India has become the second largest producer of crude steel during 2018, improving upon its third largest global ranking in the year 2017. The country is also the largest producer of sponge iron or Direct reduced iron (DRI) in the world and the third largest finished steel consumer in the world after China and USA. 2018 was the “Year of Consolidation” for the Indian steel industry. The industry structure has undergone an overhaul with NPA resolution developments under Insolvency & Bankruptcy Code (IBC). Sandeep Sharma takes a look at the Steel sector in India.... FACTS AND FIGURES During the month of April 2019, crude steel production registered a growth of 0.1% over April 2018. India produced 10.72 MT finished steel in April, 2019 thereby witnessing an increase of 2.8% over April 2018. During April 2019, India’s finished steel consumption increased by 6.4% over corresponding period of the previous year. During April, 2019, the consumption and production of finished steel grew at different rates. The consumption was higher by 3.6 percent points. For FY 2018-19, the crude steel production of India stood at 106.56 million tonnes (MT) and increased by 3.3% on a year-on-year basis. According to the rating agency India Ratings, the steel production would be significantly affected if the auction of the mines completing 50 years of operations are not conducted soon.The licences of about 288 merchant mines are due to expire by March 2020. The majority of these iron ore mines are located in state of Karnataka & Odisha with around 85 million tonne (MT) of approved annual capacity. Around 60 MT of the actual production of iron ore from these mines are at stake. GROWTH TREND As per the Government of India April 2019 report, the crude steel production has shown a mixed trend and has remained nearly flat till February 2019. It recorded an increase in March 2019 while in April 2019, it declined. The steel consumption has shown an upward trend since November, 2018 till March 2019 thereafter, it declined. According to the World Steel Association, the demand for Indian steel is projected to grow by 7.3% in 2019 against 1.4% expected growth in the global steel demand. The growth trend in steel consumption in India will continue, due to strong manufacturing sector, diversified demand demographics, accelerated expenditure on infrastructure, anticipated increase in GDP and strong focus on ‘Make in India’. The Government has budgeted to spend Rs. 6 lakh crore on infrastructure in this financial year. The per capita consumption of Steel is likely to increase from the current levels. IMPORT AND EXPORT POSITION Import of total finished steel was at 0.586 MT in April 2019 down by 2.2% over April 2018. At 0.398 MT, export of total finished steel was down by 30.5% in April 2019 over April 2018. India remains as a net importer of the steel during April 2019. Imports of finished steel have shown a mixed trend during the period January to April, 2019. Imports decreased from January to February, 2019; increase from February to March, 2019 and thereafter, decreased from March to April, 2019. The import of Finished Steel during March 2019 was 0.705 million tonne which was an increase of 46% when compared to March, 2018 and an increase of 21% when compared to February 2019. The long products section which includes Bars and Rods (35 thousand tonnes) and Railway Materials (24 thousand tonnes) have registered huge imports.Similarly, imports for flat products is dominated by HR Coils (195 thousand tonnes), CR Sheets/Coils (56 thousand tonnes), GP/GC (71 thousand tonnes) and Electrical Sheets (63 thousand tonnes). GLOBAL INSIGHTS As per the Indian Steel Association’s April 2019 report, the global steel demand in the year 2018 increased by 2.1 growing slightly slower than in 2017. In the year 2019 and 2020 the growth is still expected, but in a less favourable economic environment. China’s deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions suggest a possible moderation in business confidence and investment. Steel demand in the emerging economies excluding China is expected to grow by 2.9% and 4.6% in 2019 and 2020 respectively. Steel demand in developing Asia excluding China is expected to grow by 6.5% and 6.4% in 2019 and 2020 respectively, making it the fastest growing region in the global steel industry. In the ASEAN region, infrastructure development is likely to support demand for steel. INDUSTRY UPDATES NMDC IRON ORE OUTPUT ROSE BY 20 PER CENT IN APRIL 2019 National Mineral Development Corporation (NMDC) has reported in a BSE filing that its iron ore output rose by 20% to 2.90 MT in April 2019 against 2.41 MT in the corresponding month of the previous year. The company produced 2.21 MT iron ore from its mines in Chhattisgarh, while its production from Karnataka mines stood at 0.69 MT. The company sold 2.70 MT of iron ore in April 2019 against 2.22 MT in April 2018. NMDC, the largest producer of iron ore in the country, had earlier surpassed the 30 million tonnes figure of production and sales for the year 2018-19 for the third consecutive year. NMDC has produced 32.44 MT and reported sales of 32.38 MT iron ore during FY-19. As per media reports, the company is in the process of investing about USD 1 billion on infrastructure in the next three years to help ramp up iron ore production. RINL TARGETS RS.25000 CR TURNOVER Rashtriya Ispat Nigam Ltd (RINL) has achieved Rs.20,844-crore turnover in 2018-19, is now targeting a turnover of ₹25,000 crore in the new financial year. JSL REPORTS RS 32 CRORE PROFIT IN Q4 Jindal Stainless Ltd (JSL) has recently reported a Rs.32-crore net profit for the fourth quarter of FY19. This was a 71.9 per cent fall from the Rs.114.7- crore net profit for the same quarter of FY18. Total income rose 2.41 per cent to Rs.3,260.1 crore. JSW STEEL BIDS FOR ASIAN COLOUR Sajjan Jindal-promoted JSW Steel is making attempt to acquire the debt-ridden Asian Colour Coated Ispat Ltd. In this regard, the steel major has revised its bid by Rs.300 crore to Rs.1,500 crore. Once the bid is approved by the lenders and letter of intent provided, the resolution plan will be placed before the National Company Law Tribunal (NCLT) for final approval. SHAKAMBARI ACQUIRES SPS STEELS Shakambhari Ispat and Power Ltd has got the approval from the Kolkata bench of National Company Law Tribunal (NCLT), has completed the process of acquisition, and taken over control of SPS Steels Rolling Mills. SPS Steels are the makers of Elegant Steel and TMT bars, has an installed capacity of close to 1.8 lakh tonne per annum. The company has paid Rs. 270 crore to the financial and operational creditors as per the approved resolution plan. SAIL POSTED NET PROFIT OF RS. 2178 CR Steel Authority of India Ltd (SAIL) has clocked a Net Profit (Profit After Tax) of Rs. 2178.82 Crore in FY 2018-19 (FY’19) as against a net loss of Rs 481.71 Crore in FY 2017-18. Anil Kumar Chaudhary, Chairman, SAIL, dedicated the turnaround to organisational synergy and team work. He said, “The entire SAIL Collective worked in mission mode to achieve this turnaround. Together we have done it and it has strengthened our resolve to perform better in coming times. We all are committed to put SAIL into a higher orbit of performance. The performance during the last year gives us confidence to aim higher and we shall put in even greater efforts to ramp-up production from our sophisticated mills while focussing on augmenting production of special & valued added steels and niche products.” TATA STEEL VOLUMES GROWS BY 33 PER CENT IN FY2018-19 Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonne per annum (MTPA). It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. In 2018, Tata Steel acquired Bhushan Steel Ltd (now renamed as Tata Steel BSL Ltd). While commenting on the performance of Tata Steel in the FY2018-19 and the future growth through the company press release, T V Narendran, CEO & Managing Director, Tata Steel has said,“Tata Steel continues to grow its footprint in India in terms of volumes, downstream capability and product portfolio. Our strategy of focusing on operational excellence, strong customer relationships, superior distribution network and brands is paying rich dividends. Despite subdued steel markets and weak growth in our key customer segments, this year our volumes in India grew by over 33% leading to a significant improvement in our overall profitability and cashflows. The proposed merger of Tata Steel BSL with Tata Steel will accelerate operational synergies and simplify our corporate structure. Our 5 MTPA Kalinganagar Phase II expansion will help us to further consolidate our presence in India and strengthen our financial performance. We are excited about the recently completed acquisition of the 1 MTPA steel business of Usha Martin which is an important milestone in our plans to grow our long products business. We continue to work closely with the European Commission on seeking approvals for our planned European steel JV with thyssenKrupp.” JSPL BAGS ORDER FROM RVNL Jindal Steel & Power Ltd (JSPL) has won an order from Rail Vikas Nigam Ltd (RVNL), to supply 89,042 tonnes of rails for its upcoming projects. The order is valued at approximately Rs.665 crore. MOIL REGISTERS RS. 1440 CR TURNOVER MOIL Ltd, the largest producer of manganese ore in the country and a Mini Ratna Schedule-A CPSE under the administrative control of the Ministry of Steel, has achieved the highest-ever turnover of Rs. 1440 crore (unaudited and provisional) during financial year 2018-19, registering a growth of 9% over the previous year. MOIL is also giving special focus thrust on expansion and modernization of its mines to sustain production levels and attain capacity enhancement. Projects of sinking of second vertical shaft at Chikla mine and shaft deepening at Kandri and Balaghat mines have been completed during the year. These will enable the Company sustain enhanced level of production from these mines. Its projects of shaft sinking at Ukwa and Munsar mines and high speed shafts at Balaghat and Gumgaon mines are progressing as per schedule. COMPETITIVE EDGE The Government is taking various measures to promote the growth of domestic steel sector in India. Indian Steel Industry has overcome several challenges in the past few years. The availability of high-grade iron ore and non-coking coal gives up production from our sophisticated mills while focussing on augmenting production of special & valued added steels and niche products.” TATA STEEL VOLUMES GROWS BY 33 PER CENT IN FY2018-19 Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonne per annum (MTPA). It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. In 2018, Tata Steel acquired Bhushan Steel Ltd (now renamed as Tata Steel BSL Ltd). While commenting on the performance of Tata Steel in the FY2018-19 and the future growth through the company press release, T V Narendran, CEO & Managing Director, Tata Steel has said,“Tata Steel continues to grow its footprint in India in terms of volumes, downstream capability and product portfolio. Our strategy of focusing on operational excellence, strong customer relationships, superior distribution network and brands is paying rich dividends. Despite subdued steel markets and weak growth in our key customer segments, this year our volumes in India grew by over 33% leading to a significant improvement in our overall profitability and cashflows. The proposed merger of Tata Steel BSL with Tata Steel will accelerate operational synergies and simplify our corporate structure. Our 5 MTPA Kalinganagar Phase II expansion will help us to further consolidate our presence in India and strengthen our financial performance. We are excited about the recently completed acquisition of the 1 MTPA steel business of Usha Martin which is an important milestone in our plans to grow our long products business. We continue to work closely with the European Commission on seeking approvals for our planned European steel JV with thyssenKrupp.” JSPL BAGS ORDER FROM RVNL Jindal Steel & Power Ltd (JSPL) has won an order from Rail Vikas Nigam Ltd (RVNL), to supply 89,042 tonnes of rails for its upcoming projects. The order is valued at approximately Rs.665 crore. MOIL REGISTERS RS. 1440 CR TURNOVER MOIL Ltd, the largest producer of manganese ore in the country and a Mini Ratna Schedule-A CPSE under the administrative control of the Ministry of Steel, has achieved the highest-ever turnover of Rs. 1440 crore (unaudited and provisional) during financial year 2018-19, registering a growth of 9% over the previous year. MOIL is also giving special focus thrust on expansion and modernization of its mines to sustain production levels and attain capacity enhancement. Projects of sinking of second vertical shaft at Chikla mine and shaft deepening at Kandri and Balaghat mines have been completed during the year. These will enable the Company sustain enhanced level of production from these mines. Its projects of shaft sinking at Ukwa and Munsar mines and high speed shafts at Balaghat and Gumgaon mines are progressing as per schedule. COMPETITIVE EDGE The Government is taking various measures to promote the growth of domestic steel sector in India. Indian Steel Industry has overcome several challenges in the past few years. The availability of high-grade iron ore and non-coking coal gives up production from our sophisticated mills while focussing on augmenting production of special & valued added steels and niche products.” TATA STEEL VOLUMES GROWS BY 33 PER CENT IN FY2018-19 Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonne per annum (MTPA). It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. In 2018, Tata Steel acquired Bhushan Steel Ltd (now renamed as Tata Steel BSL Ltd). While commenting on the performance of Tata Steel in the FY2018-19 and the future growth through the company press release, T V Narendran, CEO & Managing Director, Tata Steel has said,“Tata Steel continues to grow its footprint in India in terms of volumes, downstream capability and product portfolio. Our strategy of focusing on operational excellence, strong customer relationships, superior distribution network and brands is paying rich dividends. Despite subdued steel markets and weak growth in our key customer segments, this year our volumes in India grew by over 33% leading to a significant improvement in our overall profitability and cashflows. The proposed merger of Tata Steel BSL with Tata Steel will accelerate operational synergies and simplify our corporate structure. Our 5 MTPA Kalinganagar Phase II expansion will help us to further consolidate our presence in India and strengthen our financial performance. We are excited about the recently completed acquisition of the 1 MTPA steel business of Usha Martin which is an important milestone in our plans to grow our long products business. We continue to work closely with the European Commission on seeking approvals for our planned European steel JV with thyssenKrupp.” JSPL BAGS ORDER FROM RVNL Jindal Steel & Power Ltd (JSPL) has won an order from Rail Vikas Nigam Ltd (RVNL), to supply 89,042 tonnes of rails for its upcoming projects. The order is valued at approximately Rs.665 crore. MOIL REGISTERS RS. 1440 CR TURNOVER MOIL Ltd, the largest producer of manganese ore in the country and a Mini Ratna Schedule-A CPSE under the administrative control of the Ministry of Steel, has achieved the highest-ever turnover of Rs. 1440 crore (unaudited and provisional) during financial year 2018-19, registering a growth of 9% over the previous year. MOIL is also giving special focus thrust on expansion and modernization of its mines to sustain production levels and attain capacity enhancement. Projects of sinking of second vertical shaft at Chikla mine and shaft deepening at Kandri and Balaghat mines have been completed during the year. These will enable the Company sustain enhanced level of production from these mines. Its projects of shaft sinking at Ukwa and Munsar mines and high speed shafts at Balaghat and Gumgaon mines are progressing as per schedule. COMPETITIVE EDGE The Government is taking various measures to promote the growth of domestic steel sector in India. Indian Steel Industry has overcome several challenges in the past few years. The availability of high-grade iron ore and non-coking coal gives the competitive edge to the country as far as steel production is concerned. The other advantage lies in the presence of a vast and rapidly growing domestic market for steel, strong MSME sector and a relatively young workforce with competitive labour costs. CONDUCIVE ENVIRONMENT Ministry of Steel has stopped classifying steel producers as integrated steel producers, primary steel producers, secondary steel producers. This would ensure level playing field for all kinds of steel producers. Once the steel product is certified by the Bureau of Indian Standard and meets the desired specifications, no distinction shall be made on account of the basic input material and the process followed. 53 quality control orders have been issued in this regard laying down the quality standards for several steel products. The Government departments are directed to avoid any restrictive practices in their tenders. Abhyuday Jindal, Managing Director, Jindal Stainless Ltd, in a BSE filing had recently said, “We are now looking forward to an intervention by the Indian Government to create a level playing field for Indian manufacturers. The industry needs Government support to compete with rampant dumping by FTA and other countries. To the double disadvantage of Indian manufacturers, the domestic stainless steel industry is faced with the challenge of inverted import duty structure. While imports of finished goods from FTA countries are duty-free, Indian producers have to pay a 2.5% import duty on stainless steel scrap and ferro-nickel, the two most important raw materials, both of which are unavailable in the country. Further, in the absence of an effective safeguard duty structure, all trade remedial measures imposed by the Government are being circumvented through dumped, subsidized, or re-routed imports. We need active government support to bring alive the Make in India vision and create more jobs for the domestic economy.” NATIONAL STEEL POLICY The National Steel Policy 2017 envisages a steel production capacity of 300 million tonnes and per capita steel consumption of 160 kg by 2030. The steel policy has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31. The Government has also announced a policy for providing preference to domestically manufactured Iron & Steel products in Government procurement. The Government is working on an Action Plan to ensure smooth implementation of the National Steel Policy. The Policy for Preference to Domestically Manufactured Iron & Steel Products (DMI&SP), aims to boost the steel industry growth. The Government is playing the role of a facilitator which lays down the policy guidelines and establishes the institutional mechanism/structure for creating a conducive environment for improving efficiency and performance of the steel sector in India. FUTURE OUTLOOK As per India Ratings and Research (Ind-Ra) report released in January 2019, the research agency has maintained a stable outlook on the steel sector for FY20 in view of robust domestic steel demand, moderate imports and calibrated supply increases, which will aid in sustenance of healthy margins over FY20. FY20 will be the second consecutive year of increasing domestic demand surpassing new supplies in the domestic market. However, in FY20, increased risks on moderating global demand, including that of China, and tightening of global monetary environment would have a negative bias on the domestic prices, despite favourable domestic demand-supply balance. The sector underwent consolidation and steel producers improved their balance sheets in FY 2018-19, supported by healthy cash flow from operations and progressive debt repayments. Moreover, steel producers are in a better position to spend towards capex and stressed asset acquisitions, which may lead to increased debt and refinancing requirements. Ind-Ra notes that the risks on raw materials’ availability and prices could also increase as some of the captive and merchant mines would go for auction over FY20 with their licenses expiring by March 2020.
FACTS AND FIGURES During the month of April 2019, crude steel production registered a growth of 0.1% over April 2018. India produced 10.72 MT finished steel in April, 2019 thereby witnessing an increase of 2.8% over April 2018. During April 2019, India’s finished steel consumption increased by 6.4% over corresponding period of the previous year. During April, 2019, the consumption and production of finished steel grew at different rates. The consumption was higher by 3.6 percent points. For FY 2018-19, the crude steel production of India stood at 106.56 million tonnes (MT) and increased by 3.3% on a year-on-year basis. According to the rating agency India Ratings, the steel production would be significantly affected if the auction of the mines completing 50 years of operations are not conducted soon.The licences of about 288 merchant mines are due to expire by March 2020. The majority of these iron ore mines are located in state of Karnataka & Odisha with around 85 million tonne (MT) of approved annual capacity. Around 60 MT of the actual production of iron ore from these mines are at stake.
GROWTH TREND As per the Government of India April 2019 report, the crude steel production has shown a mixed trend and has remained nearly flat till February 2019. It recorded an increase in March 2019 while in April 2019, it declined. The steel consumption has shown an upward trend since November, 2018 till March 2019 thereafter, it declined. According to the World Steel Association, the demand for Indian steel is projected to grow by 7.3% in 2019 against 1.4% expected growth in the global steel demand. The growth trend in steel consumption in India will continue, due to strong manufacturing sector, diversified demand demographics, accelerated expenditure on infrastructure, anticipated increase in GDP and strong focus on ‘Make in India’. The Government has budgeted to spend Rs. 6 lakh crore on infrastructure in this financial year. The per capita consumption of Steel is likely to increase from the current levels.
IMPORT AND EXPORT POSITION Import of total finished steel was at 0.586 MT in April 2019 down by 2.2% over April 2018. At 0.398 MT, export of total finished steel was down by 30.5% in April 2019 over April 2018. India remains as a net importer of the steel during April 2019. Imports of finished steel have shown a mixed trend during the period January to April, 2019. Imports decreased from January to February, 2019; increase from February to March, 2019 and thereafter, decreased from March to April, 2019. The import of Finished Steel during March 2019 was 0.705 million tonne which was an increase of 46% when compared to March, 2018 and an increase of 21% when compared to February 2019. The long products section which includes Bars and Rods (35 thousand tonnes) and Railway Materials (24 thousand tonnes) have registered huge imports.Similarly, imports for flat products is dominated by HR Coils (195 thousand tonnes), CR Sheets/Coils (56 thousand tonnes), GP/GC (71 thousand tonnes) and Electrical Sheets (63 thousand tonnes).
GLOBAL INSIGHTS As per the Indian Steel Association’s April 2019 report, the global steel demand in the year 2018 increased by 2.1 growing slightly slower than in 2017. In the year 2019 and 2020 the growth is still expected, but in a less favourable economic environment. China’s deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions suggest a possible moderation in business confidence and investment. Steel demand in the emerging economies excluding China is expected to grow by 2.9% and 4.6% in 2019 and 2020 respectively. Steel demand in developing Asia excluding China is expected to grow by 6.5% and 6.4% in 2019 and 2020 respectively, making it the fastest growing region in the global steel industry. In the ASEAN region, infrastructure development is likely to support demand for steel.
INDUSTRY UPDATES NMDC IRON ORE OUTPUT ROSE BY 20 PER CENT IN APRIL 2019 National Mineral Development Corporation (NMDC) has reported in a BSE filing that its iron ore output rose by 20% to 2.90 MT in April 2019 against 2.41 MT in the corresponding month of the previous year. The company produced 2.21 MT iron ore from its mines in Chhattisgarh, while its production from Karnataka mines stood at 0.69 MT. The company sold 2.70 MT of iron ore in April 2019 against 2.22 MT in April 2018. NMDC, the largest producer of iron ore in the country, had earlier surpassed the 30 million tonnes figure of production and sales for the year 2018-19 for the third consecutive year. NMDC has produced 32.44 MT and reported sales of 32.38 MT iron ore during FY-19. As per media reports, the company is in the process of investing about USD 1 billion on infrastructure in the next three years to help ramp up iron ore production.
RINL TARGETS RS.25000 CR TURNOVER Rashtriya Ispat Nigam Ltd (RINL) has achieved Rs.20,844-crore turnover in 2018-19, is now targeting a turnover of ₹25,000 crore in the new financial year.
JSL REPORTS RS 32 CRORE PROFIT IN Q4 Jindal Stainless Ltd (JSL) has recently reported a Rs.32-crore net profit for the fourth quarter of FY19. This was a 71.9 per cent fall from the Rs.114.7- crore net profit for the same quarter of FY18. Total income rose 2.41 per cent to Rs.3,260.1 crore.
JSW STEEL BIDS FOR ASIAN COLOUR Sajjan Jindal-promoted JSW Steel is making attempt to acquire the debt-ridden Asian Colour Coated Ispat Ltd. In this regard, the steel major has revised its bid by Rs.300 crore to Rs.1,500 crore. Once the bid is approved by the lenders and letter of intent provided, the resolution plan will be placed before the National Company Law Tribunal (NCLT) for final approval.
SHAKAMBARI ACQUIRES SPS STEELS Shakambhari Ispat and Power Ltd has got the approval from the Kolkata bench of National Company Law Tribunal (NCLT), has completed the process of acquisition, and taken over control of SPS Steels Rolling Mills. SPS Steels are the makers of Elegant Steel and TMT bars, has an installed capacity of close to 1.8 lakh tonne per annum. The company has paid Rs. 270 crore to the financial and operational creditors as per the approved resolution plan.
SAIL POSTED NET PROFIT OF RS. 2178 CR Steel Authority of India Ltd (SAIL) has clocked a Net Profit (Profit After Tax) of Rs. 2178.82 Crore in FY 2018-19 (FY’19) as against a net loss of Rs 481.71 Crore in FY 2017-18. Anil Kumar Chaudhary, Chairman, SAIL, dedicated the turnaround to organisational synergy and team work. He said, “The entire SAIL Collective worked in mission mode to achieve this turnaround. Together we have done it and it has strengthened our resolve to perform better in coming times. We all are committed to put SAIL into a higher orbit of performance. The performance during the last year gives us confidence to aim higher and we shall put in even greater efforts to ramp-up production from our sophisticated mills while focussing on augmenting production of special & valued added steels and niche products.”
TATA STEEL VOLUMES GROWS BY 33 PER CENT IN FY2018-19 Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonne per annum (MTPA). It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. In 2018, Tata Steel acquired Bhushan Steel Ltd (now renamed as Tata Steel BSL Ltd). While commenting on the performance of Tata Steel in the FY2018-19 and the future growth through the company press release, T V Narendran, CEO & Managing Director, Tata Steel has said,“Tata Steel continues to grow its footprint in India in terms of volumes, downstream capability and product portfolio. Our strategy of focusing on operational excellence, strong customer relationships, superior distribution network and brands is paying rich dividends. Despite subdued steel markets and weak growth in our key customer segments, this year our volumes in India grew by over 33% leading to a significant improvement in our overall profitability and cashflows. The proposed merger of Tata Steel BSL with Tata Steel will accelerate operational synergies and simplify our corporate structure. Our 5 MTPA Kalinganagar Phase II expansion will help us to further consolidate our presence in India and strengthen our financial performance. We are excited about the recently completed acquisition of the 1 MTPA steel business of Usha Martin which is an important milestone in our plans to grow our long products business. We continue to work closely with the European Commission on seeking approvals for our planned European steel JV with thyssenKrupp.”
JSPL BAGS ORDER FROM RVNL Jindal Steel & Power Ltd (JSPL) has won an order from Rail Vikas Nigam Ltd (RVNL), to supply 89,042 tonnes of rails for its upcoming projects. The order is valued at approximately Rs.665 crore.
MOIL REGISTERS RS. 1440 CR TURNOVER MOIL Ltd, the largest producer of manganese ore in the country and a Mini Ratna Schedule-A CPSE under the administrative control of the Ministry of Steel, has achieved the highest-ever turnover of Rs. 1440 crore (unaudited and provisional) during financial year 2018-19, registering a growth of 9% over the previous year. MOIL is also giving special focus thrust on expansion and modernization of its mines to sustain production levels and attain capacity enhancement. Projects of sinking of second vertical shaft at Chikla mine and shaft deepening at Kandri and Balaghat mines have been completed during the year. These will enable the Company sustain enhanced level of production from these mines. Its projects of shaft sinking at Ukwa and Munsar mines and high speed shafts at Balaghat and Gumgaon mines are progressing as per schedule.
COMPETITIVE EDGE The Government is taking various measures to promote the growth of domestic steel sector in India. Indian Steel Industry has overcome several challenges in the past few years. The availability of high-grade iron ore and non-coking coal gives up production from our sophisticated mills while focussing on augmenting production of special & valued added steels and niche products.”
TATA STEEL VOLUMES GROWS BY 33 PER CENT IN FY2018-19
Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonne per annum (MTPA). It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. In 2018, Tata Steel acquired Bhushan Steel Ltd (now renamed as Tata Steel BSL Ltd). While commenting on the performance of Tata Steel in the FY2018-19 and the future growth through the company press release, T V Narendran, CEO & Managing Director, Tata Steel has said,“Tata Steel continues to grow its footprint in India in terms of volumes, downstream capability and product portfolio. Our strategy of focusing on operational excellence, strong customer relationships, superior distribution network and brands is paying rich dividends. Despite subdued steel markets and weak growth in our key customer segments, this year our volumes in India grew by over 33% leading to a significant improvement in our overall profitability and cashflows. The proposed merger of Tata Steel BSL with Tata Steel will accelerate operational synergies and simplify our corporate structure. Our 5 MTPA Kalinganagar Phase II expansion will help us to further consolidate our presence in India and strengthen our financial performance. We are excited about the recently completed acquisition of the 1 MTPA steel business of Usha Martin which is an important milestone in our plans to grow our long products business. We continue to work closely with the European Commission on seeking approvals for our planned European steel JV with thyssenKrupp.”
COMPETITIVE EDGE The Government is taking various measures to promote the growth of domestic steel sector in India. Indian Steel Industry has overcome several challenges in the past few years. The availability of high-grade iron ore and non-coking coal gives the competitive edge to the country as far as steel production is concerned. The other advantage lies in the presence of a vast and rapidly growing domestic market for steel, strong MSME sector and a relatively young workforce with competitive labour costs.
CONDUCIVE ENVIRONMENT Ministry of Steel has stopped classifying steel producers as integrated steel producers, primary steel producers, secondary steel producers. This would ensure level playing field for all kinds of steel producers. Once the steel product is certified by the Bureau of Indian Standard and meets the desired specifications, no distinction shall be made on account of the basic input material and the process followed. 53 quality control orders have been issued in this regard laying down the quality standards for several steel products. The Government departments are directed to avoid any restrictive practices in their tenders.
Abhyuday Jindal, Managing Director, Jindal Stainless Ltd, in a BSE filing had recently said, “We are now looking forward to an intervention by the Indian Government to create a level playing field for Indian manufacturers. The industry needs Government support to compete with rampant dumping by FTA and other countries. To the double disadvantage of Indian manufacturers, the domestic stainless steel industry is faced with the challenge of inverted import duty structure. While imports of finished goods from FTA countries are duty-free, Indian producers have to pay a 2.5% import duty on stainless steel scrap and ferro-nickel, the two most important raw materials, both of which are unavailable in the country. Further, in the absence of an effective safeguard duty structure, all trade remedial measures imposed by the Government are being circumvented through dumped, subsidized, or re-routed imports. We need active government support to bring alive the Make in India vision and create more jobs for the domestic economy.”
NATIONAL STEEL POLICY The National Steel Policy 2017 envisages a steel production capacity of 300 million tonnes and per capita steel consumption of 160 kg by 2030. The steel policy has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31. The Government has also announced a policy for providing preference to domestically manufactured Iron & Steel products in Government procurement. The Government is working on an Action Plan to ensure smooth implementation of the National Steel Policy.
The Policy for Preference to Domestically Manufactured Iron & Steel Products (DMI&SP), aims to boost the steel industry growth. The Government is playing the role of a facilitator which lays down the policy guidelines and establishes the institutional mechanism/structure for creating a conducive environment for improving efficiency and performance of the steel sector in India.
FUTURE OUTLOOK As per India Ratings and Research (Ind-Ra) report released in January 2019, the research agency has maintained a stable outlook on the steel sector for FY20 in view of robust domestic steel demand, moderate imports and calibrated supply increases, which will aid in sustenance of healthy margins over FY20. FY20 will be the second consecutive year of increasing domestic demand surpassing new supplies in the domestic market. However, in FY20, increased risks on moderating global demand, including that of China, and tightening of global monetary environment would have a negative bias on the domestic prices, despite favourable domestic demand-supply balance. The sector underwent consolidation and steel producers improved their balance sheets in FY 2018-19, supported by healthy cash flow from operations and progressive debt repayments. Moreover, steel producers are in a better position to spend towards capex and stressed asset acquisitions, which may lead to increased debt and refinancing requirements. Ind-Ra notes that the risks on raw materials’ availability and prices could also increase as some of the captive and merchant mines would go for auction over FY20 with their licenses expiring by March 2020.