STEEL

For updated information, please visit www.ibef.org July 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 4.70 per cent during FY1216, with
countrys steel production reaching to 90.98 million tonnes per annum (MTPA) in FY16.

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 121.97 million tonnes (MT) in FY16, which is 11 per cent more than
FY15, while in the coming ten years the country is anticipated to produce 300 MT of steel

Indias 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. In 2015, 4 MOUs were signed at
Steel production in India is forecast to double
Dantewada
by 2031, with growth rate expected to go
above 10 per cent in FY18 Ministry of Steel plans to set up Steel
Research and Technology Mission in India
to promote R&D activities in the sector

ADVANTAGE
INDIA
As of 2017, India is the worlds 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.org

 Steel

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.org

 STRUCTURE 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
Semis Non-flat carbon Rail steel
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.org

 STEEL PRODUCTION IN INDIA HAS BEEN GROWING
AT A FAST PACE

In FY17 (1), crude steel production in India was 72.35 MT, with the Total crude steel production (million tonnes)
total crude steel production growing at a CAGR of 4.90 per cent over
the last 5 years and reached 89.79 MT in FY16. 100

The steel sector contribute over 2 per cent to the GDP of the nation 80 17.21 17.92
16.48 16.77
and provides 20 lakh jobs in the country 16.48 13.63

71.87
71.77
60 16.99

64.92
61.94

58.72
57.81
53.68
During April-January 2017, crude steel production in India grew by 7 40
per cent YoY and stood at 39.98 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 from 88.4

Total finished steel production (million tonnes)
million tonnes (MT) in 2017 to 128.6 MT by 2021, accelerating the
countrys share of global steel production from 5.4 per cent in 2017 100
to 7.7 per cent by 2021. 13.44 12.83 12.97
80
12.82
12.52

79.34
10.74

78.00
74.24
60 13.25

68.86

63.22
63.18
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.org

 SHARES IN PRODUCTION: SAIL AND TATA LEAD THE
WAY

Total proposed crude steel capacity during 2016-172 by the private Indias crude steel market share by production FY171
investors is expected to rise by 76.8 MT

As of FY17(1), SAIL dominated Indias steel sector, with the

company accounting for 11.47 per cent of countrys finished steel 14.80%
SAIL
production and 14.8 per cent of countrys crude steel production..
During FY17(1), Tata Steel accounted for 10.84 per cent of finished 11.72% TATA
steel production and 11.72 per cent of the countrys crude steel
RINIL
production 4.04%
OTHERS
In January 2017, Indian government inaugurated Universal Rail Mill
69.45%
(URM) worth US$ 178.49 million at SAILs Bhilai steel plant. The
production of the worlds longest single rail of 130 meters from the
new URM also commenced in the new mill
Indias 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 2017; (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.org

 GROWTH 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 200716(E), the sectors 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.org

 DEMAND HAS OUTPACED SUPPLY OVER THE LAST
FIVE YEARS

Total real consumption of steel is estimated at 61.54 MT in April- Real consumption of steel (in million tonnes)
December 2017..

Driven by rising infrastructure development and growing demand for 90 CAGR 1.87%
automotives, steel consumption is expected to reach 104 MT by
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

61.54
Real consumption of steel during

59.3
FY171
was estimated at 61.54 MT.
The consumption of real steel has grew at a CAGR of 1.87 per cent 50

52.4
52.1
during FY08-FY171
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.org

 TRENDS IN IMPORTS AND EXPORTS OF STEEL

Total consumption of finished steel grew by 3.4 per cent year-on- Steel exports and imports (in million tonnes)
year at 6.015 MT during April 2017.
14.0
In order to reduce imports and boost domestic steel manufacturing
industry, the Central Government extended the minimum import
price (MIP) on 19 products, till February 4, 2017. These products 12.0
include semi-finished products of iron or non-alloyed steel, flat-rolled 11.7
products of different widths, bars and rods 10.0

According to DGFT, the minimum import price (MIP) for these 9.3
products would range between US$ 643-752 per tonne 8.0
8.2
7.9
In February 2016, Indian government imposed Minimum Import Price 7.4
(MIP) on 173 steel products 6.0
6.0
5.5 5.6
In FY 2016-17, the countrys steel exports has increased by 102.1 5.4
per cent year-on-year to 8.24 million tonnes (mt), as compared to 4.0 4.6
4.1
4.07 mt in 2015-16
2.0
In FY 2016-17, the countrys steel imports fell by 36.6 per cent year-
on-year to 7.42 million tonnes (mt), as compared to 11.7 mt in 2015-
0.9
16 0.0

FY12

FY13

FY14

FY15

FY16

FY17
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.org

 KEY 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.org

 KEY STEEL PLANTS IN INDIA

Steel integrated plants

under SAIL (Bhilai, Rourkela,
Bokaro, Durgapur and
Burnpur)

Tata Steels 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.org

 PORTERS 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
have their own mines to source key raw
materials
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.
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

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.org

 Steel

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 Russias 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.org

 NOTABLE 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

Increased emphasis on
technological innovations
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

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.org

 STRATEGIES 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

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.org

 STRATEGIES 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 Globals 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

Italys Marcegaglia ArcelorMittal have offered to buy Italys troubled Ilva steel plant, for an amount of US$ 2.4
billion and will boost production

In March 2017, Central Government permitted sale of SAILs 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.org

 Steel

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.org

 CAPITAL GOODS, CONSUMER DURABLES AND
AUTOMOTIVES FURTHER DRIVING STEEL GROWTH

Over FY0520F, 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 7.58.8 per cent over 201221

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 FY1017

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY20F
Over FY1421, 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.org

 POLICY 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.org

 POLICY 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 countrys 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.org

 STEEL 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.org

 THE 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 March 2017

Sector
Metallurgical industries US$ 10.33 billion
Per cent of total FDI inflow 3.11

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.org

 PLANNED 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.org

 Steel

OPPORTUNITIES
 OPPORTUNITIES (1/2)
Automotive
The automotives 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 2016, Indian automotive
sector is estimated to be 3rd
largest automotive market, by
volume
Source: Capex Capital Expenditure, P - Provisional
Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India
31 Steel
Capital goods
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 Indias capex is
expected to grow and generate
greater demand for steel
Infrastructure
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
For updated information, please visit www.ibef.org
Airports
More and more modern and
private airports are expected to
be set up
In 2016, passenger traffic at
Indian airport stood at 223.61
million and number of
operational airports stood at 95
in FY16
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
 OPPORTUNITIES (2/2)
Railways
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
Indian Railways started the
PPP mode of funding and has
already awarded projects
worth around US$ 1.73 billion
during the 1st 7 months (April-
October) of FY16
In January 2017, Crisil
estimated that the railways
sector could create business
opportunities worth US$ 99.65
billion
Source: Make In India, Ministry of Power, Aranca Research
32 Steel
Oil and gas
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
Power
The government targets
capacity addition of 100 GW
under the 13th Five-Year Plan
(201722)
Both generation and
transmission capacities would
be enhanced, thereby raising
steel demand from the sector
Conventional power capacity
addition of 23.98 GW has
registered to be the highest in
FY16
For updated information, please visit www.ibef.org
Rural India
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 60 kg,
which is lower in comparison
with the global average of 216
kg
 Steel

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 36.0%
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
sector.
New and expansion projects include setting up of a 7 MTPA 12.56
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 16 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.org

 JINDAL 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 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

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.org

 Steel

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.org

 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

39 Steel For updated information, please visit www.ibef.org

 EXCHANGE RATES

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

Year INR Equivalent of one US$ Year INR Equivalent of one US$

200405 44.81 2005 43.98

200506 44.14 2006 45.18

200607 45.14 2007 41.34
200708 40.27
2008 43.62
200809 46.14
2009 48.42
200910 47.42
2010 45.72
201011 45.62
2011 46.85
201112 46.88
2012 53.46
201213 54.31
2013 58.44
201314 60.28

2014-15 61.06 2014 61.03

2015-16 65.46 2015 64.15

2016-17E 66.95 2016E 67.22

Source: Reserve bank of India, Average for the year

40 Steel For updated information, please visit www.ibef.org

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41 Steel For updated information, please visit www.ibef.org