The Indian steel industry started in 1907, and at the time of independence there were only three steel plants producing about 1.1 million metric tonnes (MT) of steel. With a view to accelerating the growth of steel sector, the Government of India in the industrial policy of July 1991 opened the iron & steel industry for private investment. With that, the steel industry now has grown approximately to 39 MT of capacity (FY06). The industry has not just grown in terms of size but today it also manufactures a wide variety of steel products that can be termed as world class.
Depending upon the demand from the end user industries and availability of raw materials, the new players have accordingly chosen the technology and in general have preferred to have presence in the value added products segment. Though companies are engaged in manufacturing basic long and flat products, with the expected shift in demand towards more value added product, they are making an attempt to improve their product mix.
The oldest among the lot are SAIL and Tata Steel, the integrated players that manufacture basic long and flat products and with the shift in demand are moving onto higher value added products. The new players, as mentioned earlier, prefer to enter value added segment using EAF (Electric Arc Furnace) technology on account of the strong shift in demand and difficulties in procuring stable long-term raw material supplies.
Let us now have a look at profiles of major steel producing companies in India, the process adopted by them and also their product mix to better understand the dynamics of the Indian steel industry.
SAIL: SAIL is India's largest integrated producer of Iron and Steel and accounts for nearly 26% of domestic finished steel production. It is also the 11th largest steel producer in the world. The company uses blast furnace/blast oxygen furnace (BOF) route to manufacture steel. The company is the largest player in the flat products and second largest player in the long products segment. The company manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels.
Tata Steel: Tata Steel is Asia's first and India's largest integrated private sector steel company. The company produces steel using BOF route and has installed capacity of nearly 5 MTPA. It is one of the least cost producers of Hot Rolled coils in the world. The company offers a diverse range of products and services. The company operates in flat and long products but the main products are value added products like hot rolled coils and sheets, plates, bars, structurals, etc. In an attempt to 'decommoditise' steel, the company has recently introduced brands like Tata Steelium (India's first branded cold rolled steel), Tata Shaktee (galvanised corrugated sheets), Tata Tiscon (re-rolled bars), Tata pipes, Tata bearings, Tata Wiron (galvanised wire products) and Tata Agrico (hand tools and implements).
Rashtriya Ispat Nigam Ltd (RINL): RINL, a PSU also known as Vishakhapatnam Ltd, manufactures steel using BOF route. The company has an integrated steel plant and produces long products. The company's product mix consists of bars, rods, booms, billets, pig iron, granulated slag, etc.
Essar Steel: The company (Essar Steel) is the largest integrated steel producer on the Western Coast of India and the second largest private sector steel producer in India. The company has full control over the entire process of manufacture-from iron ore to ready-to-market products. The company uses Electric arc furnace (EAF) route to manufacture steel and uses sponge iron as the major raw material. It operates in Hot Rolled flat products with a capacity of 3.4 MTPA. The company is India's largest exporter of flat products, selling nearly 33% of production to the highly demanding European and US markets, and to the growing markets of South East Asia and the Middle East
JSW Steel Ltd: The Company (JSW Steel Ltd) has a fully integrated steel plant with units spread across Karnataka and Maharashtra. The only flat steel producer in the southern region uses Corex technology to manufacture steel. The company's product mix consists of upstream products (mild steel hot rolled coils, plates and sheets) and downstream (Cold rolled and galvanised sheets and coils) products. JSW Steel Limited's downstream exports constitute more than 33% of India's total exports of galvanised products. The exports contribute to 75% of production to over 45 countries.
Ispat Industries ltd: Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector producer of hot rolled coils in India with an installed capacity of 3 MTPA. The company produces hot rolled coils, cold rolled coils, galvanised sheets/coils and colour-coated sheets. It uses sponge iron EAF route to making steel. The company is one of the major exporters of cold rolled products.
The product profile of steel companies may vary depending upon the markets they serve but it indicates that the demand for value added products is increasing and is expected to rise even further as end user industries like automobiles and white goods make further inroads into the Indian market. This is one of the reasons that companies like Tata Steel (one amongst the least cost producer) is increasingly looking at de-integration strategy, manufacturing primary metal in low cost countries and acquiring assets abroad, the ones that would give it ready access to technology for sophisticated high value add products.