Editorial – April 2018

Indian economy has witnessed two tremors in the last one or two years. One was demonetization and the other was introduction of GST, Goods & Services Tax. While demonetization was intended to nullify the fake currency and to curb cash economy, GST’s purpose was to bring the whole nation under one tax regime, avoid double taxation and collect the tax at the point of sale. The thought behind these two moves was said to be making Indian economy more straight and more attractive for overseas investment. While one can debate the extent of fulfillment of these objectives, it is really creditable on the part of Indian economy which successfully withstood these tremors. Its growth rate for the fiscal 2017-18 was around 6.5 % and it is predicted by the international agencies that Indian economy will grow by around 7.5 % in the fiscal 2018-19.

We all know that the steel consumption is directly related to GDP growth rate and thus the consumption grew decently in 2017-18. Now if Indian economy speeds up in coming months, the consumption curve is also going to shoot. Infrastructure and construction are the two foremost important consumers of steel and they seem to be doing well. Another important customer is auto industry. It is undoubtedly doing well for the past few quarters. All these factors do make us believe that Indian iron & steel industry will be doing better, quarter after quarter. The raider in this thought process  is that the steel consumption is sure to grow, If Indian producers are unable to take advantage of this situation for their own (financial or management related)  reasons, then the country may turn into a long term importer of steel.

Here, we should differentiate between the large integrated steel business houses and medium scale steel plants. The financial and ownership restructuring problems are faced by these large business houses while the medium scale plants are in a perfect position to exploit this situation. This is evident from the reactions of steel veterans from Chhattisgarh published in this issue. In the past few years, Chhattisgarh has become the biggest steel producing state in the country and Raipur has emerged as the ‘New Steel Capital’ of India.



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!



Editorial – February 2018

Today, Indian steel industry is on crossroads. A lot of opportunities are emerging and at the same time, it is surrounded by numerous problems.

Last few quarters have seen a steady increase in steel demand, thanks to mega infra projects being implemented by the central as well as many state governments. A sustained increase in steel demand can transform the industry sentiment and encourages steel business houses to plan for the future, think of capacity expansion and so on. It also improves the bottomline and influences the price curve in a positive way. Presently, most of the commodities in the iron & steel process chain have somewhat regained the comfort in pricing which can ensure smooth running of the enterprise and expect some growth in the future. The customer industries like infrastructure, automobile are putting up impressive growth figures and this will surely translate into higher steel demand in coming months. Recently presented union budget for the fiscal 2018-19, apart from its provisions for the farming sector, emphasizes on infrastructure development in the form of railways, airports, sea ports, metro projects etc. which certainly promises bright future for steel industry. It also estimates that Indian economy will grow by 7.2 to 7.5 % in this fiscal. I am sure if the economy really grows with this rate, all the industries including ours will tremendously gain. It can attract huge capital not only from India but from every corner of the world.

Many big steel companies have heavy debt burden and unfortunately are not in the position to exploit the full advantage of the present industry situation. In fact this financial situation has initiated restructuring process in the industry and few private steel plant promoters face a threat of being out of job. We all know that this is a very complicated process involving plant and financial valuation, brand value estimation and so many other parameters. My point here is that the enterprise is loosing a great opportunity of recovering its financial position. Can the government and our ministry do something about it?

To say so, the future seems bright but the journey is corrugated. Let’s see how the things unfold !

Editorial Steelworld 2018

Since last few years, MENA region has been identified as one of the fast growing economies of the world. This growth story started around turn of the century and had a smooth run till 2008 global economic meltdown. Many economies in the developed world suffered a big jolt and since the economies of many countries in MENA region are closely associated with western world, they also felt huge tremors. Infrastructure creation was at the core of this economic growth and due to crunch in liquidity, many infra projectes were halted. The steel demand suddenly dived down and many enterprises associated with this industry witnessed a huge setback, few had to even down their shutters. Many jobs were lost.

All of us know that the collapses are sudden where as the growth is always gradual. The region also started gaining back the lost ground. Slowly the infra projects re started and the steel demand started recovering. Oil price crash happened around 3 years back and it had a similar impact on infra projects and steel demand. Now the oil prices are somewhat better which has improved liquidity situation to some extent. Naturally, the steel industry and the economy in general are on recovery path.

Another factor which has been impacting the economic activity is political instability. The region has been unfortunate on this count and few countries in MENA are going through political instability which is adversely affecting the economy and the industry.

In spite of all these ups and downs, MENA region still offers great opportunities for steel business houses around the globe. It consumes substantial quantity of steel mainly for its infrastructure development needs. Thus steel raw material suppliers have a sustained interest in this region. Further, the region consumes far more than its production capacity and imports the rest. The main suppliers to this region are China, Turkey, CIS countries etc. Till now there was no import barrier to GCC countries but now the governments of few countries are in the process of imposing import duties to protect the domestic industry and to keep the price balance intact. On the other hand, new steel projects are being conceived and implemented to bridge the gap between the consumption and the production.

Overall, I feel that MENA region offers a tremendous opportunity for iron & steel industry and I look forward to a vibrant, growing and sustainable industry in coming time !

Editorial December 2017

The efforts for finding the alternate fuel are going on for last many years. If we look back, last 40 years saw a steady rise in the consumption of fossil fuels like oil, coal. The oil deposits in the Middle East region changed the fortune of many countries in that region. The infrastructure growth happened in this region was possible only because of the earnings through the oil trade. Today also, many such projects are being funded in a similar way.

Last few years, there has been an exhaustive brainstorming and research by scientific community over the issue of alternative sources of energy. A lot of breakthrough technologies were developed in the areas of solar and nuclear energy, which are supposed to be green energy sources. They do not emit poisonous gases like in the case of a thermal power plant or a oil refinery.

These developments may seem far away from iron and steel industry but it is far from the truth. Our industry will be directly impacted by these developments. Firstly, the global oil demend may not rise in coming years. Infact it may reduce a bit. This situation may depress the oil prices or atleast prevent any rise. This will have an adverse effect on liquidity of many countries and will not only slow down the economic wheel but also slow down the pace of infrastructure development in many regions. This will obviously reduce the steel demand. Secondly, when electric vehicles become popular and affordable, their steel requirement may come down drastically. The body may be made by composite material and today’s complicated engine using numerous steel components may be replaced by a simpler version.

These are my thoughts on what may happen on a long term basis and not in near future. Nobody can exactly predict the future but can imagine visualize certain situations. One has to take these thoughts in that spirit !


Editorial November 2017

Special Steels’ forms an intricate but still very important sub segment of iron & steel sector. We all know that steel is an alloy of iron and carbon. Apart from its normal properties, specific applications need additions of materials like chromium, silicon, nickel, etc. to impart specific properties to steel. These special steels are used in many engineering machines but the most prominent application being in auto sector. Almost all critical parts and also many other parts inside an automobile are made of special steel components. Even the body is made of steels which have higher impact resistance. Apart from auto sector, the other customer industries include engineering, power sector, aerospace etc. Now defence sector is also opening up and offering many opportunities for special steels and their components.

Naturally, the fortune of special steels sector largely depends on the auto industry. As we have been witnessing for the last few years, this important customer industry has been going through a transition. There is added emphasis on light weight, aerodynamic model and fuel efficiency. These factors have changed their steel requirement, qualitatively as well as quantitatively. Few engine parts, which were earlier made of steel, are now being made of aluminium and its alloys. This is for the sake of reducing the weight of the vehicle. Also, many body parts are being made of composites to reduce the vehicle weight and also the cost.

The special steel producers are also responding positively to these changes. A new family of micro alloyed steels has been introduced by many producers. These steel require very less alloying additions and also eliminate the need of heat treatment thus reducing the cost. A great research is being carried out on a global level to produce light weight steels suitable for auto and similar applications.

Evolution of new technologies and processes like 3D printing and electric vehicles is likely to change not only the perception but the whole structure of this sector. There are various possibilities being discussed and debated right now but now this is certain. Manufacturing sector in general and auto sector in particular will be undergoing a sea change in coming years and this will have a great impact on the fortune of special steels producing industry.

Editorial October 2017

Ministry of Steel (Govt of India) has set an ambitious target of steel industry to enhance the capacity to 300 MTPY by 2030 from the present capacity of around 130 MTPY. There is a countrywide debate on this and many experts feel that this is unrealistic figure. On the other hand, there are many who support such optimism and feel that if the national economy continues to grow with substantial speed, this target is well within reach. Instead of taking any side, I would like to put forward few observations.


First of all, I would rather use the word ‘Projection’ or ‘Estimation’ instead of ‘Target’. We all know that steel is an input for a lot of industries. The basic objective of steel industry is to provide sufficient steel to other industry sectors in a sustainable manner at a reasonable price. Thus the steel demand does not lie within steel industry but depends on the requirement from other industries like infra, auto, engineering etc. Thus, rather than having its own target, steel industry should estimate the steel requirement from customer industries and and try to fulfill it.


Of all the industries, steel is one of the highest employer industries. It requires both unskilled as well as skilled, technically qualified manpower and even metallurgy experts. I do agree that the manpower requirement can substantially reduce due to automation and modern manufacturing processes but still there is no substitute for metallurgists. Today our country produces only few thousand metallurgists per year. Many engineering colleges prefer dropping the metallurgy stream or merge it with Material Science stream. Further, very few metallurgical engineers get excited by the idea of working in dirty environment of a steel plant and many of them change their career path. Many also prefer overseas research option over a job in a steel plant. Thus today it is very difficult to find a qualified metallurgist to run the plant. If we expect India to reach to a level of 300 MTPY by 2030, we have to see that those many metallurgists are produced in the country to run this industry.


Building of a steel plant is a huge and complicated project. It requires expertise from all engineering streams and there are specialized organizations that design and commission such projects. India today has only handful of such companies. Building an additional steel making capacity of around 170 MT in 13 years would require many more such project execution companies.


To produce one ton of steel, three tons of raw materials are required to move. Thus to produce 300 MT, we have to move 900 MT plus 300 MT of finished steel. One can imagine the kind of infrastructure (roads, rail and even sea route) required for this exercise.


The final and the most critical point is finance. Today many of the Indian steel companies are so much burdened with debt that financial institutions are scared to lend them further finance. Thus even if there is an opportunity, the present management of private steel companies is not in a position to expand for lack of support from financial institutions.


Thus its going to be a uphill task to reach to 300 MTPY level but this process would certainly help the industry to be more productive, competitive and sustainable on a long term basis.