion
Source: Make In India, Ministry of Power, Aranca Research
32 Steel For updated information, please visit www.ibef.orgSteel SUCCESS STORIES
JINDAL STEEL AND POWER LTD: REAPING BENEFITS
OF PRUDENT INVESTMENTS … (1/3)
Incorporated in 1979, Jindal Steel and Power Ltd. (JSPL) is an Projected
Visakhapatnam
crude steel
port
production
traffic (million
(million
tonnes)
tonnes)
integrated steel producer and the largest coal-based sponge iron
manufacturer in the world. The company has an installed steel
CAGR 41.76%
production capacity of 3 MTPA at Raigarh in Chhattisgarh. JSPL is 35.00
engaged in manufacturing long products and is specialised in
producing long rails for railways and large sized H-beams as well as 30.00 31.75
columns for the infrastructure and construction sector
JSPL also has significant presence across the mining, power
25.00
generation and infrastructure sectors
In March 2017, Jindal Steel has entered into an agreement with
20.00
Defence Research and Development Organisation (DRDO), which
would allow the agency to transfer technology facilitating
manufacturing of high-nitrogen steel, for application in defence 15.00 15.80
sector.
New and expansion projects include setting up of a 7 MTPA 10.00
integrated steel plant in Chhattisgarh, 12 MTPA integrated steel plant
in Jharkhand and a 12.5 MTPA integrated steel plant in Orissa.
5.00
Achievements:
• 2014 - Company has commissioned the billet caster plant with
0.00
capacity of 6 MTPA at Angul with record time of 1 year FY 17 FY 18 E
• 2015 - Company has created history with its Raigarh steel facility
producing 10,000 tonnes of crude steel in a single day
• 2017 – Launched a 6 MTPA integrated steel plant in Odisha.
Source: Ministry of Steel, Company website (www.jindalsteelpower.com), Aranca Research; E- Estimated
34 Steel For updated information, please visit www.ibef.orgJINDAL STEEL AND POWER LTD: REAPING BENEFITS
OF PRUDENT INVESTMENTS … (2/3)
Visakhapatnam
Sale of steel
port(million
traffic (million
tonnes)tonnes) Visakhapatnam
Financial growth
port traffic
(US$ (million
million)
tonnes)
5.0 4000
4.5
4.6
3500
3,542
4.0
4.2
3,315
3,218
3,199
4.0
3000
3.8
3,007
3.5
2,813
3.5
2500
3.27
3.0
3.2
3.1
3.0
2.9
2,287
2.8
2.8
2.5 2000
2.5
2.3
2.3
1,803
2.0
2.2
1500
2.1
1,596
2.0
1.9
1,488
958
910
1.5
818
1.6
1.6
727
1000
721
634
1.4
532
1.0
1.2
438
431
395
816
1.0
197
671
500
0.8
103
0.5
0.7
0.3
0.5
0.2
0.0 0
FY 14
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
FY 15
FY 16
FY 17
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Finished Steel Products Semi - Steel Products Pellets Gross Revenue PBIDT
Note: Company clubs iron and steel segment ‘s performance; PBIDT (Profit Before Interest, Depreciation and Tax)
Source: Company website (www.jindalsteelpower.com)
35 Steel For updated information, please visit www.ibef.orgSteel KEY INDUSTRY ASSOCIATIONS
INDUSTRY ASSOCIATIONS
Indian Stainless Steel Development Association
L-22/4, DLF Phase-II
Gurgaon, Haryana –122 002
Phone: 91-124-4375501
Fax: 91-124-4375509
E-mail: nissda@gmail.com
37 Steel For updated information, please visit www.ibef.orgSteel USEFUL INFORMATION
GLOSSARY
CAGR: Compound Annual Growth Rate
FDI: Foreign Direct Investment
FY: Indian Financial Year (April to March)
• So FY10 implies April 2009 to March 2010
JV: Joint Venture
MoU: Memorandum of Understanding
MT: Million Tonnes
MTPA: Million Tonnes Per Annum
NPAT: Net Profit After Tax
SEZ: Special Economic Zone
TMT: Thermo Mechanically Treated
US$ : US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
39 Steel For updated information, please visit www.ibef.orgEXCHANGE RATES
Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Year INR Equivalent of one US$ Year INR Equivalent of one US$
2004–05 44.81 2005 43.98
2005–06 44.14 2006 45.18
2006–07 45.14 2007 41.34
2007–08 40.27
2008 43.62
2008–09 46.14
2009 48.42
2009–10 47.42
2010 45.72
2010–11 45.62
2011 46.85
2011–12 46.88
2012 53.46
2012–13 54.31
2013 58.44
2013–14 60.28
2014-15 61.06 2014 61.03
2015-16 65.46 2015 64.15
2016-17 67.09 2016 67.21
Q1 2017-18 64.46 H1 2017 65.73
Source: Reserve bank of India, Average for the year
40 Steel For updated information, please visit www.ibef.orgDISCLAIMER
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation
with IBEF.
All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced,
wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or
incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval
of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the
information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a
substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do
they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.
Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any
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