SECTION 1 -
PROFILE STUDY OF JINDAL STEEL WORKS LTD
INTRODUCTION TO STEEL INDUSTRY
India’s economic growth is contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be an indicator of economic development. While steel continues to have a stronghold in traditional sectors such as construction, housing and ground transportation, special steels are increasingly used in engineering industries such as power generation, petrochemicals and fertilisers. India occupies a central position on the global steel map, with the establishment of new state-of-the-art steel mills, acquisition of global scale capacities by players, continuous modernisation and upgradation of older plants, improving energy efficiency and backward integration into global raw material sources.
The growing consolidation in the steel industry worldwide through mergers and acquisitions has already thrown up several significant concerns. The fact that internationally steel has always been an oligopolistic industry,s sometimes has raised concerns about the anti- competitive behaviours of large firms that dominate this industry. On the other hand the set of large firms that characterize the industry has been changing over time.
Trade and other government policies have significant bearing on competition issues. Matters of subsidies, non-tariff barriers to trade, discriminatory customs duty (on exports and imports) etc. may bring in significant distortions in the domestic market and in the process alter the competitive positioning of individual players in the market. The specific role of the state in creating market distortion and thereby the competitive condition in the market is a well-known issue in this country.
The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the starting point of modern Indian steel industry. Afterwards a few more steel companies were established namely Mysore Iron and Steel Company, (later renamed Vivesvaraya Iron & Steel Ltd) in 1923; and Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron and Steel Co) 1939. All these companies were in the private sector.
1907*: Tata Iron and Steel Company set up.
1913: Production of steel begins in India.
1918: The Indian Iron & Steel Co. set up by Burn & Co. to compete with Tata Iron and Steel Co. 1923*: Mysore Iron and Steel Company set up
1939*: Steel Corporation of Bengal set up
1948: A new Industrial Policy Statement states that new ventures in the iron and steel industry are to be undertaken only by the central government. 1954: Hindustan Steel is created to oversee the Rourkela plant. 1959: Hindustan Steel is responsible for two more plants in Bhilai and Durgapur. 1964: Bokaro Steel Ltd. is created.
1973: The Steel Authority of India Ltd. (SAIL) is created as a holding company to oversee most of India's iron and steel production.
1989: SAIL acquired Vivesvata Iron and Steel Ltd.
1993: India sets plans in motion to partially privatize SAIL. 1999: The Company posts losses as a result of an industry downturn. 2003: SAIL's output surpasses ten million tons of saleable steel.
At the time of independence, India had a small Iron and Steel industry with production of about a million tonnes (mt). In due course, the government was mainly focusing on developing basic steel industry, where crude steel constituted a major part of the total steel production. Many public sector units were established and thus public sector had a dominant share in the steel production till early 1990s.
Mostly private players were in downstream production, which was mainly producing finished steel using crude steel products. Capacity ceiling measures were introduced. Basically, the steel industry was developing under a controlled regime, which established more public sector steel companies in various segments.
Till early 1990s, when economic liberalization...
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