Editorial September 2017

The Indian iron & steel sector seems to be in somewhat better shape now. Last few years were particularly challenging for everybody as demand seemed stagnated coupled with raw material crisis. Now, if you look at the quarterly reports of major steel companies, they have started increasing the production. Further, though most of them owe huge money to financial institutions, their position is comparatively better than the last year. Today atleast they can expect a gradual rise in the demand in coming months. The raw material crisis is also mostly resolved and the availability of iron ore, coal has improved substantially. Many experts prefer to describe such a situation ‘new normal’ instead of ‘recession’. No, its not only word play. What it means is that now one has to get used to such industry environment where making profits may not be as easy as it was before. One has to be really innovative and articulate to do so. This situation is not a temporary passing phase but a long term reality.

The world around us is changing very fast. Our industry too is feeling the heat and will be undergoing a tremendous transformation in coming years. This transformation is multi dimensional. The technologies like 3D printing are going to re – define the auto industry while technologies like robotics, cloud computing, virtual reality, augmented reality are going to completely change the way businesses are being done. I am very sure that many giants of today will face a tough time tomorrow and few of them will even perform a vanishing trick. New business models will emerge. We know today that the biggest taxi company in the world does not own a single vehicle. It was mobile companies which saw the downfall of music and camera companies. In today’s times, one should expect the most unexpected to happen.

Most of the Indian steel majors are under tremendous finance pressure and few of them are looking for buyers, invertors etc. Many companies want to expand the capacity and tap the additional demand expected to be generated but lack the support of financial institutions. Already, there is a talk of mergers and acquisitions. Looking at all this, I definitely see a big change just round the corner!

 

 

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