X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
World's most profitable steel maker is Indian - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 9, 2009

    World's most profitable steel maker is Indian

    It is now well known that India remained an oasis of calm amidst the unprecedented turbulence that hit the global financial system. It is also well known that when global giants in sectors such as auto and steel were struggling to keep their noses above water, their Indian counterparts were marching to a different beat. It is not a coincidence that most major auto players around the world are making a beeline to India.

    The Indian steel industry has also done far better than its global peers. As per a leading business daily, public sector steel giant, Steel Authority of India (SAIL) is the world's top profit making steel company in HCY09 ahead of names like ArcelorMittal, Posco, Bao Steel and Nippon. Of course, it helps that there is strong domestic demand. But in our opinion, one of the key reasons that SAIL is doing well is its much lower capacity. It terms of manufacturing capacity, it is only the world's 21st largest steel company. Little wonder then that it is going full throttle at a time when the capacity utilisation of the global giants is about 50% to 60%. A lower capacity means lower fixed costs. The company is now also an efficient player with favourable operational characteristics like energy consumption and blast furnace productivity. A rational manpower cost structure and a debt free balance sheet has also added to SAIL's profitability.

    While this is heartening news, it may be noted that SAIL is on a huge expansion drive currently. We hope it is able to retain some of its current operational and fiscal tidiness even when it is a much larger player.

    Little land for steel giants
    Speaking of the steel giants, many of them are keen to get into India. After all, besides being the world's second fastest growing economy, India is blessed with the raw materials that go into steel production. But they are finding the going rather difficult mainly due to land acquisition problems. Recently L N Mittal expressed his concerns over the inordinate delay in land acquisition. Posco has been waiting for years now to kick start its project.

    While the steel ministry plans to boost India's steel capacity from the present 55 m tonnes to 124 m tonnes by next year, it has little control over land which is a state subject. It may be noted that most of the new projects are slated to come in the mineral rich belt of Jharkand, Orissa, Chhattisgarh and Bengal. These states also happen to have strong tribal bases and are facing difficulties in the form of political agitation and Naxalism.

    Clearly, a speedier process of acquiring land now holds the key to India's ambition of becoming a major steel producer. No doubt, land cannot be snatched and owners must receive proper compensation but one cannot ignore the economic and employment benefits that the steel industry will generate for some of India's poorest regions.

     

     

    Equitymaster requests your view! Post a comment on "World's most profitable steel maker is Indian". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why Shopping Online This Festive Season Makes Better Sense (Outside View)

    Aug 24, 2017

    Online shopping if done sensibly can help you save money and carries many other advantages.

    Mr Trump Has Been Broken (Vivek Kaul's Diary)

    Aug 24, 2017

    Kelly, Mattis, McMaster, Cohn, and Mnuchin are in charge. But these Pentagon bureaucrats and Wall Street hustlers may be worse than a loose-cannon president.

    Were You Lured By Mr Market's Bait? (The 5 Minute Wrapup)

    Aug 23, 2017

    Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?

    Deep State First (Vivek Kaul's Diary)

    Aug 23, 2017

    Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 24, 2017 01:11 PM

    MARKET STATS