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STEEL

Table of Content

Executive Summary……………….….…….3

Advantage India…………………..….……...4

Market Overview …………………….……..6

Recent Trends and Strategies …….……..17

Growth Drivers…………………….............22

Opportunities…….……….......………….…30

Industry Associations……………....……...36

Success Stories……………....……………33

Useful Information……….......…………….38

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EXECUTIVE SUMMARY

Total crude steel production in India has increased at a CAGR of 5.43 per cent during FY12–18, with country’s

output reaching 102.34 million tonnes per annum (MTPA) in FY18.

The country became the 3nd largest crude steel producer in 2017, as large public and private sector players

strengthen steel production capacity in view of rising demand.

Moreover, capacity has increased to 134.6 million tonnes (MT) in 2017-18 while in the coming ten years the

figure is anticipated to rise to 300 MT of steel.

3rd largest producer of

crude steel

Source: World Steel Association, Ministry of Steel, Aranca Research

India’s comparatively low per capita steel consumption and expected growth in consumption due to growing

infrastructure construction, automobile and railways sectors has offered scope for growth

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

reliance on imports. In addition, the entry of international players would provide benefits in terms of capital

resources, technical know how and more competitive industry dynamics

Note: MTPA – Million Tonnes Per Annum

Strong growth

opportunities

Rising domestic and

international investments

Steel

ADVANTAGE INDIA


ADVANTAGE INDIA

Demand would be supported by growth in

the domestic market

Infrastructure, oil and gas and automotives

would drive the growth of the industry

Lower per capita consumption compared to

international average

Steel production in India is forecast to double

by 2031, with growth rate expected to go

above 10 per cent in FY18

To achieve steel capacity build-up of 300

million tonnes per annum (MTPA) by 2030,

India would need to invest US$ 156.08

billion by 2030-31.

301 MoUs have been signed with various

states for planned capacity of about 486.7

MT.

Ministry of Steel plans to set up Steel

Research and Technology Mission in India

to promote R&D activities in the sector

As of 2017, India is the world’s 3rd largest

producer of crude steel (up from 8th in

2003). India’s steel production in 2017

stood at 101.4 MT.

Easy availability of low-cost manpower

and presence of abundant iron ore

reserves make India competitive in the

global set up

100 per cent FDI through the automatic

route is allowed. Large infrastructure

projects in the PPP mode are being formed

National Steel Policy (NSP) implemented to

encourage the industry to reach global

benchmarks

Policy clarity and stability expected in

respect of mining leases and forest

clearances

20 per cent safeguard duty on steel imports

ADVANTAGE

INDIA

Source: Metallurgical and Materials Engineering Division Board, Aranca Research Notes: MT - Million Tonnes, FDI – Foreign Direct Investment

Steel

MARKET OVERVIEW


EVOLUTION OF THE INDIAN STEEL SECTOR

Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd;

1907-18 1923-48 1973-92 1954-64 2015-18 1993-2014

Production of steel started in

India (TISCO was setup in 1907)

IISC was set up in 1918 to

compete with TISCO

Hindustan Steel Ltd and Bokaro Steel Ltd

were setup in 1954 and 1964, respectively

In the early 1990s, the public sector

dominated steel production

Private players were in downstream

production mainly producing finished steel

using crude steel products

Foreign players began entering the Indian steel

market

No license requirement for capacity creation

Imposition of export duty on iron ore, to focus more

on catering growing domestic demand

Decontrol of domestic steel prices

Launch of Scheme for promotion of Research and

Development in Iron and Steel sector

Mysore Iron and Steel Company

was set up in 1923

According to the new Industrial

Policy Statement (1948), new

ventures were only undertaken by

the central government

SAIL was created in 1973 as a holding company

to oversee most of India's iron and steel

production

In 1989, SAIL acquired Vivesvata Iron and Steel

Ltd

In 1993, the government set plans in motion to

partially privatise SAIL

In 2017, India ranked as the 3nd

largest crude steel producer in the

world, leaving behind United States.

During 2017-18, 9.62 MT of steel

was exported from India.


STRUCTURE OF THE STEEL SECTOR

Source: Report on Indian steel industry by Competition Commission of India, Aranca Research

Steel

Form Composition End use

Liquid Steel Crude Steel Finished

Steel Alloy

Non-alloy Steel

Structural Steel

Ingots

Semis

Flat

Non-flat

Stainless

Silicon electrical

High Speed

Low carbon Steel

Medium carbon Steel

High Carbon Steel

Construction Steel

Rail Steel


STEEL PRODUCTION IN INDIA HAS BEEN GROWING

AT A FAST PACE0

53

.68

57

.81

61

.94

64

.92

71

.77

71

.87

78

.91

75

.30

17.0 16.5 16.5 16.8 17.2 17.9

18.5 17.9

0

20

40

60

80

100

120

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P

Private Sector Public Sector

Source: Ministry of Steel Annual Report

In FY18, crude steel production in India was 102.34 MT, with the

total crude steel production growing at a CAGR of 5.43 per cent over

the last 7 years.

The steel sector contributes over 2 per cent to the GDP of the nation

and provides 20 lakh jobs in the country.

During 2017-18, finished steel production for sale in India stood at

104.98 MT respectively.

Steel manufacturing output of India is expected to increase to 128.6

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.

55

.37

63

.18

68

.86

74

.24

79

.34

78

.00

96

.39

92

.46

13.3 12.5

12.8 13.4 12.8 13.0

14.9 14.6

0

20

40

60

80

100

120

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P

Private Sector Public Sector

Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; P – Provisional, 1April 2017 to February 2018 , 2CAGR is till FY17, Figures

mentioned are as per latest data available, ^ As per BMI Research Report, *without deducting own consumption by producers

1

1

Total finished steel production (million tonnes)*

2CAGR 8.39%

Total crude steel production (million tonnes)

CAGR 5.49%


SHARES IN PRODUCTION: SAIL AND TATA LEAD THE

WAY

Source: Ministry of Steel Annual Report 2016-17, Aranca Research

As of FY17, SAIL dominated India’s steel sector, with the company

accounting for 11.40 per cent of country’s finished steel production

and 14.59 per cent of country’s crude steel production. During FY17,

Tata Steel accounted for 11.46 per cent of finished steel production

and 12.46 per cent of the country’s crude steel production

In January 2017, Indian government inaugurated Universal Rail Mill

(URM) worth US$ 178.49 million at SAIL’s Bhilai steel plant. The

production of the world’s longest single rail of 130 meters from the

new URM also commenced in the new mill.

Notes: RINL - Rashtriya Ispat Nigam Limited ; (1)Provisional; Figures mentioned are as per latest data available

India’s crude steel market share by production – FY171

India’s finished steel market share by production – FY171

14.59%

12.46%

4.47%

68.49%

SAIL

TATA

RINL

OTHERS

10.40%

10.46%

3.22%

75.91%

SAIL

TATA

RINL

OTHERS


52

.12

52

.40

59

.34

66

.42

70

.92

73

.48

74

.10

76

.99

81

.52

84

.04

90

.68

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

DEMAND HAS OUTPACED SUPPLY OVER THE LAST

FIVE YEARS

Total consumption of finished steel was 90.68 MT in FY18 as

compared to 83.90 MT in FY17.

Steel consumption is expected to grow 5.7 per cent year-on-year to

92.1 MT in 2018.

It is expected that consumption per capita would increase supported

by rapid growth in the industrial sector and rising infra expenditure

projects in railways, roads and highways, etc.

The consumption of real steel has grew at a CAGR of 5.69 per cent

during FY08-FY18

India’s per capita consumption of steel grew at a CAGR of 4.75 per

cent from 45 kgs in FY09 to 65.25 kgs in FY17. The figure stood at

68 kgs (P) during April-February 2017-18.

Consumption of finished steel (in million tonnes)

CAGR 5.69%

Source: JPC India Steel, Ministry of Steel, Aranca Research

Note: MT - Million Tonnes, FY18*-Up to February 2018, 2CAGR- up to FY17, P – Provisional, kg - kilograms

45

.00

58

.20

59

.30

59

.56

61

.15

63

.99

65

.25

68

.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

FY09 FY12 FY13 FY14 FY15 FY16 FY17 FY18P*

Per-capita consumption of steel (in kgs)

2CAGR 4.75%


TRENDS IN IMPORTS AND EXPORTS OF STEEL

Indian Government imposed Anti-Dumping Duty on 47 steel products

for five years beginning from August 2016.

In 2017-18, the country’s finished steel exports increased 17 per cent

year-on-year to 9.62 million tonnes (MT), as compared to 8.24 MT in

2016-17.

During the same period, the country’s finished steel imports rose 3.5

per cent year-on-year to 7.48 MT, as compared to 7.23 MT in 2016-

17.

6.8

6 7

.93

5.4

5

9.3

2

11

.71

7.2

3

7.4

8

4.5

9 5.3

7

5.9

9

5.6

0

4.0

8

8.2

4

9.6

2

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

Imports Exports

Finished steel exports and imports (in million tonnes)

Source: Joint Plant Committee, Aranca Research

Note: FY - Indian Financial Year (April - March)


KEY PLAYERS OF THE INDUSTRY

Source: 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 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


KEY STEEL PLANTS IN INDIA

Alloy and special steel plants

under SAIL (Bhadrawati and

Salem); iron and steel plant

at Visvesvaraya

Steel integrated plants

under SAIL (Bhilai, Rourkela,

Bokaro, Durgapur and

Burnpur)

Tata Steel’s largest steel

plant, based in Jamshedpur

RINL steel plant in

Vishakhapatnam

Source: Company websites, Aranca Research


PORTER’S FIVE FORCES FRAMEWORK

Positive Impact

Neutral Impact

Negative Impact

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

Threat of Substitutes

Medium - The steel industry is highly

concentrated, with the top five players

accounting for more than 70 per cent of

the market share

Steel companies usually compete on the

basis of production capacity, economies

of scale, access to raw material, etc.

Competitive Rivalry

Medium - Major steel consumption

sectors, such as automobiles, oil and gas,

shipping, consumer durables and power

generation, enjoy high bargaining power

and get favourable bulk deals. Smaller

customers, however, do not enjoy this

benefit

Bargaining Power of Buyers

Low - Capital intensive, industry players

are large and enjoy economies of scale.

Some have their own mines for sourcing

key raw materials

Several regulatory clearances required,

including environmental, land acquisition,

etc.

Threat of New Entrants

Medium - Large integrated companies

have their own mines to source key raw

materials

Bargaining Power of Suppliers

Steel

RECENT TRENDS

AND STRATEGIES


NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY

… (1/2)

Source: Ministry of Steel, Ministry of Railways, Aranca Research

Notes: MTPA - Million Tonnes Per Annum

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

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

Growing investments

SAIL and Arcelor Mittal are going to form a joint venture to set up a 1.5 million tonne per annum steel plant.

The consortium of SAIL and National Fertiliser Ltd. (NFL) has been nominated 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 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

to enter the market

National Mineral Development Corporation (NMDC) has signed an MoU with Russia’s 3rd largest steelmaker,

Severstal, for a greenfield steel plant in Karnataka

Strategic alliances

Entry of international

companies


NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY

… (2/2)

Source: Ministry of Steel, Aranca Research

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

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

Increased emphasis on

technological innovations


STRATEGIES ADOPTED

Source: CCI, Ministry of External Affairs

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. The

government is targeting a steel production capacity of 150 million tonnes by 2020.

India is the 3rd-largest crude steel producer in the world with production reaching 101.4 million tonnes in 2017.

Tata Steel is expanding the capacity of its Kalinganagar plant from 3MTPA to 8MTPA with an estimated

investment of Rs 23,500 crore (US$ 36.46 billion). The capacity expansion is expected to improve margins

and lead to cost effectiveness.

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 2030, as per National Steel Policy 2017

SAIL is increasing its production capacity by 60-70 per cent in the last leg of its US$10.79 billion programme.

JSW Steel is looking at starting activity in the next fiscal on its 12 million tonnes mega steel plant proposed in

Odisha.

Capacity expansion

In the last few years, rapid and stable growth in demand has also prompted domestic entrepreneurs to set up

fresh greenfield projects in different states of the country. Mittal Steel announced two 12 mtpa greenfield steel

projects, one each in Jharkhand and Orissa

As India surges ahead in building infrastructure, investments in steel pave the way ahead

Greenfield projects –

focus on downstream

value-added products

Note: GDP – Gross Domestic Product, MTPA – Million tonnes per annum


STRATEGIES ADOPTED

Source: CCI, Ministry of External Affairs

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.

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.

In March 2018, Tata Steel won the bid for acquisition of Bhushan Steel and is awaiting approval from National

Company Law Tribunal (NCLT) and Competition Commission of India (CCI). Acquisition of Bhushan Steel will

help Tata Steel increase its capacity to over 18 MTPA.

Mergers and Acquisition

Note: MTPA – Million Tonnes Per Annum

Steel

GROWTH DRIVERS


STRONG DEMAND AND POLICY SUPPORT DRIVING

INVESTMENTS

Growing demand in the

construction industry

Growing demand in the

automotives sector

Rising demand for consumer

durables and capital goods

Growing demand

100 per cent FDI in the steel

sector

Encouragement of sector-based

R&D activities by the

government

Reduced custom duty and other

favourable measures

Policy support

Rising investments from

domestic and foreign players

Increasing number of MoUs

signed to boost investment in

steel

Foreign investment of nearly

US$ 40 billion committed in the

steel sector

Increasing investments

Invitin

g

Re

su

lting in

Notes: FDI - Foreign Direct Investment, MOU – Memorandum of Understanding


CAPITAL GOODS, CONSUMER DURABLES AND

AUTOMOTIVES FURTHER DRIVING STEEL GROWTH

Source: SIAM, PWC, CEAMA, Aranca Research

Notes: F- Forecast, FY - Indian Financial Year (April - March)

Over 2017-22F, the appliances and consumer electronics (ACE)

sector will expand at a CAGR of 9 per cent as growth in disposable

income is expected to result in increase in demand for such

products.

The appliances and consumer electronics market is estimated at

US$ 31.49 billion in 2017 and is forecasted to reach US$ 48.37

billion by 2022.

Automobile production in India expanded at a CAGR of 7.08 per cent

during FY13-FY18.

Appliances and Consumer Electronics Industry (US$ billion)

Total automobile production in India (million units)

31

.49

48

.37

0

10

20

30

40

50

60

201

7

202

2F

CAGR 9%

2.3

6

2.9

8

3.1

5

3.2

3

3.0

9

3.2

2

3.4

1

3.7

9

4.0

1

0.5

7

0.7

6

0.9

3

0.8

3

0.7

0.7

0.7

8

0.8

1

0.8

9

11.13 14.15

16.31 16.58 17.71 19.45 19.76 20.71

24.17

0

5

10

15

20

25

30

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

Passenger Vehicles Commercial Vehicles Two & Three Wheelers


POLICY SUPPORT AIDING GROWTH IN THE STEEL

SECTOR … (1/2)

Source: Ministry of Steel, Aranca Research

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

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.

National Steel Policy 2017

‘The scheme for the promotion of R&D in the iron and steel sector’ has been continued under the 14th Finance

Commission (2019-20). Under the scheme, 26 projects have been approved with financial assistance of Rs

161 crore (US$ 24.98 million) from Ministry of Steel.

The Ministry of Steel is also actively participating in the Impacting Research Innovation & Technology (IMPRINT) &

Uchchatar Avishkar Yojana (UAY) Schemes launched by Ministry of Human Resource Development. IMPRINT scheme

aims to solve major engineering and technology challenges and UAY is promoting industry sponsored, outcome-oriented

research projects.

Ministry of Steel is setting up an industry driven institutional mechanism - Steel Research & Technology Mission of India

(SRTMI) – with an initial corpus of US$ 30.89 million. The institute will facilitate joint collaborative research projects in the

sector.

R&D and innovation

Note: MT - Million tonnes


POLICY SUPPORT AIDING GROWTH IN THE STEEL

SECTOR … (2/2)

Source: The Economic Times, Ministry of Steel, Business Standard, Make In India, Aranca Research

The government hiked the export duty on iron ore to 30 per cent ad valorem on all varieties of iron ore (except

pellets) Rise in export duty

Reduction in custom duty

on plants and equipment

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

cent

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

Going forward, the Make in India initiative and policy decisions taken under it are expected to augment the

country’s steel production capacity and resolve issues related to the mining industry

100 per cent FDI through the automatic route is allowed in the Indian steel sector Foreign Direct Investment

Push due to Make in India

initiative


STEEL SEZs IN INDIA

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

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

Corporation Jaipur, Orissa

Metallurgical-based engineering and

ancillary/downstream industry

Tata Steel Special Economic Zone (TSSEZ) Gopalpur, Odisha Steel and allied downstream industries


THE SECTOR WITNESSED RISING INVESTMENTS IN

THE LAST DECADE

Source: Thomson ONE Banker, “Fact Sheet on Foreign Direct Investment (FDI)”, Department of Industrial Policy and Promotion

Date announced Acquirer name Target name Value of deal (US$ million)

May-18 Tata Steel Ltd Bhushan Steel 5,461.60

Dec-17 Tata Steel Ltd Bhubaneshwar Power 39.5

Jan-17 Tata Steel Ltd Creative Port Development Pvt Ltd -

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

Cumulative FDI inflows

Period: April 2000 to December 2017

Sector

• Metallurgical industries US$ 10.56 billion


PLANNED CAPACITY ADDITIONS BY 2017-18

Source: Ministry of Steel Annual Report, Joint Plant Committee

Notes: MTPA - Million Tonnes Per Annum

Company Existing capacity

JSW Steel Ltd 18.00

Tata Steel Ltd 12.59

Essar Steel Ltd 10.00

Bhushan Steel Ltd 5.60

Bhushan Power and Steel Ltd 2.50

Electrosteel Steels Ltd 1.88

Monnet Ispat and Energy Ltd 1.80

Jindal Stainless Ltd 1.15

Jindal Stainless (Hissar) Ltd 0.86

Visa Steel Ltd 0.50

97

.02

10

2.2

6

10

9.8

5

12

1.9

7

12

8.2

8

13

4.6

0

0

20

40

60

80

100

120

140

160

FY13 FY14 FY15 FY16 FY17 FY18

Crude Steel Production Capacity (in million tonnes)

Steel

OPPORTUNITIES


OPPORTUNITIES … (1/2)

The automotive industry is

forecasted to grow in size by

US$ 74 billion in 2015 to US$

260-300 billion by 2026

With increasing capacity

addition in the automotive

industry, demand for steel from

the sector is expected to be

robust

In 2017, India overtook

Germany to become the fourth

largest automobiles market

globally.

Automotive

The capital goods sector

accounts for 11 per cent of

steel consumption and

expected to increase 14/15 per

cent by 2025-26 and has the

potential to increase in

tonnage and market share

Corporate India’s capex is

expected to grow and generate

greater demand for steel

Capital goods

The infrastructure sector

accounts for 9 per cent of steel

consumption and expected to

increase 11 per cent by 2025-

26.

Due to such a huge investment

in infrastructure the demand

for long steel products would

increase in the years ahead

Infrastructure

More and more modern and

private airports are expected to

be set up

In FY18, passenger traffic at

Indian airports stood at 308.75

million and number of

operational airports stood at 94

in July 2017.

Development of Tier-II city

airports would sustain

consumption growth

Estimated steel consumption in

airport building is likely to grow

more than 20 per cent over

next few years

Airports

Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India

Source: Capex – Capital Expenditure, P - Provisional


OPPORTUNITIES … (2/2)

Source: Make In India, Ministry of Power, Aranca Research

The Dedicated Rail Freight

Corridor (DRFC) network

expansion would be enhanced

in future

Gauge conversion, setting up

of new lines and electrification

would drive steel demand

PPP Investments in railways

are expected to grow from Rs

24,000 crore (US$ 3.72 billion)

in 2017-18 (RE) to Rs 27,000

crore (US$ 4.19 billion) in

2018-19.

Railways

Oil and gas amongst major

end-user segment accounted

for ~34.4 per cent of primary

energy consumption in FY16

This would lead to an increase

in demand of steel tubes and

pipes, providing a lucrative

opportunity to the steel

industry

Oil and gas

The government targets

capacity addition of 100 GW

under the 13th Five-Year Plan

(2017–22)

Both generation and

transmission capacities would

be enhanced, thereby raising

steel demand from the sector

Power capacity addition of

17,200 MW achieved in 2017-

18.

Power

Rural India is expected to

reach per capita consumption

of 12.11 kg to 14 kg for

finished steel by 2020.

Policies like Food for Work

Programme (FWP) and Indira

Awaas Yojana, Pradhan Mantri

Gram Sadak Yojana are

driving growing demand for

construction steel in rural India

In FY16, per capita

consumption of steel in rural

India is estimated at 9.74 kg.

Rural India

Note: RE – Revised Estimates

Steel

SUCCESS STORIES


JINDAL STEEL AND POWER LTD: REAPING BENEFITS

OF PRUDENT INVESTMENTS … (1/3)

4.60

4.80

4.50

4.55

4.60

4.65

4.70

4.75

4.80

4.85

FY 16 FY 17

Incorporated in 1979, Jindal Steel and Power Ltd. (JSPL) is an

integrated steel producer and the largest coal-based sponge iron

manufacturer in the world. The company has an installed steel

production capacity of 3 MTPA at Raigarh in Chhattisgarh. JSPL is

engaged in manufacturing long products and is specialised in

producing long rails for railways and large sized H-beams as well as

columns for the infrastructure and construction sector

JSPL also has significant presence across the mining, power

generation and infrastructure sectors

New and expansion projects include setting up of a 7 MTPA

integrated steel plant in Chhattisgarh, 12 MTPA integrated steel plant

in Jharkhand and a 12.5 MTPA integrated steel plant in Orissa.

Achievements:

• 2014 - Company has commissioned the billet caster plant with

capacity of 6 MTPA at Angul with record time of 1 year

• 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.

• 2018 – Raised Rs 1,200 crore (US$ 186.19 million) through issue

of equity via QIP.

Visakhapatnam port traffic (million tonnes) Total steel production (million tonnes)

CAGR 4.35%

Source: Ministry of Steel, Company website (www.jindalsteelpower.com), Aranca Research

Source: E- Estimated, QIP – Qualified Institutional Placement

http://www.jindalsteelpower.com/


JINDAL STEEL AND POWER LTD: REAPING BENEFITS

OF PRUDENT INVESTMENTS … (2/3)

67

1

81

6

1,4

88

1,8

03

1,5

96

2,2

87

3,3

15

3,0

07

3,1

99

3,2

18

2,8

13

3,5

42

10

3

19

7 43

1

43

8

39

5 63

4

81

8

72

1 95

8

91

0

53

2 72

7

0

500

1000

1500

2000

2500

3000

3500

4000

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

Gross Revenue PBIDT

Financial growth (US$ million)

0.3 0.2

0.7

1.0

1.2

1.6

1.9

2.1

2.2

2.3

2.5

0.5

0.8

1.4

1.6

2.0

2.3

2.8

3.0

2.9

3.1

3.5

2.8

3.8

4.0

4.2

3.2

4.6

3.2

7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

Finished Steel Products Semi - Steel Products Pellets

Sale of steel (million tonnes)

Source: Company website (www.jindalsteelpower.com)

Note: Company clubs iron and steel segment ‘s performance; PBIDT (Profit Before Interest, Depreciation and Tax)

Steel

KEY INDUSTRY

ASSOCIATIONS


INDUSTRY ASSOCIATIONS

L-22/4, DLF Phase-II

Gurgaon, Haryana –122 002

Phone: 91-124-4375501

Fax: 91-124-4375509

E-mail: [email protected]

Indian Stainless Steel Development Association

Steel

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


EXCHANGE RATES

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year INR Equivalent of one US$

2004–05 44.95

2005–06 44.28

2006–07 45.29

2007–08 40.24

2008–09 45.91

2009–10 47.42

2010–11 45.58

2011–12 47.95

2012–13 54.45

2013–14 60.50

2014-15 61.15

2015-16 65.46

2016-17 67.09

2017-18 64.45

Year INR Equivalent of one US$

2005 44.11

2006 45.33

2007 41.29

2008 43.42

2009 48.35

2010 45.74

2011 46.67

2012 53.49

2013 58.63

2014 61.03

2015 64.15

2016 67.21

2017 65.12

Source: Reserve Bank of India, Average for the year


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