SUBMITTED TO:
Prof. Arindam Banik
SUBMITTED BY: -
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Introduction
The India steel industry is one of the major industries in India and the
Indian government plays a very important role in the development of the
steel industry in India.
The India steel industry is experiencing a slow but steady growth. The
steel industry in India has huge scopes in the future with massive scale
of infrastructural development happening all across the country. The
India steel industry caters to many other industrial sectors such as
construction industry, mining industry, transportation industry,
automobile industry, engineering industry, chemical industry, etc.
The India steel industry has further plans of development. Plans are
being chalked out for setting up of 3 pig iron manufacturing units of a
combined capacity of 6 lakh tons per year and a steel manufacturing unit
of the capacity of producing 1 million tons yearly in West Bengal, with
the technical and financial support of China. With all these
developments, India steel industry is all set to become one of the most
reputed industries not only in India but also in the international market.
The different steel manufacturing plants under the India steel industry:
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Subsidiaries
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Statistics
(Rs. in Crore)
1998-99 1999-00 2000-01
Company
Sales Net Profit Sales Net Profit Sales Net Profit
Explosives - - - - - -
I D L Inds 143.3 7.7 151.9 5.1 170.6 -14.3
Indo Gulf Expl 41.8 -3.1 - - - -
Noble Explochem 24.4 1.0 - - - -
Premier Explos 34.2 -2.0 - - - -
Metal - Ferrous - - - - - -
Hoganas India 27.6 2.8 29.7 3.1 - -
Kanthal India 14.4 -0.9 - - - -
Ispat Alloys 143.3 0.1 - - - -
Sponge Iron - - - - - -
Ispat Inds 1286.7 25.1 1326.6 4.4 1292.2 3.7
Tata Sponge 82.0 5.2 106.4 9.4 112.9 8.5
Nova Iron & Steel
Steel - - - - - -
Essar Steel 2262.9 -496.5 2421.8 -581.2 2426.4a -164.0a
Jindal Vijaynagar 537.6 -29.0 - - 1160.6 -49.6
Malvika Steel 773.1 11.6 - - - -
Sunflag Iron 347.1 -4.3 415.8 7.8 369.2 10.3
Tata Steel 5584.6 157.0 6044.0 422.6 6838.6 816.0
SAIL 13203.5 7573.7 16722.9 -1134.5 14572.6 -728.7
Ballary Steel 455.9 19.1 - - 196.4a -24.0a
Bhuwalka Steel 253.0 1.5 - - - -
Gandhi Special 21.9 4.0 26.4 4.4 21.9 3.4
Jindal Iron 1007.5 10.8 1083.0 8.7 1536.6 -96.5
Kalyani Steels 197.6 8.2 89.1 -8.6 125.5 -13.7
Tata Yodogawa 67.1 5.4 87.3 4.7 - -
Special Steel - - - - - -
Mukand 595.2 -46.8 844.8 5.9 265.6 32.2
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Aggregate Investment in Individual Companies under Steel in India
(1998-1999 to 2005-2006)
(Rs. in Lakh)
Share
Paid-Up
Company/Year Loan Application Total
Capital
Money
2005-06
Ferro Scrap Nigam Limited 200 0 0 200
Indian Iron & Steel Co. Limited 0 0 0 0
Maharashtra Elektrosmelt Limited 2400 206 0 2606
Mishra Dhatu Nigam Limited 13734 0 0 13734
Rashtriya Ispat Nigam Limited 782732 0 0 782732
Sponge Iron India Limited 6510 0 0 6510
Steel Authority of India Limited 413040 388126 0 801166
Sub Total 1218616 388332 0 1606948
2004-05
Ferro Scrap Nigam Limited 200 0 0 200
Indian Iron & Steel Co. Limited 38766 20561 0 59327
Maharashtra Elektrosmelt Limited 2400 796 0 3196
Mishra Dhatu Nigam Limited 13734 34 0 13768
Rashtriya Ispat Nigam Limited 782732 0 0 782732
Sponge Iron India Limited 6510 0 0 6510
Steel Authority of India Limited 413040 527398 0 940438
Sub Total 1257382 548789 0 1806171
2003-04
Ferro Scrap Nigam Limited 200 0 0 200
Indian Iron & Steel Co. Limited 38766 23846 0 62612
Maharashtra Elektrosmelt Limited 2400 3477 0 5877
Mishra Dhatu Nigam Limited 13734 194 0 13928
Rashtriya Ispat Nigam Limited 782732 0 0 782732
Sponge Iron India Limited 6510 0 0 6510
Steel Authority of India Limited 413040 709097 0 1122137
Sub Total 1257382 736614 0 1993996
2002-03
Ferro Scrap Nigam Limited 200 0 0 200
Indian Iron & Steel Co. Limited 38766 8718 0 47484
Maharashtra Electrosmelt Limited 2400 2224 0 4624
Mishra Dhatu Nigam Limited 13734 239 0 13973
Rashtriya Ispat Nigam Limited 782732 57484 0 840216
Sponge Iron India Limited 6510 350 0 6860
Steel Authority of India Limited 413040 980244 0 1393284
Sub Total 1257382 1049259 0 2306641
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Production Of Iron –Ore In India
Year Production
1997-98 1880
1998-99 1771
1999-2000 2670
2000-01 2664
2001-02 2770
35.0
(1997-98 to 2001-02)
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Year Production
1997-98 1588
1998-99 1132
1999-2000 1600
2000-01 1417
2001-02 1375
Analysis
Structural Weaknesses of Indian Steel Industry
Outlook
The outlook for Indian steel industry is very bright. India's lower wages
and favourable energy prices will continue to promise substantial cost
advantages compared to production facilities in (Western) Europe or the
US. It is also expected that steel industry will undergo a process of
consolidation since industry players are engaged in an unfettered rush
for scale. This is evident from the recent acquisition of Corus by Tata.
The deployment of modern production systems is also enabling Indian
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steel companies to improve the quality of their steel products and thus
enhance their export prospects.
Concentration Ratio
Concentration ratios depend upon technical factor, conduct and
performance variables. The firm’s profit is the net result of two forces: -
higher efficiency (conduct variable) and greater market power (structural
variable). But leading firms may still collude to avoid reductions in their
profitability that arises from competition. In such a case, collusion would
have little or no impact on profitability of the leading firm and might even
have a negative impact. A firm that moves from being a monopolist to
being a duopolist or an oligopolist is no longer able to enjoy monopolist
profits. Although collusion might result in joint profit maximization but it
might not increase the profitability of the leading firm.
Value of Herfindahl index for Indian Steel Industry is 2470. It implies that
the competition in the steel industry is medium to high and high
concentration.
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INTERDEPENCENCE
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The data above clearly suggests an interdependence between the public
and private sector undertakings, though there is a strong possibility that
the private sector overtakes the public sector due to technical inductions
and use of superior technology. The public sector though has the
benefits of volume and thus returns to scale.
Abnormal profits are very unlikely in the industry, due to the structure of
the industry, i.e. an open market being existent, fast entry being virtually
impossible because of the massive capital investment required and
availability of resources like huge chunks of land which is imperative for
setup. These can also termed as the barriers to entry and thus also
safeguard the profit margins of the dominant players.
The pricing structure in the industry suggests that there are no price
leaders in the market, the same is demonstrated by the fact that the
difference of prices range in the minimum of 2% and a maximum of 4%.
CONCLUSION
In conclusion we can say that the Indian Steel industry reflects
Oligopolistic nature, the same being demonstrated by
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may involve working out new revenue predictions, and revaluing
stock of finished goods. A tedious task considering the size of the
market and the industry on the whole.
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ACKNOWLEDGEMENT
The guidance and support received from all the team members who
contributed to this project, was vital for its successful completion.
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TABLE OF CONTENTS
Acknowledgement
Introduction
Statistics
Analysis
Concentration Ratio
Interdependence
Conclusion
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