Tata steel and the global steel industry Essay

1.0.1 Introduction of Tata Steel:

The growing of an organisation is constantly determined non merely by its scheme, but on how rapidly it responds to the challenges it may meet. Over the decennaries, Tata Steel has successfully countered several challenges that have come its manner with advanced responses and uninterrupted betterment that have enabled it to stay stable and even change over some of these challenges into chances.

It is this civilization of endurance that has accorded Tata Steel the penetration and focal point to cover with the current economic environment. Pulling from its interior strength and attitude, Tata Steel responded by establishing several enterprises across all its operations in assorted geographicss that are assisting the Group to accomplish sustainable competitory border even in the current times. It is besides this really civilization that will impel Tata Steel to go on on its growing in the coming old ages.

Tata Steel, once known as TISCO and Tata Iron and Steel Company Limited, is the universe ‘s 6th largest steel company, with an one-year petroleum steel capacity of 31 million metric tons. Ranked 258th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. Harmonizing to an one-year study conducted by Brand Finance and The Economic Times in 2010, Tata steel is in the 8th most valuable trade name. Tata Steel is besides India ‘s 2nd largest private sector steel company in India in term of domestic production and 2nd most profitable company with amalgamate grosss of Rs 1,32,110 croreA and net net income of over Rs 12,350 crore during the twelvemonth ended March 31, 2008.

Its chief works is located in Jamshedpur, Jharkhand. The Jamshedpur works contains the DCS supplied by Honeywell and the registered office of Tata Steel is in Mumbai. World Steel Dynamics besides recognized the company as the universe ‘s best steel manufacturer in 2005.

Since so, Tata Steel has non limited its operations and concerns within India but has built an enforcing presence around the Earth every bit good. The Tata Steel Group believed that common benefit of states, corporations and communities is the most effectual path to growing. With the acquisition of Corus in 2007 taking to beginning of Tata Steel ‘s European operations, the Company today is the 10th largest steel manufacturer in the universe with employee strength of above 81,000 across five continents.

During the fiscal twelvemonth 2009-10, the Group recorded bringings of 24 million metric tons against 28 million metric tons in the old twelvemonth, the diminution being a contemplation of the planetary economic lag chiefly in the UK and European operations. The Group recorded a turnover of Rs.102, 393 Crores in 2009 – 2010. The Company has ever had important impact on the economic development in India and now seeks to beef up its place of pre-eminence in international sphere by go oning to take by illustration of duty and trust.

Then once more, Tata Steel ‘s abroad ventures and investings in planetary companies have helped the Company make a fabrication and selling web in Europe, South East Asia and the Pacific-rim states. The Group ‘s South East Asiatic operations comprise of Tata Steel Thailand, in which it has 67.1 % equity and Nat Steel Retentions, which is one of the largest steel manufacturers in the Asia Pacific with presence across seven states.

1.0.2 Global steel industry:

The biggest roar in history of steel industry is that of the 1950s and 1960s, when the post-War roar in the developed universe drove the steel industry. Now, the current roar is being led by the growing in the developing state such as China, India and Brazil. However, China has now become the engine that has driven steel ingestion in the Asiatic part.

The demand outlooks for steel merchandises are quickly turning for coming old ages. The portions of steel industries are besides in a high gait. The steel industry is basking its 6th back-to-back old ages of growing in supply and demand. Then, there is more amalgamation and acquisitions which overall maintained the industry and showed some good consequences.

The subprime crisis has lead to the recession in economic system of different states, which may take to hold a negative consequence on whole steel industry in forthcoming old ages. However, the steel production and ingestion will be supported by uninterrupted economic growing.

The petroleum steel production for 66 states describing to the World Steel Association was 1220 million metric metric tons for calendar twelvemonth 2009, lower by 8 % against that of 2008. Hit by the economic downswing, the bead in production was about in all steel bring forthing states excluding positive growing recorded in China, India and the Middle East. In most states including the developed steel markets of the EU, the U.S.A. , Japan, Brazil, CIS impairment in the economic system resulted in a crisp diminution of demand in cardinal steel utilizing sectors. Look at table appendix 1.0.1, page demoing the top 10 steel bring forthing states.

As a consequence of the strong growing in China in crisp contrast to the diminution in major parts of the Earth, Chinese companies are laterality at the list of the top 10 steel bring forthing companies during the twelvemonth 2009. Look at table appendix 1.0.2, page demoing the Chinese companies ruling the steel production.

1.0.3 India steel industry:

India has traditionally been one of the major manufacturers of steel in the universe. Till the 1990s the steel industry of India was regulated and controlled by authorities policies. Since its independency, India has experienced steadily growing in the steel industry ; the authoritiess have supported the industry and pushed its robust development. Further exemplifying this program is the fact that a figure of steel workss were established in India, with technological aid and investings by foreign states.

In 1991, the Indian authorities introduced a significant figure of economic reforms. One of the economic reforms allowed no licences to be required for capacity creative activity, except for some geographical countries. These reforms boosted the development procedure of a figure of steel industries in India.

Yet another reform for India ‘s steel industry came in 1992, when every type of control over the pricing and distribution system was removed, doing the modern Indian Steel Industry highly efficient, every bit good as competitory. Additionally, a figure of other authorities steps have stimulated the growing of the steel industry, coming in the signifier of an unrestricted external trade, low import responsibilities and an easy revenue enhancement construction.

Over the old ages, India continually posts phenomenal growing records in steel production. In 1992, India produced 14.33 million dozenss of finished C steels and 1.59 million dozenss of hog Fe. The entire ingestion of finished steel was 14.84 million tones in the twelvemonth 1992.

The state ‘s production of petroleum steel in 2005-06 stood at 42.1 million metric tons, reflecting an addition of 7.1 per cent over the old financial. On the other manus, the ingestion of steel during the twelvemonth was pegged at 41.43 million metric tons, a monolithic growing of 13.88 per cent when compared with the 2004-05 figures.

In 2008, India produced about 46.575 million dozenss of finished steels and 4.393 million dozenss of hog Fe. Look at graph appendix 1.0.3, page demoing the grounds of Indian steel production. Both primary and secondary manufacturers contributed their portion to this phenomenal development, while these additions have pushed up the demand for finished steel at a really stable rate. The entire sum of domestic steel ingestion was 43.925 million tones in the twelvemonth 2008. With the increased demand in the national market, a immense portion of the international market is besides served by this industry.

Powered by an increased demand for steel from neighboring China, which has been timing a 15 per cent sectorial growing yearly on history of building undertakings in readying for the Olympics. The steel industry in India is besides being competitory over the past two old ages and has grown about 10 per cent compared with the planetary growing rate of about 6 per cent a twelvemonth.

Finally, India has set it vision to go an economically developed state by 2020. The steel industry in India has a really high growing potency and is expected to play a major function in India ‘s economic development in the coming decennaries. On top, India is besides projected to emerge as a strong force in the planetary steel market in the hereafter.

2.0 Conducting strategic Position Analysis:

2.0.1: Application of Position Analysis to TATA Steel ( 1 ) : Porter 5 forces theoretical account

Backed by robust volumes every bit good as realisations, steel Industry has registered a phenomenal growing across the universe over the past few old ages. The state of affairs in the domestic industry was no exclusion. In fact, it enjoyed a double-digit growing rate backed by a robust turning economic system. However, the current fiscal crisis seems to hold created average term hiccoughs. Using Michael Porter ‘s five-force theoretical account, I will analyse the domestic steel sectors to understand the fight of the sector every bit good as pointed out the enterprises taken by Tata Steel to safeguard its place from all the five forces of menaces, viz. :

Menaces of new entrants.

Intensity of competition among bing rivals.

The bargaining power of providers.

The menace of replacement merchandises.

The bargaining power of purchasers.

& gt ; Entry barriers: High

In term of Capital Requirement: Tata Steel had made sufficient attempts to safeguard itself in this respect. Its has a batting order of Greenfield undertakings which it plans to set up non merely in domestic markets ( Jharkhand, Orissa & A ; Chhattisgarh but besides internationally ( Bangladesh, Iran & A ; Vietnam ) . Besides that, it has already completed its enlargement capacity of its bing works from 5 mtpa to 6.8 mtpa at Jamshedpur with an investing of Rs 5,000 crore, while it is in the procedure of spread outing the capacity from 6.8 mtpa to 10 mtpa with an estimated investing of Rs 15,000 crore. The company has invested Rs 8,000 crore out it and it expects to accomplish 10-mtpa capacities by 2011-12. It would turn out to be really hard for any new entrant to come up with such immense investing spendings.

In term of Economies of graduated table: Tata Steel being an integrated steel company has its ain mines for cardinal natural stuffs such as Fe ore and coal that protects them from possible menace of new entrants to a important extent. Tata Steel owns natural stuff assets such as coal and limestone mines through joint ventures or wholly, with the assets spread across states such as Australia, Oman and Mozambique.

In term of Government Policy: Tata Steel being a century old company under the flagship Tata Sons that is known for its Corporate Social Responsibility Look at table appendix 1.0.2, page sing their Corporate Governance already enjoys a respectable place in forepart of the Indian Government. The Jharkhand authorities on May 24th 2009 has granted a prospecting license ( PL ) to Tata Steel for the Ankua Fe ore mines. A senior company functionary said that Tata Steel has been allocated 1,800 hectares for prospecting in the Ankua country. Another 10,000 estates of land will be allocated to them for their undertaking in Ranchi.

In term of Product distinction: Tata Steel still enjoys a premium for their merchandises because of its quality and its trade name value created more than 100 old ages back. Tata Steel has introduced trade names like Tata Steelium ( the universe ‘s first branded Cold Rolled Steel ) , Tata Shaktee ( Galvanized Corrugated Sheets ) , Tata Tiscon ( re-bars ) , Tata Bearings, Tata Agrico ( manus tools and implements ) , Tata Wiron ( galvanized wire merchandises ) , Tata Pipes ( pipes for building ) and Tata Structura ( modern-day building stuff ) . Apart from these merchandise trade names, the company besides has in its creases a service trade name called “ steel junction ” .

& gt ; Competition: High

The steel industry is genuinely planetary in footings of competition with big bring forthing states like China significantly act uponing planetary monetary values through aggressive exports. The 4 major domestic challengers are SAIL, JSW, ISPAT and ESSAR STEEL, which the remainders are all smallish Millss which together histories for 30 % of the entire market portion.

Presently, two Global Steel big leagues viz. Arcelor- Mittal, which is the universe ‘s largest I and POSCO, are posed to be the biggest menace as they plan to come in the Indian Steel Industry really shortly. Look at table appendix 1.0.2, page analysis on Tata Steel Competitor.

Dickering power of providers: Low

The bargaining power of providers is low for to the full integrated steel workss as they have their ain mines of cardinal natural stuff like Fe ore coal for illustration Tata Steel. However, those who are non-integrated or semi integrated has to depend on their providers for illustration SAIL, which imports coking coal.

Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto supply about two-thirds of the processed Fe ore to steel Millss and command really high bargaining power. In India excessively, NMDC is a major provider to standalone and non-integrated steel Millss.

Since domestic natural stuff beginnings are deficient to provide the Indian steel industry, a considerable sum of natural stuffs has to be imported. For illustration, India ‘s difficult coal sedimentations have sufficient sum, low quality plus the monetary values of coking and non-coking coal are of all time increasing. For this ground, difficult coal imports have increased in the last five old ages by a sum of 40 % to about 30 million dozenss. Almost half of this is coking coal. The lifting end product of electric steel is besides taking to a crisp addition in demand for steel bit. Some 3.5 million dozenss of bit have already been imported in 2006, compared with merely 1 million dozenss in 2000.

In order to safeguard itself from the high bargaining power of the purchasers, Tata Steel has forayed much earlier into the scheme of ‘Backward Integration ‘ . Look at appendix 1.0.3, for more item sing this.

Menace of replacements: High

Plastics and complexs pose a menace to Indian steel in one of its biggest markets – automotive industry. For the car industry, the other stuff at present with the possible to upstage steel is aluminum. Possibly the most attractive option to chromium steel is aluminum. Stainless manufacturers themselves are offering their clients a scope of options in an attempt to forestall concern being lost to non-ferrous or C steel stuffs. Such options include lower-nickel duplex classs and ferritic types. In the interim, Ni ‘s fluctuations will go on to make jobs for the chromium steel industry worldwide.

At the present, Steel has already been replaced in some big volume applications: railroad slumberers ( RCC slumberers ) , big diameter H2O pipes ( RCC pipes ) , little diameter pipes ( PVC pipes ) , and domestic H2O armored combat vehicles ( PVC armored combat vehicles ) . The permutation is more prevailing in the industry of cars and consumer durable goodss.

Dickering power of Buyers: Assorted

Some of the major steel ingestion sectors like cars, oil & A ; gas, transportation, consumer durable goodss and power coevals enjoy high bargaining power and acquire favourable trades. However, little and retail consumers who are scattered and devour a important portion do non bask these benefits.

2.0.2: Application of Position Analysis to TATA Steel ( 2 ) : S.W.O.T Analysis

S.W.O.T analysis is done for an organisation, to bring out its overall Strengths, Weaknesses, Threats and Opportunities taking to mensurating their competitory border. The SWOT Analysis enables an organisation to follow schemes consequently and acknowledge its market standing.

Using this analysis, I will analyse their failing and menaces that Tata Steel is presently confronting. First, I will analyze internally what weaknesses that Tata Steel is confronting so after that I will analyze externally what are their Threats. Sing their Strength and Opportunities please look at table appendix 1.0.2, page analysis on Tata Steel Competitor.

Failing:

1. Steel production in India is besides hampered by power deficits.

2 Insufficient cargo capacity and conveyance substructure hindrances to halter the growing of Indian steel industry.

3. Natural stuffs for steel production are quickly depleting and are unrenewable ; organisation has to come up with sustainable methods in steel production.

4. India is lacking in natural stuffs required by the steel industry. Iron ore sedimentations are finite and there are jobs in mining sufficient sums of it.

5. Low Labour Productiveness:

In India, the advantages of inexpensive labor get offset by low labour productiveness ; e.g. , at comparable capacities labour productiveness of SAIL and TISCO are 75 t/manyear and 100 t/manyear, for POSCO, Korea and NIPPON, Japan the values are 1345 t/man twelvemonth and 980 t/manyear.

6. High Cost of Basic Inputs and Services:

High administered monetary value of indispensable inputs like electricity puts Indian steel industry at a disadvantage ; approximately 45 % of the input costs can be attributed to the administered costs of coal, fuel and electricity, e.g. cost of electricity is 3 cents in the USA as compared to 10 cents in India ; and freight cost from Jamshedpur to Mumbai is $ 50/tonne compared to merely $ 34 from Rotterdam to Mumbai.

7. Endemic Lacks:

These are built-in in the quality and handiness of some of the indispensable natural stuffs available in India, e.g. high ash content of autochthonal coking coal adversely impacting the productive efficiency of Fe devising and is by and large imported. Advantages of high Fe content of autochthonal ore are frequently neutralized by high basicity index. Besides, certain cardinal ingredients of steel devising, e.g. Ni, Ferro-molybdenum is besides unavailable indigenously.

Menace:

1. Menace of Substitutes: Plastics and Complexs.

2. High natural stuff input cost and scarceness of unrenewable natural stuffs are a menace to the industry. ( e.g. Coal, limestone etc. ) .

3. In the developed universe, industries have been confronting lifting environmental costs due to the increased concerns on Global Warming. It is, hence, a challenge and duty for the Steel industry to be the legal guardian in preservation of nature for future coevalss.

4. It is recognized that the steel and aluminium industries are important subscribers to semisynthetic nursery gas emanations as the industry of steel green goodss C dioxide ( CO2 ) , and the industry of primary aluminium generates both CO2 and per fluorocarbons ( PFCs ) .

2.0.3: Application of Position Analysis to TATA Steel ( 3 ) : P.E.S.T.E.L Analysis

Economic:

In the last 12 months, the fiscal market has been volatile triggered by the subprime mortgage crisis in the US. This has adversely affected the liquidness and the hazard perceptual experience of the international capital markets. Inflation has increased around the World boosted by chiefly addition in nutrient and energy monetary values. The existent effectual exchange rate for the US dollar has declined since mid-2007 as foreign investing in US bonds and equities has been dampened by decreased assurance in both the liquidness and the returns on such assets, weakening of US growing chances and involvement rate cuts. The chief opposite number to the diminution of the dollar has been grasp of the euro, the hankering, and other drifting currencies such as the Canadian dollar and some emerging economic system currencies.

The acquisition of Corus is being financed by a significant sum of debt. This puts force per unit area on Tata Steel and should the concern environment deteriorate, the necessity to serve this debt could keep Tata Steel in its hereafter investing and capacity enlargement programs.

Due To Subprime Crisis in USA a subsequent shudder all along the universe, particularly in developed market in Western Europe make the vulnerable place of Corus even more hazardous. UK, Germany and Netherlands the chief market for Corus merchandises are confronting the fright for recession on negative growing.

The steel industry is extremely cyclical, receptive to general economic conditions and reliant on the status of a figure of other industries, including the automotive, contraption, building and energy industries. If these industries experience a downswing, Tata Steel excessively would excessively take a hit, therefore negatively impacting it ‘s evaluation.

Corus follows the policy of come ining into long term supply contracts with natural stuffs sellers. Therefore there can be a immense clip spread between fluctuation in monetary values under purchase contracts and the clip when Corus can do a corresponding monetary value alteration under its gross revenues contacts with its consumers. Furthermore, Corus may non be able to go through on the increased natural stuffs costs to its clients. Such developments would take to a downside in our evaluation.

Steel production procedures are energy dependent and monetary value motions in the energy market would consequently impact Tata Steel ‘s bottom line.

Tata Steel became 6th biggest Steel Producer in the World after geting Corus, but the cost of the integrating goes much more beyond the fiscal facet. There are other factors that will add to overall integrating costs such as:

Cross Cultural Integration.

Employer-Employee Relationship.

Political:

Tata committed a immense sum of investing in politically unstable state like Bangladesh, Iran, Mozambique and Thailand. The full procedure of puting up program is acquiring delayed in inquiry of gas supply ( in Bangladesh ) ; Iron ore mine rental in Iran is intensifying the Undertaking cost.

Increased substructure disbursement by the Government of India and development of roads could bring forth important nest eggs in cargo and transit cost, doing Indian steel companies and other industries globally competitory.

Impact of Liberalization: The economic reforms initiated by the authorities in 1991 have added new dimensions to the industrial growing in general, and steel industry in peculiar. Some of the of import characteristics due to liberalisation are:

Licensing demand for capacity creative activity has been abolished.

Steel industry has been removed from the list of industries reserved for the province sector.

Automatic blessing granted for foreign equity investing in steel has been increased up to 74 % .

Monetary value and distribution controls were removed from January 1992.

Restrictions on external trade, both in import and export, have been removed.

Import duty reduced from 105 % in 1992/93, to 30 % in 1996-97.

Other policy steps like convertibility of rupee on trade history, permission to mobilise resources from abroad fiscal markets, and rationalisation of bing revenue enhancement construction.

The Government plays a cardinal function in the economic sciences of TATA Steel. It has a function as a resource distributor ( the excavation policies of the Government ) , as Competitor ( the populace sector steel companies ) and as Regulator. In volatile times the regulative hazard rises with steps like decrease in import responsibilities, levy of export responsibilities and backdown of DEPB benefits, menaces of monetary value kerbs etc. Tata Steel counters this hazard by being a role-model corporate citizen and playing an of import function in lending to the Nation edifice. Tata Steel is the 2nd largest steel manufacturer in footings of Geographical spread of its installations.

Sociable:

Tata Steel Ltd has been awarded the Golden Peacock Global Award for Corporate Social Responsibility ( CSR ) for the twelvemonth 2009. The award looks for continual committedness by concern to ethical behaviour, to economic development and to bettering the quality of life of employees and their households, every bit good as to engagement with local communities and society at big. Look at table appendix 1.0.2, page analysis on Tata Steel Competitor.

Legal:

Tata steel requires immense ball of land. Sudden fling of large corporate houses for catching land makes the state of affairs even more competitory. Look at table appendix 1.0.2, page analysis on Tata Steel Competitor.

2.0.3: Application of Position Analysis to TATA Steel ( 4 ) : Boston Matrix

3.0 Tata Steel Major Issues and challenges after carry oning

place analysis:

Muthuraman identified three of them — foremost, to run a really tight ship for one or two old ages, conserves hard currency and do certain we have adequate hard currency for our hereafter programs and growing and so on. Second, reconstituting or re-engineering our European operations so that they become globally competitory in the following two or three old ages. Third, to supply natural stuff security in footings of Fe ore ownership and coal mine ownership to our European operations. ”

An even bigger challenge, Muthuraman says, will be running a big transnational, multi-cultural company that Tata Steel has now become — a wholly different ball game from what Muthuraman faced in 2001, when he took the reins of a majorly Jamshedpur-based company. As the adult male who scripted the largest foreign acquisition by an Indian company with the return over of Corus, Muthuraman has set aggressive marks for that globally competitory border.

Having put European operations in form, what mills at that place now sorely need is protection from the freakish behavior of mining giants. As a sort of bequest of over a century old Jamshedpur steel factory which will hold its capacity raised to 10 million metric tons during this fiscal twelvemonth, it has good natural stuffs endorsing, peculiarly Fe ore, chromites and manganese ore. The factory, calculating among the universe ‘s least cost steelworkers, will go progressively valuable with creative activity of coated and packaging merchandises in the downstream in conformance with the group policy to steadily increase the portion of value added points in its merchandise portfolio.

In the interim, natural stuffs have become such a major concern that all Tata Steel greenfield ventures like the six-million-tonnes undertaking in Orissa in two stages will be conditional upon acquiring entree to adequate Fe ore sedimentations. The authorities should see to it that whether it is confined or merchandiser excavation, all such operations are to be on big graduated table to ease usage of best engineerings and environment protection.

Volume came to Tata Steel in one spell with Corus acquisition. Challenges thenceforth are in incorporating cardinal maps across the group and seamless knowledge exchange among Millss. Such integrating happened good earlier with ArcelorMittal. Tata Steel informs that every bit many as 17 public presentation betterment squads covering countries like doing of Fe and steel and level and long turn overing with work forces drawn from across the group are doing important part to fabricating betterments in multiple locations.

Traveling frontward, what are the chief concern challenges that Tata Steel will hold to get by with to stay at the top?

Both in India and in the remainder of the universe, the full steel industry is traveling to confront the challenge of pulling and retaining the needed endowment. I am intentionally stating necessity and non the best endowment. It is going progressively hard for the fabrication industry to pull endowment as opposed to other industries that can afford to pay better and make non name for every bit much difficult work. I am slightly saddened to see that many of today ‘s applied scientists and technocrats pass up the professional challenges that the fabrication industry offers in favor of purportedly glamourous desk occupations affecting small professional challenge.

The other cardinal challenge that Tata Steel is traveling to face is in the country of fabrication and excavation engineering, particularly in relation to issues such as preservation of resources and safeguarding the environment. Geting clasp of equal resources of Fe ore and coal both in the immediate term and long term is another factor that will hold important bearing on our future place.

What about challenges in countries such as invention and human resources?

Invention surely remains a focus country for us. Invention has been one of the trademarks of Tata Steel but this has mostly remained restricted to fabrication and excavation, with a focal point on cost decrease. For some clip now, we have been rehearsing invention in customer-facing countries, such as merchandise development and selling. We will necessitate to escalate these attempts. The acquisition of Corus will surely assist us in this country.

In your position, what will be the form of the Indian steel industry in five old ages, in footings of size, competition, foreign participants, etc? Where do you anticipate Tata Steel to be within this matrix?

Cardinal accomplishments

Record production of steel –

more than five million metric tons

Record production of cold

turn overing factory

New ferrochrome works doubles capacity

PAT of more than Rs4,000 crore

New challenges

Retaining endowment

Accessing natural stuff – Fe ore and coal

Bettering client centricity

Developing environment-friendly technologiesTata Steel has been and will stay on top in India and I can state this with some strong belief. Taking into history the restraints in the system both at the policy degree every bit good as on the land, I do non see much alteration in the competitory landscape in India in the following five old ages. My position is that unless the authorities takes extremist steps to advance the steel industry, growing in demand for steel will go on to surpass supply and India will go on to confront short supply of steel for a long clip to come.

Sing Tata Steel ‘s strengths and the action plans that we have put in topographic point, I am non peculiarly worried about intensified competition, whether within India or outside. India has the possible to excel China, provided the substructure is strengthened and proper and crystalline policies are followed that will promote the steel industry.

What is the biggest menace that Tata Steel faces as it seeks farther growing and enlargement? And what about domestic and planetary competition?

While I remain bullish about the growing of the planetary economic system, a possible slow down could be a serious menace to the steel industry as a whole. My fright is non that it will impact the steel industry in the short tally ; the bigger menace is that it will cut down investings in upstream industries like Fe ore and coal, which will hold a more permanent negative impact on the industry, like it did during the old downswing. The steel industry is even now staggering under its effects. Competition is something that all of us have to larn to populate with. Our challenge is to alter or better at a faster rate than the others.

Traveling frontward, the planetary steel industry will see more consolidation every bit good as intensified attempts to get ownership of natural stuffs. This will better the remaining power of steel shapers and I expect that this will take to greater subject in the market topographic point.

new decennary brings new challenges. How will India ‘s burgeoning domestic steel demand influence the planetary steel kineticss? How will China ‘s influence on planetary natural materi- Al and finished steel markets evolve and where are the following hot-spots for universe steel? What is India ‘s future roadmap for the sector? How will the Vision 2020 and ‘The Great Indian Steel Dream ‘ of going the largest manufacturer of steel in the universe from the current 3rd place be woven together to determine the hereafter of the state? Can an appropriate ‘Raw Material Security ‘ program be drawn to guarantee timely supply of indispensable natural stuffs to the industry in the yearss to come?

1.0.2 Industry Analysis The chief challenges that Tata Steel is confronting:

First, the steel industry has been impacted by the planetary economic downswing over two twelvemonth ago. The demand of steel is turning in Asia, where downstream user industries are sing high demand, whereas the markets for steel in the United Kingdom and Continental Europe have remained down. Through these hard times, Tata Steel has struggled to adhere to its long-run schemes, both in India and overseas. There has however been need to re-schedule and re-prioritise investing schemes in consonant rhyme with market conditions during this period.

Second, demand for steel remains weak in Europe in 2010, and the market is improbable to return to pre-crisis degrees for several old ages. Automotive demand is expected to be hit by the decision of European authoritiess ‘ client inducement strategies and there is small chance of recovery in the building market, particularly in the UK, for the foreseeable hereafter.

Third, the steel-making overcapacity in Europe, it could be made worse by the menace of imports from Eastern Europe, Commonwealth of Independent States and China. And despite the down steel market, Fe ore and coal demand is likely to transcend supply as the Chinese domestic market continues to suck in natural stuffs, raising topographic point monetary values globally. Any rise in natural stuff monetary values will evidently squash already thin borders. In the interim, natural stuffs have become such a major concern that all Tata Steel Greenfield ventures like the six-million-tonnes undertaking in Orissa in two stages will be conditional upon acquiring entree to adequate Fe ore sedimentations.

Fourthly, progressively rigorous European environmental demands and stricter CO2 emanation allowances besides pose a major menace to the long-run sustainability of the steel-making and steel-consuming industries in Europe. Consequently, Tata Steel Europe will necessitate to be extremely flexible in functioning clients in a planetary market, and its ability to vie with low-priced manufacturers worldwide

4.0 Referencing