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Increasing The Competitiveness of Indian Steel Industry?: MFSA Project
Increasing The Competitiveness of Indian Steel Industry?: MFSA Project
Background
In fiscal 2015, India imported 9.3 million tonnes of finished steel, up 71.1% from a year ago, whil
it exported a mere 5.5 million tonnes
Between April 2014 and January 31 this year the country imported 8.38 million tonne (MT) of stee
of which 2.9 MT was from China against 1.08 MT in 2013-14.
Imports and Exports
10
9.32
7.93
8
7
6.86
6.66
5.37
5.98
5.59
4.59
5
4
5.45
3.64
3
2
1
0
2010-11
2011-12
2012-13
2013-14
2014-15
What
What can
can be
be done
done to
to
improve
improve the
the situation
situation
The
The probable
probable reasons
reasons
The
The debt
debt be
be written
written off
off so
so as
as
to
to reduce
reduce debt
debt servicing
servicing
costs?
costs?
No
No
If
to write
write off
off the
If it
it is
is feasible
feasible to
the
debt and
debt
and how
how will
will it
it affect
affect the
the
various
various stakeholders
stakeholders
Yes
Yes
The
The steel
steel companies
companies achieve
achieve
operating
operating efficiencies
efficiencies
Yes
Yes
Analysis of financial
statements and the main
costs involved
Company financial
statements
If
can be
be
If operating
operating costs
costs can
somehow
somehow reduced
reduced to
to make
make
the
the industry
industry be
be more
more
competitive
competitive
Hpw
Hpw can
can the
the demand
demand on
on the
the
global
global level
level be
be revived?
revived?
No
No
Industry reports
The
The current
current level
level of
of demand
demand
and
the
way
in
which
and the way in which can
can be
be
increased
increased if
if any
any
Are
Are firms
firms losing
losing revenue
revenue
No
No
Key
Key Comps
Comps and
and how
how the
the
revenues are
revenues
are distributed
distributed
Financial
Financial Analysis
Analysis
Fundamental
Fundamental Analysis
Analysis and
and
actual
actual loss
loss of
of revenues
revenues
IS
because of
IS it
it because
of the
the economic
economic
wide
wide factors
factors
No
No
Key
factors determining
Key factors
determining the
the
economy
economy wealth.
wealth.
Analyst
Analyst Reports
Reports on
on India
India Inc.
Inc.
If
If steel
steel industry
industry is
is really
really going
going
down
because
down because of
of some
some
economy
economy wide
wide factors.
factors.
IS
IS it
it because
because the
the firms
firms are
are
lacking in
lacking
in some
some dimension
dimension
Yes
Yes
IFE,
IFE, EFE
EFE &
& Space
Space
Company
Company website,
website, Analyst
Analyst
reports
reports etc
etc
How
How firm
firm wide
wide factors
factors will
will
help
help
Is
because of
Is it
it because
of industry
industry level
level
factors
factors
Yes
Yes
Porters
forces, Value
Porters 5
5 forces,
Value Chain
Chain
Analysis
Analysis
Industry
Wide Reports,Analyst
Industry Wide
Reports,Analyst
Reports
Reports
How
How can
can industry
industry level
level
factors
factors be
be solved
solved
Can
Can the
the government
government
intervene
intervene by
by introducing
introducing
quotas
quotas etc.
etc. on
on imported
imported steel.
steel.
If
If regulations
regulations can
can be
be put
put in
in
place
such
that
steel
place such that steel
becomes
becomes more
more competitive
competitive
Problem Statement
How can we
maximise the
CAPEX utilization
How to increase
the Operational
Efficiency if
Indian Steel
Industry?
Project: Steel
Introduction
Revival
Summary of Findings
7th August, 2015
Table of
Contents
Executive Summary
Definition of the
problem
Overview of the
Indian Economy
Overview of Steel
Sector and the
reasons for which
it is in dire straits.
How the
recommendation
s may prove to
be helpful to the
steel ministry
Indian Environment
PESTLE Analysis
Industry Structure
Current Strategy
Competitor
Analysis-CPM
Porters 5 forces
Value Chain
Analysis-Key
drivers
Company
Overview
QSPM Analysis
Financial
Analysis-SPACE
MATRIX
Recommendations
What can be
done by the
Steel Industry
Intensity of competition(Moderate to
High)
competition from foreign players
Spurt in Merger And Acquisitions activities
Excess demand met by import
High cost of exit
Commoditized
Suppliers power(Low)
High raw material
availability
Lack of transportation
Prices set as per
international benchmark
Porters Five
Forces
Threats of New
Entrant(low to
moderate)
High cost of basic inputs
and services
Industry is capital intensive
Regulatory environment
Buyers
power(Moderate)
increasing demand for Steel
Fragmented coke suppliers
Access to global market
Threats of
Substitute(High)
Use of Aluminum, Plastics,
Plastics, carbon fiber
India is expected to
become the world's
second largest
producer of crude
steel in 2015-16,
moving up from the
fourth position
PESTEL Analysis
Recommendations on captive mines(FDI of US$ 1,669.49 millions)
Political National Steel Policy to remove bottlenecks
Factors
Economi GDP Growth rate is appreciable now.(Steel industry Contribution in GDP 2%)
Reduction in custom duty
cal
Factors
Rural-Urban Divide
Technolo Popularity of steel plants(Iran has shown interest in steel and mines sector)
gical Application of SML(Steel Markup Language)
Factors
Environm
ental
Factors
Legal
Factors
Management( Planning,
organizing, motivating, staffing
and controlling)
Marketing
Finance/Accounting
Production/ Operations
Management Information
Systems
Ratings:-1(Poor)-4(Superior)
Weights:- 0(Not important)
1(Very important)
Weighted score:- weights*Ratings
Total :- sum total of weighted
scores
Factors
Threats
Technology Risks
0.15
0.15
0.12
0.24
0.07
0.14
Regulatory and
Compliance Risks
0.06
0.12
0.11
0.33
Macro environment
0.18
0.72
Industry Cyclicality
0.15
0.45
Growth Projects
0.12
0.36
Financing
0.08
0.24
Opportunities
Total
2.75
Strength
Opportunitie
s
Competitive advantage by value of size
Growth of Infra Sector in India
Higher pricing opportunities in foreign
markets
Movement along Value chain front
Weakness
Company should
continue their
expansion strategies if
possible through
acquisitions in
domestic as well as
foreign market
Company should focus
more on technology
driven operations to
gain competitive edge
Threats
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