Professional Documents
Culture Documents
Group 8
Section E
Ironis one of the oldest inventions in the
world
Contribution :
○ GDP – 10%
○ GNP – 6%
Objective
COREX
Structure of Indian steel
industry
India is 5th largest steel producer
• Backward integration
• Consolidation
• Branded products
• Longer contracts
• Government initiatives
• Impact of Liberalization
• Cost competitiveness
Current investments
Tata Steel:
planning for 5 million tonne plant in Chhattisgarh ( US$ 3.59 billion)
setting up greenfield projects in Jharkhand and Orissa
Reliance Infrastructure:
plans to build a 12-million tonne steel plant in Jharkhand; likely to be completed by
2012.
Indian Railways:
plans to invest around US$ 437.25 million per annum to raise its consumption of
stainless steel for adding new alloy-made wagons and coaches to its portfolio.
Qualitative Analysis
Framework for industry
analysis
Entry barriers: High
Cost of capital
Competition: High
Bargaining power of suppliers: High
Threat of substitutes: Low
Bargaining power of Consumers: Mixed
Internal assessment
Strengths
Availability of iron ore
Availability of labor at low wage rates
Weakness
High Cost of Capital
Low Labor Productivity
High Cost of Basic Inputs and Services
External assessment
Opportunities
Unexplored rural market
Other sectors
Export penetration
Threats
Slow Industry Growth
Technological Change
Price Sensitivity and Demand Volatility
Quantitative Analysis
Key ratios considered:
- Debt – equity ratio
- Interest coverage ratio
- Debtors’ turnover ratio
Companies considered for
analysis
• Differentiation through
technical specifications and
service quality.