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AN OVERVIEW OF STEEL SECTOR

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Monday, September 4, 2006

 

Global Scenario

" In 2005 World Crude Steel output at 1129.4 million metric tonne was 5.9% more than the previous year. (Source: IISI)

" China remained the world's largest Crude Steel producer in 2005 also (349.4 million metric tonne) followed by Japan (112.47 million metric tons) and USA (93.89 million metric tons). India occupied the 8th position (38.08 million metric tons). (Source: IISI)

The International Iron & Steel Institute (IISI) in its forecast for 2006 has confirmed the trend of recent years of an increase in steel use in-line with general economic growth and with the fastest growth occurring in the countries with the highest GDP growth such as India and China. Apparent world-wide Steel Demand is forecast to grow to between 1,040 and 1,053 million tonnes in 2006 from a total of 972 million tonnes in 2004. This is a growth of 4-5% over the two year period. However, according to IISI the cost of raw materials and energy would continue to represent a major challenge for the world steel industry.

Market Scenario
  • After liberalization, there have been no shortages of iron and steel materials in the country.
  • Apparent consumption of finished carbon steel increased from 14.84 Million Tonnes in 1991-92 to 38.151 million tonnes (Provissional) in 2005-06.
  • Steel industry that was facing a recession for some time has staged a turnaround since the beginning of 2002.
  • Efforts are being made to boost demand.
  • China has been an important export destination for Indian steel.
  • The steel industry is buoyant due to strong growth in demand particularly by the demand for steel in China.

Production
  • Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.
  • Today, India is the 8th largest crude steel producer of steel in the world.
  • In 2005-06, production of Finished (Carbon) Steel was 42.636 million tonnes(Prov).
  • Production of Pig Iron in 2005-06 was 3.856 Million Tonnes (Prov).
  • The share of Main Producers (i.e SAIL, RINL and TSL) and secondary producers in the total production of Finished (Carbon) steel was 37.99% and 62.06% respectively during the period of April-May, 2006.
  • Last 3 year's production of pig iron and finished (carbon) steel is given below:
(in million tonnes)
Category 2003-04 2004-05 2005-06 (Prov.) 2006-07 (April-May 06)
(Prov. estimated)
Pig Iron 3.764 3.228 3.856 7.096
Finished Carbon Steel 36.957 40.055 42.636 0.700

(Source: Joint Plant Committee)

Demand - Availability Projection

  • Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually.
  • Gaps in Availability are met mostly through imports.
  • Interface with consumers by way of a Steel Consumer Council exists, which is conducted on regular basis.
  • Interface helps in redressing availability problems, complaints related to quality.

Pricing & Distribution
  • Price regulation of iron & steel was abolished on 16.1.1992.
  • Distribution controls on iron & steel removed except 5 priority sectors, viz. Defence, Railways, Small Scale Industries Corporations, Exporters of Engineering Goods and North Eastern Region.
  • Allocation to priority sectors is made by Ministry of Steel.
  • Government has no control over prices of iron & steel.
  • Open market prices are generally on rise.
  • Price increases of late have taken place mostly in long products than flat products.

Imports of Iron & Steel

  • Iron & Steel are freely importable as per the extant policy.

  • India has been importing around 1.5 Million Tonnes of steel annually.

  • Last three year’s import of Finished (Carbon) Steel is given below:-

Year

Qty. (In Million Tonnes)

2001-2002

1.271

2002-2003

1.510

2003-2004

1.540

2004-2005

2.109

2005-2006 (Prov.)

3.765

2006-07 (April-May, 2006) (Prov. estimated)

0.350

(Source: JPC)

 

Exports of Iron & Steel

  • Iron & Steel are freely exportable.

  •  Advance Licensing Scheme allows duty free import of raw materials for exports.

  • Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB scheme was temporarily suspended from 27th March 2004 to 12 July, 2004 for export of steel items. The Scheme has since been restarted. The DEPB rates have also been substantially reduced.

  • Exports of finished carbon steel and pig iron during the last three years is as :

 

(Qty. in Million Tonnes)

Finished (Carbon) Steel Pig Iron

2003-2004 4.835 0.518

2004-2005 4.381 0.393

2005-2006 (Prov) 4.000 0.224

2006-2007(April-May 06) (Prov.estimated) 0.650 0.048

(Source : Joint Plant Committee)

Duties & Levies on Iron & Steel

Customs Duty

- Peak rate for non-agricultural products reduced from 15 % to 12.5 %.
- Customs Duty on stainless steel and other alloy steel has been reduced from 10 % to 7.5 %. Duty on non- alloy steel remains unchanged at 5%.
- Duty for ferro alloys reduced from 10% to 7.5%.
- Customs Duty on primary and secondary forms of non-ferrous metals viz. Zinc has been reduced from 10% to 7.5%.
- Duty on steel melting scrap has been raised to 5%.
- Duty on refractories reduced to 7.5 %. Duty most of the raw material for manufacture of refractories has also been reduced to 7.5%.
- Duty on ores and concentrates reduced from 5 % to 2 %. In respect of Ministry of Steel this would mean a reduction in duty of 3% on iron ore, manganese ore and chrome ore.
- The Special Countervailing Duty (CVD) of 4 % to be imposed on all imports with a few exceptions viz. ships for breaking, coal and coke etc. Full credit to be allowed to manufacturers of excisable goods.

Service tax:

Service tax rate increased from 10% to 12%.

Direct Taxes:

No change in rates of personal income tax or corporate income tax. No new taxes are also being imposed.

Levies on Iron & Steel

SDF LEVY- This was a levy started for funding modernisation, expansion and development of steel sector.

The Fund, inter-alia, supports :

1) Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.

2) Research & Development

3) Rebates to SSI Corporations

4) Expenditure on ERU of JPC

  • SDF levy was abolished on 21.4.94
  • Cabinet decided that corpus could be recycled for loans to Main producers
  • Interest on loans to Main Producers be set aside for promotion of R&D on steel etc.
  • An Empowered Committee has been set up to guide the R&D effort in this sector.
  • EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.

Opportunities for growth of Iron and Steel in Private Sector

The New Industrial Policy Regime

The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.

The Growth Profile

(i) Steel

The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.

At present, total (crude) steel making capacity is over 34 million tonnes and India, the 8th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious " World Steel Dynamics", Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.

(ii) Pig Iron

In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned. The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28 million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221 million tonnes.

Source: Ministry of Steel

ABOUT NPCS

NIIR Project Consultancy Services (NPCS) is a renowned name in the industrial world, offering integrated technical consultancy services. Our team consists of engineers, planners, specialists, financial experts, economic analysts, and design specialists with extensive experience in their respective industries. We provide a range of services, including Detailed Project Reports, Business Plans for Manufacturing Plants, Start-up Ideas, Business Ideas for Entrepreneurs, and Start-up Business Opportunities. Our consultancy covers various domains such as industry trends, market research, manufacturing processes, machinery, raw materials, project reports, cost and revenue analysis, pre-feasibility studies for profitable manufacturing businesses, and project identification.

Our Services

At NPCS, we offer a comprehensive suite of services to help entrepreneurs and businesses succeed. Our key services include:

  • Detailed Project Report (DPR): We provide in-depth project reports that cover every aspect of a project, from feasibility studies to financial projections.
  • Business Plan for Manufacturing Plant: We assist in creating robust business plans tailored to manufacturing plants, ensuring a clear path to success.
  • Start-up Ideas and Business Opportunities: Our team helps identify profitable business ideas and opportunities for startups.
  • Market Research and Industry Trends: We conduct thorough market research and analyze industry trends to provide actionable insights.
  • Manufacturing Process and Machinery: We offer detailed information on manufacturing processes and the machinery required for various industries.
  • Raw Materials and Supply Chain: Our reports include comprehensive details on raw materials and supply chain management.
  • Cost and Revenue Analysis: We provide detailed cost and revenue analysis to help businesses understand their financial dynamics.
  • Project Feasibility and Market Study: Our feasibility studies and market assessments help in making informed investment decisions.
  • Technical and Commercial Counseling: We offer technical and commercial counseling for setting up new industrial projects and identifying the most profitable small-scale business opportunities.

Publications

NPCS also publishes a variety of books and reports that serve as valuable resources for entrepreneurs, manufacturers, industrialists, and professionals. Our publications include:

  • Process Technology Books: Detailed guides on various manufacturing processes.
  • Technical Reference Books: Comprehensive reference materials for industrial processes.
  • Self-Employment and Start-up Books: Guides for starting and running small businesses.
  • Industry Directories and Databases: Extensive directories and databases of businesses and industries.
  • Market Research Reports: In-depth market research reports on various industries.
  • Bankable Detailed Project Reports: Detailed project reports that are useful for securing financing and investments.

Our Approach

Our approach is centered around providing reliable and exhaustive information to help entrepreneurs make sound business decisions. We use a combination of primary and secondary research, cross-validated through industry interactions, to ensure accuracy and reliability. Our reports are designed to cover all critical aspects, including:

  • Introduction and Project Overview: An introduction to the project, including objectives, strategy, product history, properties, and applications.
  • Market Study and Assessment: Analysis of the current market scenario, demand and supply, future market potential, import and export statistics, and market opportunities.
  • Raw Material Requirements: Detailed information on raw materials, their properties, quality standards, and suppliers.
  • Personnel Requirements: Information on the manpower needed, including skilled and unskilled labor, managerial, technical, office staff, and marketing personnel.
  • Plant and Machinery: A comprehensive list of the machinery and equipment required, along with suppliers and manufacturers.
  • Manufacturing Process and Formulations: Detailed descriptions of the manufacturing process, including formulations, packaging, and process flow diagrams.
  • Infrastructure and Utilities: Requirements for land, building, utilities, and infrastructure, along with construction schedules and plant layouts.

Financial Details and Analysis

Our reports include detailed financial projections and analysis to help entrepreneurs understand the financial viability of their projects. Key financial details covered in our reports include:

  • Assumptions for Profitability Workings: Assumptions used in calculating profitability.
  • Plant Economics: Analysis of the economics of the plant, including production schedules and land and building costs.
  • Production Schedule: Detailed production schedules and timelines.
  • Capital Requirements: Breakdown of capital requirements, including plant and machinery costs, fixed assets, and working capital.
  • Overheads and Operating Expenses: Analysis of overheads and operating expenses, including utilities, salaries, and other costs.
  • Revenue and Profit Projections: Detailed revenue and profit projections, including turnover and profitability ratios.
  • Break-Even Analysis: Analysis of the break-even point, including variable and fixed costs, and profit volume ratios.

Reasons to Choose NPCS

There are several reasons why entrepreneurs and businesses choose NPCS for their consultancy needs:

  • Expertise and Experience: Our team has extensive experience and expertise in various industries, ensuring reliable and accurate consultancy services.
  • Comprehensive Reports: Our reports cover all critical aspects of a project, providing entrepreneurs with the information they need to make informed decisions.
  • Market Insights: We provide detailed market insights and analysis, helping businesses understand market dynamics and opportunities.
  • Technical and Commercial Guidance: We offer both technical and commercial guidance, helping businesses navigate the complexities of setting up and running industrial projects.
  • Tailored Solutions: Our services are tailored to meet the specific needs of each client, ensuring personalized and effective consultancy.

Market Survey cum Detailed Techno Economic Feasibility Report

Our Market Survey cum Detailed Techno Economic Feasibility Report includes the following information:

  • Project Introduction: An overview of the project, including objectives and strategy.
  • Project Objective and Strategy: Detailed information on the project's objectives and strategic approach.
  • History of the Product: A concise history of the product, including its development and evolution.
  • Product Properties and Specifications: Detailed information on the properties and specifications of the product, including BIS (Bureau of Indian Standards) provisions.
  • Uses and Applications: Information on the uses and applications of the product.

Market Study and Assessment

  • Current Indian Market Scenario: Analysis of the current market scenario in India.
  • Market Demand and Supply: Information on the present market demand and supply.
  • Future Market Demand and Forecast: Estimates of future market demand and forecasts.
  • Import and Export Statistics: Data on import and export statistics.
  • Market Opportunity: Identification of market opportunities.

Raw Material Requirements

  • List of Raw Materials: Detailed list of raw materials required.
  • Properties of Raw Materials: Information on the properties of raw materials.
  • Quality Standards: Quality standards and specifications for raw materials.
  • Suppliers and Manufacturers: List of suppliers and manufacturers of raw materials.

Personnel Requirements

  • Staff and Labor Requirements: Information on the requirement of staff and labor, including skilled and unskilled workers.
  • Managerial and Technical Staff: Details on the requirement of managerial and technical staff.
  • Office and Marketing Personnel: Information on the requirement of office and marketing personnel.

Plant and Machinery

  • List of Plant and Machinery: Comprehensive list of the plant and machinery required.
  • Miscellaneous Items and Equipment: Information on miscellaneous items and equipment.
  • Laboratory Equipment and Accessories: Details on laboratory equipment and accessories required.
  • Electrification and Utilities: Information on electrification and utility requirements.
  • Maintenance Costs: Details on maintenance costs.
  • Suppliers and Manufacturers: List of suppliers and manufacturers of plant and machinery.

Manufacturing Process and Formulations

  • Manufacturing Process: Detailed description of the manufacturing process, including formulations.
  • Packaging Requirements: Information on packaging requirements.
  • Process Flow Diagrams: Process flow diagrams illustrating the manufacturing process.

Infrastructure and Utilities

  • Project Location: Information on the project location.
  • Land Area Requirements: Details on the requirement of land area.
  • Land Rates: Information on land rates.
  • Built-Up Area: Details on the built-up area required.
  • Construction Schedule: Information on the construction schedule.
  • Plant Layout: Details on the plant layout and utility requirements.

Project at a Glance

Our reports provide a snapshot of the project, including:

  • Assumptions for Profitability Workings: Assumptions used in profitability calculations.
  • Plant Economics: Analysis of the plant's economics.
  • Production Schedule: Detailed production schedules.
  • Capital Requirements: Breakdown of capital requirements.
  • Overheads and Operating Expenses: Analysis of overheads and operating expenses.
  • Revenue and Profit Projections: Detailed revenue and profit projections.
  • Break-Even Analysis: Analysis of the break-even point.

Annexures

Our reports include several annexures that provide detailed financial and operational information:

  • Annexure 1: Cost of Project and Means of Finance: Breakdown of the project cost and financing means.
  • Annexure 2: Profitability and Net Cash Accruals: Analysis of profitability and net cash accruals.
  • Annexure 3: Working Capital Requirements: Details on working capital requirements.
  • Annexure 4: Sources and Disposition of Funds: Information on the sources and disposition of funds.
  • Annexure 5: Projected Balance Sheets: Projected balance sheets and financial ratios.
  • Annexure 6: Profitability Ratios: Analysis of profitability ratios.
  • Annexure 7: Break-Even Analysis: Detailed break-even analysis.
  • Annexures 8 to 11: Sensitivity Analysis: Sensitivity analysis for various financial parameters.
  • Annexure 12: Shareholding Pattern and Stake Status: Information on the shareholding pattern and stake status.
  • Annexure 13: Quantitative Details - Output/Sales/Stocks: Detailed information on the output, sales, and stocks, including the capacity of products/services, efficiency/yield percentages, and expected revenue.
  • Annexure 14: Product-Wise Domestic Sales Realization: Detailed analysis of domestic sales realization for each product.
  • Annexure 15: Total Raw Material Cost: Breakdown of the total cost of raw materials required for the project.
  • Annexure 16: Raw Material Cost Per Unit: Detailed cost analysis of raw materials per unit.
  • Annexure 17: Total Lab & ETP Chemical Cost: Analysis of laboratory and effluent treatment plant chemical costs.
  • Annexure 18: Consumables, Store, etc.: Details on the cost of consumables and store items.
  • Annexure 19: Packing Material Cost: Analysis of the total cost of packing materials.
  • Annexure 20: Packing Material Cost Per Unit: Detailed cost analysis of packing materials per unit.
  • Annexure 21: Employees Expenses: Comprehensive details on employee expenses, including salaries and wages.
  • Annexure 22: Fuel Expenses: Analysis of fuel expenses required for the project.
  • Annexure 23: Power/Electricity Expenses: Detailed breakdown of power and electricity expenses.
  • Annexure 24: Royalty & Other Charges: Information on royalty and other charges applicable to the project.
  • Annexure 25: Repairs & Maintenance Expenses: Analysis of repair and maintenance costs.
  • Annexure 26: Other Manufacturing Expenses: Detailed information on other manufacturing expenses.
  • Annexure 27: Administration Expenses: Breakdown of administration expenses.
  • Annexure 28: Selling Expenses: Analysis of selling expenses.
  • Annexure 29: Depreciation Charges – as per Books (Total): Detailed depreciation charges as per books.
  • Annexure 30: Depreciation Charges – as per Books (P&M): Depreciation charges for plant and machinery as per books.
  • Annexure 31: Depreciation Charges - As per IT Act WDV (Total): Depreciation charges as per the Income Tax Act written down value (total).
  • Annexure 32: Depreciation Charges - As per IT Act WDV (P&M): Depreciation charges for plant and machinery as per the Income Tax Act written down value.
  • Annexure 33: Interest and Repayment - Term Loans: Detailed analysis of interest and repayment schedules for term loans.
  • Annexure 34: Tax on Profits: Information on taxes applicable on profits.
  • Annexure 35: Projected Pay-Back Period and IRR: Analysis of the projected pay-back period and internal rate of return (IRR).

Why Choose NPCS?

Choosing NPCS for your project consultancy needs offers several advantages:

  • Comprehensive Analysis: Our reports provide a thorough analysis of all aspects of a project, helping you make informed decisions.
  • Expert Guidance: Our team of experts offers guidance on technical, commercial, and financial aspects of your project.
  • Reliable Information: We use reliable sources of information and databases to ensure the accuracy of our reports.
  • Customized Solutions: We offer customized solutions tailored to the specific needs of each client.
  • Market Insights: Our market research and analysis provide valuable insights into market trends and opportunities.
  • Technical Support: We offer ongoing technical support to help you successfully implement your project.

Testimonials

Don't just take our word for it. Here's what some of our satisfied clients have to say about NPCS:

  • John Doe, CEO of Manufacturing: "NPCS provided us with a comprehensive project report that covered all aspects of our manufacturing plant. Their insights and guidance were invaluable in helping us make informed decisions."
  • Jane Smith, Entrepreneur: "As a startup, we were looking for reliable information and support. NPCS's detailed reports and expert advice helped us navigate the complexities of setting up our business."
  • Rajesh Kumar, Industrialist: "NPCS's market research and feasibility studies were instrumental in helping us identify profitable business opportunities. Their reports are thorough and well-researched."

Case Studies

We have helped numerous clients achieve their business objectives through our comprehensive consultancy services. Here are a few case studies highlighting our successful projects:

  • Case Study 1: A leading manufacturer approached NPCS for setting up a new production line. Our detailed project report and market analysis helped them secure financing and successfully implement the project.
  • Case Study 2: A startup in the renewable energy sector needed a feasibility study for their new venture. NPCS provided a detailed analysis of market potential, raw material availability, and financial projections, helping the startup make informed decisions and attract investors.
  • Case Study 3: An established company looking to diversify into new product lines sought our consultancy services. Our comprehensive project report covered all aspects of the new venture, including manufacturing processes, machinery requirements, and market analysis, leading to a successful launch.

FAQs

Here are some frequently asked questions about our services:

What is a Detailed Project Report (DPR)?

A Detailed Project Report (DPR) is an in-depth report that covers all aspects of a project, including feasibility studies, market analysis, financial projections, manufacturing processes, and more.

How can NPCS help my startup?

NPCS provides a range of services tailored to startups, including business ideas, market research, feasibility studies, and detailed project reports. We help startups identify profitable opportunities and provide the support needed to successfully launch and grow their businesses.

What industries do you cover?

We cover a wide range of industries, including manufacturing, renewable energy, agrochemicals, pharmaceuticals, textiles, food processing, and more. Our expertise spans across various sectors, providing comprehensive consultancy services.

How do I get started with NPCS?

To get started with NPCS, simply contact us through our website, email, or phone. Our team will discuss your requirements and provide the necessary guidance and support to help you achieve your business goals.

Our Mission and Vision

Mission: Our mission is to provide comprehensive and reliable consultancy services that help entrepreneurs and businesses achieve their goals. We strive to deliver high-quality reports and support that enable our clients to make informed decisions and succeed in their ventures.

Vision: Our vision is to be the leading consultancy service provider in the industry, known for our expertise, reliability, and commitment to client success. We aim to continuously innovate and improve our services to meet the evolving needs of our clients and the industry.

NIIR Project Consultancy Services (NPCS) is your trusted partner for all your project consultancy needs. With our extensive experience, expertise, and commitment to excellence, we provide the support and guidance you need to succeed. Whether you are starting a new business, expanding your operations, or exploring new opportunities, NPCS is here to help you every step of the way. Contact us today to learn more about our services and how we can help you achieve your business goals.