Editorial – March 2018

Indian iron & steel industry is going through a big transition. On one hand, the demand curve is going up suggesting that it is the right time to think about the capacity expansion, and on the other hand, Indian steel business houses are surrounded by financial crisis. Most of them have huge amount of debt on their head and are not able to service it. Banks and financial institutions have raised their hands and are not willing to give any debt restructuring package to these sick companies. They have rather opted to auction the assets of these companies and recover whatever they can. The common perception about these companies is not very positive and many believe that the promoters have themselves siphoned the money and made these companies sick !

Apart from this financial crisis and ownership restructuring, the industry seems to be doing well on operational front. As mentioned earlier, the steel demand is increasing steadily; thanks to infra projects like bridges, ports, airports, metros etc. and also to the decent performance of other user industries like automobile, transport, construction, engineering, consumer durables etc. The capacity utilization figures of various plants are also becoming better. The raw material crisis erupted few years back is now more or less resolved. The availability of iron ore and coal has sufficiently increased for the seamless metal production.

The other major issue facing the industry is non availability of technical manpower. Ministry of Steel (Govt of India) has announced a target for the capacity creation of 300 mtpa by 2031. This means an increase of around 170 mtpa capacity from the present level of 130 mtpa in just 13 to 14 years. Rather than commenting on whether this target is achievable or not, let us ask ourselves few questions. Do we have sufficient companies to build these steel plants? Does our education system produce those many metallurgists and other technical manpower to run an industry producing 300 mtpa? Is our raw material industry geared up to supply that much quantity to produce 300 mtpa of steel ? To produce a ton of steel, approximately three tons of raw materials have to be moved. Is our transport system geared up for the movement of 1200 mtpa (comprising of raw materials and finished steel)?

Irrespective of whether India achieves 300 mtpa steel making capacity building by 2031 or not, I strongly believe that Indian iron & steel sector has a bright future and we all have to start gearing up for that!

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s