The Indian Steel IndustryMarket projections and company strategies out to 2015
How much has the Indian steel industry been affected by therecent global economic downturn?
What is the long-term outlook for the Indian steel industryand how does this fit within the global market?
Are CEOs in India equipped to seize the right opportunities ina climate of economic upheaval?
• The independent and unrivalled view ofMBR on the demand, supply and pricingprospects of the Indian steel and rawmaterials industry;
• Critical raw materials scenario;
• Detailed strategic recommendations oncompetitive strategies to be adopted byIndian steelmakers and those looking toinvest in India, for sustainable and profitable growth;
• Unique and in-depth insights into theIndian steel market and company strategiesby MBR consultants and experts, in tandemwith Satyabir Bhattacharyya, the formerDirector - Corporate Strategy and BusinessExcellence in Ispat Industries Limited;
• The Indian CEO – a simple point plan inre-defining the role and leadership stylerequired to successfully meet the domesticand global challenges ahead.
The Indian Steel IndustryMarket projections and company strategies out to 2015
Why is this report unique?Metal Bulletin Research (MBR) has undertaken an in-depth review of the Indian SteelIndustry and its outlook over the next six years. The Indian Steel Industry: Marketprojections and company strategies out to 2015 offers over 300 pages of independentresearch and analysis including:
The Indian Steel Industry: Market projections and
company strategies out to 2015 is the first report of itskind to provide independent and on-the-ground researchwith unique board-level insights. Amid the challengingeconomic climate the report offers strategicrecommendations for those looking to invest, or alreadyoperating, in the Indian steel industry.
Contents
Executive Summary
Chapter 1 – Global Steel Industry Overview 1.1. Crude steel production
1.1.1 By region 1.1.2 Top ten crude steel producing countries1.1.3 Top ten crude steel producers in the world with their installed capacities1.1.4 Crude steel production by different process routes1.1.5 Regional steelmaking – Historical context and current advantages
1.2 Crude steel consumption1.3 Steel trade
1.3.1 Top steel importers1.3.2 Top steel exporters
Chapter 2 - Asian Steel Industry2.1 Crude steel production2.2 Crude steel production growth2.3 Steel trade2.4 Steel consumption2.5 China steel analysis
Chapter 3 - Indian Steel Industry Performance3.1 Macro economic environment3.2 Steel demand and supply analysis3.3 Crude steel production
3.3.1 Crude steel production by process 3.3.2 Crude steel producers3.3.3 Steel production – By Products (DRI and Pig Iron)3.3.4 Production of hot rolled steel products
3.4 Steel consumption3.4.1 Finished steel consumption3.4.2 Steel consumption – By Products3.4.3 Steel demand pattern – By Industry
3.5 Steel trade3.5.1 Finished steel import3.5.2 Steel import - By Products3.5.3 Steel import at major ports3.5.4 Finished steel
3.6 National steel policy-20053.6.1 Background3.6.2 Objective3.6.3 Policy Implications
Chapter 4 – Raw Material Industry Structure4.1 Iron ore
4.1.1 Introduction4.1.2 Global scenario4.1.3 Indian iron ore outlook
4.1.3.1 Resources4.1.3.2 Iron ore production and consumption in India4.1.3.3 Iron ore prices 4.1.3.4 Iron ore – Future perspective
4.2 Coking Coal4.2.1 Coal reserves in India4.2.2 Coke deficit in India (Demand and Supply)4.2.3 Global coking coal scenario 4.2.4 Coke prices 4.2.5 Foreign collaboration
4.3 Metallics (Scrap and DRI) 4.3.1 Global scenario4.3.2 Estimated consumption, trade and apparent domestic supply
4.4 National mineral policy – 20084.4.1 Background4.4.2 Objective4.4.3 Policy implications
Chapter 5 – Indian Economy and Industry Sectors Outlook5.1 Indian economy overview
5.1.1 Gross domestic product5.1.2 Foreign direct investment
5.2 Indian steel industry growth and opportunities5.2.1 Steel growth drivers
5.2.1.1 Automotive industry5.2.1.2 Construction and infrastructure industry
5.2.1.2.1 Roads5.2.1.2.2 Ports5.2.1.2.3 Airports5.2.1.2.4 Railways5.2.1.2.5 Power5.2.1.2.6 Real estate
5.3 Major issues and challenges5.3.1 The challenges5.3.2 Strategy for today5.3.3 Raw material security to drive M&A in the long-term5.3.4 The demand-supply gap5.3.5 Concluding remarks
Chapter 6 - Major Indian Steel Companies6.1 Steel Authority of India Limited
6.1.1 The company history and background 6.1.2 Facilities, locations and installed capacities 6.1.3 Process and technologies 6.1.4 Products manufactured and volumes 6.1.5 Key customers and markets 6.1.6 Sales volumes and market shares 6.1.7 Cost structure and competitiveness 6.1.8 Exports and retail sales 6.1.9 Corporate and product brands 6.1.10 Financial performance and profitability 6.1.11 Future plans and strategies for growth 6.1.12 Corporate social responsibility (CSR) activities
6.2 Tata Steel Limited6.3 Ispat Industries Limited6.4 Essar Steel Limited6.5 JSW Steel Limited
Chapter 7 - Future Outlook and Projections out to 20157.1 Steel consumption7.2 Steel production capacity7.3 Development of the steel industry in the medium to long-term7.4 Steps required to be taken by the Government for the future growth
Chapter 8 – Future Strategies for Indian Steelmakers8.1 Background
8.1.1 Differentiating steel companies – A model 8.1.2 Competitive positioning of Indian steel companies
8.2 Competitive rivalry among major players 8.3 Barriers to entry and critical success factors 8.4 Current cost structure vis-à-vis selling price8.5 Strategies for steelmakers out to 2015
8.5.1 Minimisation of cost per tonne of steel produced 8.5.1.1 Establishing long-term partnership with key raw material supplier 8.5.1.2 Reducing cost of manufacturing of hot metal 8.5.1.3 Reducing percentage of fines generation in iron ore and coke 8.5.1.4 Optimising charge mix at electric arc furnaces (EAF) 8.5.1.5 Charging hot DRI into electric arc furnaces (EAF) 8.5.1.6 Minimising raw materials usage efficiency variances, yield and
improving conversion efficiency 8.5.1.7 Reducing logistics and handling costs 8.5.1.8 Improving plant reliability and minimising unplanned
breakdowns
8.5.1.9 Reducing energy costs 8.5.1.10 Maximising production volumes and plant utilisation 8.5.1.11 Minimising administrative overhead costs 8.5.1.12 Controlling working capital
8.5.2 Selection of appropriate steelmaking and casting technology for quality andcost- effective production 8.5.2.1 Production of clean steel at the steelmaking stage 8.5.2.2 Continuous assessment of current status of technology – process
and technological innovation 8.5.2.3 Assessment of promising emerging technologies
8.5.3 Focus on building organisational capabilities 8.5.3.1 Securitisation of key bulk raw materials 8.5.3.2 Product development and R&D 8.5.3.3 Manufacturability of various special grade steels 8.5.3.4 Market leadership in key customer segments 8.5.3.5 Build world-class supply chain 8.5.3.6 Service centers and customer relationship management 8.5.3.7 Steel retailing and product branding 8.5.3.8 State-of-the-art information technology systems
8.5.4 Focus on growth and capacity expansion – A long-term perspective 8.5.5 Focus on corporate social responsibility (CSR) – Environment protection
and carbon credit 8.6 Concluding remarks
Chapter 9 – Leadership and Management Styles in India9.1 Challenges faced by CEOs world over in this global economic downturn9.2 What it means to operate as a CEO in a more connected world9.3 Some companies are making the wrong moves – A Global study
9.3.1 What are those wrong moves?9.3.2 What should the companies do?
9.4 The Indian Culture – how it might influence leadership styles in managing business9.4.1 Socio-demographic features of India9.4.2 National culture
9.4.2.1 Hofstede’s analysis9.4.2.2 Cultural dimensions by Hampden-Turner/Trompenaars9.4.2.3 The concept of high and low context cultures by Hall9.4.2.4 The concept of monochromic and polychromic culture by Lewis9.4.2.5 Fukuyama: Trust
9.4.3 Business culture9.4.3.1 Values and behaviour in organisations9.4.3.2 Communication9.4.3.3 Industry structure
9.4.4 Family culture in India9.4.4.1 Leadership style in India – closer to Theory X or Theory Y?9.4.4.2 Impact of family culture on leadership style9.4.4.3 Unique styles of leadership have emerged out of Indian family
culture9.5 Leadership style of Indian CEOs
9.5.1 Focused more on growth9.5.2 Focused more on tasks and hierarchies9.5.3 How Indian corporate culture impedes innovation
9.6 Top 12 traits of today’s global CEOs 9.6.1 The traits - highlights9.6.2 In what ways Indian CEOs are different9.6.3 Professor CK Prahalad on Indian leadership
9.7 Why do CEOs in India fail?9.8 Role and challenges for CEOs in the coming years
9.8.1 The immediate CEO challenges for the steel industry in India9.8.2 The immediate CEO challenges across the world – seven key steps to
weather the economic downturn9.8.3 In search for global solutions
9.8.3.1 Government action: More of the right kind9.8.3.2 Climate change: The next global crisis?
9.8.4 Redefining success: CEOs face extreme short-term and long-term challenges9.8.4.1 When is a new CEO necessary?
9.8.4.2 New generation young leaders view the world differently –Session at WEF, Davos 2008
9.8.4.3 Short-term survival9.8.4.4 Long-term success 9.8.4.5 A new mindset for extreme conditions
9.8.5 Shifting strategies9.8.5.1 JVs overtake M&A9.8.5.2 Balancing talent retention and cost reduction9.8.5.3 Mitigating risks collaboratively
9.9 The Indian CEO - Redefined role and leadership style
Biographies
Satyabir BhattacharyyaSatyabir has more than 30 years of rich experience in managementconsulting and industry. Until recently he was the Director -Corporate Strategy and Business Excellence in Ispat Industries Limitedin Mumbai, India. Earlier Satyabir was a partner with AndersenBusiness Consulting, KPMG, and Andersen Consulting (nowAccenture). He was also the first Managing Partner and CountryLeader at IBM and started the Business Consulting practice in India.
Satyabir has experience in numerous industries including Steel,Automotive, Engineering, Oil and Gas, FMCG and White Goods,Retail, Pharmaceuticals, Chemicals, Airline and SurfaceTransportation, and Information Technology. He is a strategyconsultant and also specialises in Supply Chain Management,Organisation Design, Business Transformation, Change Managementand Leadership. He has written several articles and papers inmanagement and has delivered several presentations in internationaland national seminars and conferences.
Satyabir has a BS honors degree in Mathematics, BS in ElectricalEngineering, MS in Operations Research from the London School ofEconomics, and MS, DIC in Management from the Imperial CollegeBusiness School, Imperial College of Science, Technology andMedicine, University of London.
Brian Levich Head of Research for Metal Bulletin Research, Brian specialises in thesteel and raw materials sectors. He has written numerous major studieson the global steel industry and has done extensive consultancy andmarket research work for a number of major steel producers,consumers and financial institutions.
• Key long-term supply-demand balances forsteel and raw materials by major productincluding: iron ore, DRI, pig iron, cokingcoal, HR coil/sheet and other products;
• Sales volumes and cost structures for the keysteelmakers in India;
• Key strategic insights in leading steelmakersincluding Tata Steel Limited, Steel Authorityof India Limited (SAIL), Ispat IndustriesLimited, Essar Steel Limited, JSW SteelLimited among others;
• Consumption drivers of the end-userindustry segments including: construction,automotive, roads, ports, airports, railwaysand power;
• Government policies on steel and mineralsand how these will affect the industrystructure and prices over the next decade;
• Investment strategies needed to ensuregrowth, profitability and sustainabilityuniquely for the Indian market includinghow to build organisational capabilities,select the appropriate steelmaking andcasting technology and achieve costefficiency;
• How best to understand and take advantageof the Indian steel business culture.
The Indian Steel Industry: Market projections and
company strategies out to 2015 offers:
Expected Start of Global Economic Recovery
Total: All Industries
Source: Global Business Outlook Survey 4th Quarter, 2008
Most Optimistic: Transport, Energy69% of the Transport and Energy Industries are not affected by the credit crisis
Most Pessimistic: Construction, Mining86% of the Mining and Construction Industries are affected by the credit crisis
11.9%
36.8%28.1%
23.2%
0.0%
14.3%
28.6%
57.1%
23.1%
53.9%
15.4%
7.7%
1H 2009 2H 2009 1H 2010 2H 2010 & Beyond
160
140
120
100
80
60
40
20
0
MnT
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
Public SectorPrivate Sector
35000
30000
25000
20000
15000
10000
5000
0
Net
Sal
es R
ealis
atio
n in
INR
Cro
res
INR
4.8
Cro
res =
US$
1m
50%45%40%35%30%25%20%15%10%5%0%
ISPAT ISPAT JSW JSW TataSteel
TataSteel
SAIL SAIL
Apr-Dec08
Apr-Dec07
Apr-Dec08
Apr-Dec07
Apr-Dec08
Apr-Dec07
Apr-Dec08
Apr-Dec07
16% 17%
24%
32%
45%
43%
26%
34%
7089.026005.13
10726.237883.16
17595.43
13806.86
31851.17
26338.9
Nine Months ended period (Apr-Dec 08 vs. Apr-Dec 07)
Net Sales EBITA %
Source: Metal Bulletin Research
Growth in EBITDA – Highest Tata Steel (35.08%), Ispatrepresents second with 11.69%
Staff and Personnel Cost as % of Sales – Highest SAIL (22.18%),Ispat represents third with 2.39%.
Source: Metal Bulletin Research
Indian Iron Ore production– Public versus Private sector
Performance of majorIndian Steel makers
The Indian Steel IndustryMarket projections and company strategies out to 2015
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