Description
It explains about Industry Trends of steel industry, PEST Analysis of Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about JSW ISPAT STEEL, it's Finance performance, SWOT analysis and Various Strategies employed by JSW ISPAT STEEL .
STEEL INDUSTRY ANALYSIS
1. Industry trends: Indian and Global perspectives, recent happenings. Steel is the back bone of human civilization, it is very crucial in development of a modern economy. The per capita consumption of steel shows the living standard of people in any country. Global Perspective: The industry directly employs about more than two million people worldwide, with a further two million contractors and four million people in the supporting industries. Considering steel’s position as the key product supplier to industries such as automotive, construction, transport, power and machine goods, and using a multiplier of 25:1, the steel industry is at the source of employment for more than 50 million people. World crude steel production has increased from 851 mega tonnes (Mt) in 2001 to 1,527 Mt in 2011. (It was 28.3 Mt in 1900).World average steel use per capita has steadily increased from 150 kg in 2001 to 215 kg in 2011. India, Brazil, South Korea and Turkey have all entered the top 10 steel producers list in the last 40 years.
World Steel in Figures 2012 The World Steel Association (world steel) has published the 2012 edition of World Steel in Figures. World Steel in Figures provides essential facts and statistics about the global steel industry. The book contains comprehensive information on crude steel production, apparent steel use, pig iron production, steel trade, iron ore production and trade, and scrap trade. World Steel in Figures lists major steel-producing countries, top steel-producing companies, and top steel-consuming countries. Table 1: Major steel-producing countries 2011 1. 2. 3. 4. 5. China Japan United States India Russia 683.9 Mt 107.6 Mt 86.4 Mt 71.3 Mt 68.9 Mt China Japan United States India Russia 2010 637.4 Mt 109.6 Mt 80.5 Mt 68.3 Mt 66.9 Mt
Table 2: Top steel-producing companies 2011 1. 2. 3. 4. 5. Arcelor Mittal Hebei Group Baosteel Group POSCO Wuhan Group 97.2 Mt 44.4 Mt 43.3 Mt 39.1 Mt 37.7 Mt 6 7 8 9 10 Nippon Steel Shagang Group Shougang Group JFE Ansteel Group 33.4 Mt 31.9 Mt 30.0 Mt 29.9 Mt 29.8 Mt
Table 3: Countries with the highest apparent steel use per capita 2011 1. 2. 3. 4. 5. South Korea Taiwan, China Czech Republic Japan Germany 1,156.6 kg 784.4 kg 595.7 kg 506.7 kg 479.6 kg 6 7 8 9 10 Austria China Italy Sweden Belgium-Luxembourg 473.1 kg 459.8 kg 459.5 kg 424.5 kg 422.5 kg
Indian Perspective: 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 liberalizationreforms were introduced, the steel industry continued to be under the control of IndianGover nment, regulation were constituted such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the government; foreign investment was restricted; and there were restrictions on imports as
well as exports. But after liberalization many reforms and regulation were changed which brought the new era for development in steel industry. Some of the major developments were : 1. Large plant capacities that were reserved for public sector were removed; 2. Export restrictions were eliminated; 3. Import tariffs were reduced from 100 percent to 5 percent; 4. Decontrol of domestic steel prices; 5. Foreign investments was encouraged, and the steel industry was part of the high priority industries for foreign investments implying automatic foreign equity participation up to 100 percent; and 6. System of freight ceiling was introduced in place of freight equalization scheme. Due to this, the domestic steel industry has since then, become market oriented and integrated with the global steel industry. This has helped private players to expand their operations and bring in new cost effective technologies to improve competitiveness not only in the domestic but also in the global market.
The Indian steel industry comprises of the producers of finished steel, semi-finished steel, stainless steel and pig iron. Indian steel industry, having participation from both public sector and private sector enterprises, is one of the fastest growing markets for steel and is also increasingly looking towards exports as driving the growth of the industry. Indian steel Industry Structure: Indian iron and steel industry can be divided into two main sectors: Public sector and Private sector. Further on routes of production it can be classified as: Integrated producer which convert iron ore into steel e.g. SAIL, TISCO, etc and Secondary producer which make steel from sponge iron or scrap e.g. ISPAT Industries, Essar. Key Drivers of Steel Industry India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of the total steel used is for kitchenware. However, its use in railway coaches, wagons, airports, hotels and retail stores is growing immensely. Construction: The construction industry has been witnessing a growth rate of 12%-14% in recent times. Steel construction is now identified with speed and since India is in need of speedy project implementation, steel is the best alternative for fast track construction. With economy surging ahead and expected increase in income levels of population, it is believed that demand for steel from this sector will continue to grow at current rates if not improve
Automobile: The domestic automobile industry has also grown at more than double-digit rates in the past five years. The Indian automobile sector is the second fastest growing market after Chinaand has emerged as a prime demand driver for alloy steel. Automobile sector which isexperiencing growth and competition is likely to be one of the major drivers for steelconsumption in the coming years and most likely, its contribution in the overall demand pie is likely to improve from the current levels. Auto components Industry: During the last five years, auto components market has grown at19% CAGR, led by both robust domestic demand as well as exports. India is fast emerging ashub for auto components. International companies such as General Motors, Ford, Daimler Chrysler, Toyota and Volkswagen are outsourcing auto parts from India as it has cost advantage with regard to forgings and castings. Also, the growing domestic automobile industry, which relies on steel industry for its parts manufacturing, will enhance the demand for steel in India. Infrastructure: Infrastructure sector comprises of roads, railways, airports and power. The 11thFive-year plan has lined up huge investments in all the above related sectors of infrastructure. The sector wise anticipated investment are $200bn in power, $80bn in railways, $48bn in roads,$13bn in ports and $9bn in airports. Because of surge in the above activities, the demand for long products of steel will be increasing in years ahead. Consumer Durables: The consumer durables sector has also been witnessing robust growth. It has grown at an average of 10% per annum and is expected to grow at double-digit rates for coming years. The share of white goods and utensils is predominant in India. The domestic appliances market which includes spin driers of washing machine, thermo ware, water filters, dishwashers, microwave ovens, catering equipments, cutlery, furniture etc have opened new opportunities for steel consumption, thus ensuring a steadily growing trend of steel off take. Oil & Gas Industry: Oil & gas sector is the major consumer of steel tubes and pipes. The pipe consumption in oil & gas sector is expected to grow at a rate of 25% CAGR as this sector is set to witness massive capital investment. Apart from laying cross-country pipelines, exploration and production activities are also experiencing strong growth in both international as well as domestic markets.
2. PEST Analysis Political Factors: It includes a lot of policies given by the Indian steel ministry; it includes industrial policies, electricity policies, national mineral policies, foreign trade policies, environmental policies, etc. there are also other factors including government ownership at local and national levels and other legislations and licenses involved. The Government has approved the National Steel Policy (NSP) in November 2005.The long-term goal of the NSP is for India to have a modern and efficient steel industry of world standards. The focus of the policy is to achieve global competitiveness not only in terms of cost, quality and product-mix but also in terms of global benchmarks of efficiency and productivity. The policy targets to increase steel production at a compounded annual growth rate of 7.3% to 110 mt by 2019-2020. It projects domestic consumption to grow at annual growth rate of 6.9% to 90 mt during this period. The policy envisages the share of exports to increase to 25% from present share of 10% 100% FDI is allowed under the automatic route for metallurgy and processing of all metals. Economic Factors: Inflation: the inflation has grown to about 7.25 percent so there is rise in price of all the goods, and also production efficiency has decreased. Currency fluctuation and exchange rates: With increase in the value of dollar, the industry needs to give a large amount in exchange rates. Moreover there is a rise in price of crude oil and has cost transportation charges to increase Economic Crisis: due to economic crisis in Europe led to decrease in demand of finished goods in the foreign market and has led to a trade deficit. Consumer expenditure: Due to high inflation rate the prices of product has increased leading to more expenditure of the customer. Social Factors: shift in value and culture of people, a positive attitude towards work, green environment issue, product safety issue, employment and safety laws Technological Factors: There is a need for new government investment policies. New patents and products for extracting ores, manufacturing purpose should be implemented where ever necessary to rapid the pace and improve quality of the products. The current level of investment in R&D in the Indian Steel Plants is less than 0.24% of their total turnover. In order to encourage R&D activities in Iron and Steel sector, Ministry of Steel is providing financial assistance. 3. Competitor Analysis: The Major competitors to steel industry are plastic industry, alluminium industry and cement industry. Though their cheap prices they cannot replace steel in essential products like automobile, machineries
and in construction of bridges and other infrastructure. Although a small sector of steel is affected by plastic industry as steel is replaced by plastic in some kitchenware articles, and furnitures.
4. SWOT Analysis Strengths Availability of iron ore and coal: India has abundance of iron ore, coal & other rawmaterials required for iron & steel making. It has 4th largest iron ore reserves (13 bn tons)in the world. Low labor wage rates: India has low unit labor cost, this gets reflected in low cost of production Abundance of quality manpower: It has 3rd largest pool of technical manpower, next toUnited States & erstwhile USSR, capable of understanding and assimilating newtechnologies. Mature production base Weakness Unscientific mining: India is deficient in raw materials required by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India's hard coal deposits are of low quality Low productivity: According to an estimate crude steel output at the biggest Indian steel maker is roughly 150 tonnes per worker per year, whereas in Western Europe the figure is around 600 tonnes. Power shortages: Steel production in India is also hampered by power shortages. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure hamper the growth of Indian steel industry Low R&D investments: There are inadequate investments in infrastructure. Lack of best quality and trained professionals has been a major drawback. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high. Opportunities Unexplored rural market: The Indian rural market remains fairly unexposed to the multi-faceted use of steel. Growing domestic demand: There is enormous scope for increasing consumption of steel in almost all sectors in India.
Export Market Penetration: It is estimated that world steel consumption will double in next 25yrs. Quality improvement of Indian steel combined with low cost advantages will definitely help in substantial gain in export market Consolidation: As global companies have realized the threat of excess supply, they are looking at M&A (mergers and acquisitions) option to retain market share and improve margins. Threats Technological change: Technological changes force the industry structure to change. In India where capital itself is costly, technological obsolescence is a major threat. Price sensitivity & Demand volatility: The demand for steel is derived demand and the purchase quantity depends on end-use requirements. The traders are price sensitive and buy when there are discounts. Dumping of steel by developed countries: High quality products for developed countries available for imports at competitive prices. Slow Industry Growth
JSW ISPAT STEEL LTD. COMPANY ANALYSIS
1. About: Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector producer of hot rolled coils in India. Set up as Nippon Denro Ispat Limited in May 1984 by founding Chairman Mr. M L Mittal, IIL has steadily grown into a Rs 9,400-crore company, assuming its position as flagship of the reputed Ispat Group. A corporate powerhouse with operations in iron, steel, mining, energy and infrastructure, the Group today figures among the top 20 business houses in the country. On 21 December 2010 JSW Steel bought interest in Ispat Industries at an enterprise value of $3 billion to emerge as India's largest producer of the commodity with an annual capacity of 14.3 million tonnes. The company’s name thus changed to JSW Ispat Steel Ltd. 2. Headquarter: Mumbai.
3. Total number of Employees: 3000
4. Top Management and H.O.D Mr. Sajjan Jindal: Chairman Mr. Vinod Mittal: Vice Chairman Mr. B K Singh Chief Executive Officer Mr. Ashok Aggarwal Joint Chief Executive Officer Mr. Rajesh Asher Executive Director (Corporate) Mr. Ashok V Bharadwaj Director (Marketing) Mr. Alok Chandra Chief Operating Officer Mr. T P Subramanian President & Company Secretary Mr. Nilesh Dattani President (SCM) Mr. B K Das Senior Vice President (Projects)
5. The company is listed on Bombay Stock Exchange and National Stock Exchange of India BSE:500305 | NSE:JSWISPAT | ISIN 136A01022 Market Cap: Rs 2824 crore Industry: Steel(Large)
6. Share Holding Pattern (in %): CATEGORY OF SHAREHOLDER NO. OF SHAREHOLDERS TOTAL NO. OF SHARES TOTAL NO. OF SHARES HELD IN DEMATERIALIZED FORM TOTAL SHAREHOLDING AS A % OF TOTAL NO. OF SHARES AS A % OF (A+B) AS A % OF (A+B+C)
SHARES PLEDGED O OTHERWISE ENCUMBER NUMBER OF SHARES AS A % OF TOTAL NO. OF SHAR
(A) Shareholding of Promoter and Promoter Group (1) Indian Individuals / Hindu Undivided Family Bodies Corporate Sub Total (2) Foreign Individuals (Non-Residents Individuals / Foreign Individuals) Bodies Corporate Sub Total Total shareholding of Promoter and Promoter 1 677,576 677,576 0.03 0.03 3 6,441,236 6,441,236 0.27 0.27 1,329,236
29
1,394,274,230
1,394,274,230
58.42
58.42
210,831,738
32
1,400,715,466
1,400,715,466
58.69
58.69
212,160,974
8
269,071,893
265,731,093
11.27
11.27
265,569,489
9 41
269,749,469 1,670,464,935
266,408,669 1,667,124,135
11.30 69.99
11.30 69.99
265,569,489 477,730,463
Group (A) (B) Public Shareholding (1) Institutions Mutual Funds / UTI Financial Institutions / Banks Central Government / State Government(s) Insurance Companies Foreign Institutional Investors Sub Total (2) NonInstitutions Bodies Corporate Individuals Individual shareholders holding nominal share capital up to Rs. 1 lakh 2,841 105,515,534 105,427,985 4.42 4.42 17 2,302,464 1,334,151 0.10 0.10 -
43
105,128,167
105,123,214
4.40
4.40
-
1
12,768
12,768
-
-
-
8
48,308,107
48,297,989
2.02
2.02
-
46
51,232,966
51,225,826
2.15
2.15
-
115
206,984,472
205,993,948
8.67
8.67
-
291,782,891 709,605
281,836,889
12.22
12.22
-
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh Any Others (Specify) Non Resident Indians Foreign Corporate Bodies Hindu Undivided Families Trusts Clearing Members Market Maker
72,609,363 2,335
72,583,383
3.04
3.04
-
6,288
39,441,935
37,264,296
1.65
1.65
-
4,762
28,427,594
27,982,755
1.19
1.19
-
1,732,800 8
-
0.07
0.07
-
1,166,581 1,114
1,166,581
0.05
0.05
-
15 287
30,145 7,019,446
30,145 7,019,446
0.29
0.29
-
97
1,038,069
1,038,069
0.04
0.04
-
Overseas Corporate Bodies Foreign Nationals Sub Total
300 1
300
-
-
-
4 721,069
27,000
27,000
-
-
-
509,349,723
497,112,553
21.34
21.34
-
Total Public shareholding (B) Total (A)+(B) (C) Shares held by Custodians and against which Depository Receipts have been issued-m (1) (2) Sub Total Total (A)+(B)+(C)
721,184
716,334,195
703,106,501
30.01
30.01
-
721,225
2,386,799,130
2,370,230,636
100.00
100.00
477,730,463
-
-
-
-
-
-
721,225 2,386,799,130
2,370,230,636
-
100.00
477,730,463
7. Major units 1. Integrated Steel Plant at Dolvi, Maharashtra. The Dolvi complex has a captive port located close to it on the Amba River, which opens into the Arabian Sea. This port can handle barges and mini-bulk carriers up to 4000 dry weight tonnage (DWT). Moreover, a jetty adjoining the complex is capable of handling cargo of up to 10 million tonnes per annum. Manufacturing Facilities: DRI - Sponge Iron Plant Blast Furnace Compact Strip Production 2. Integrated Steel Plant at Kalmeshwar, Maharashtra The integrated steel plant at Kalmeshwar uses the latest steel manufacturing technology to produce galvanized sheets and products, apart from cold rolled coils. The Kalmeshwar complex houses a total of three advanced plants - a 0.325 million tonnes
Galvanized Plain/Galvanized Corrugated plant, a 0.33 million tonne Cold Rolled Coils plant and a 60,000 tonne Color Coated Sheets plant. Manufacturing Facilities Cold rolling mill Galvanizing line Color coating line BALANCE SHEET
Balance Sheet of JSW ISPAT Steel
------------------- in Rs. Cr. ------------------Jun '11 12 mths Jun '10 15 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 3,354.92 2,225.09 2,386.09 1,221.71 150.96 968.83 884.34 18.00 1,003.38 965.94 2,272.51 1,221.65 51.98 1,050.86 -1,363.05 1,070.44 2,031.88 7,150.81 200.24 7,351.05 9,382.93 Mar '09 12 mths 2,294.03 1,221.58 0.00 1,072.45 -544.34 1,151.92 2,901.61 6,940.05 284.99 7,225.04 10,126.65 Mar '08 12 mths 2,288.74 1,218.40 0.00 1,070.34 -587.07 1,240.00 2,941.67 7,849.07 466.43 8,315.50 11,257.17 Mar '07 12 mths
-2,363.82 -1,630.42 2,026.40 1,578.61 5,911.10 7,156.90 1,021.66 24.85 6,932.76 7,181.75 8,959.16 8,760.36 Jun '11 12 mths Jun '10 15 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress 13,438.70 13,456.02 6,193.56 5,528.67 7,245.14 7,927.35 61.86 63.73 13,557.39 4,669.58 8,887.81 102.71 13,167.93 3,961.92 9,206.01 108.25 13,067.37 3,244.04 9,823.33 54.68
Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
163.42 394.57 1.64
229.37 758.97 23.27
232.89 1,382.93 560.09 3.03 1,946.05 1,881.55 75.89 3,903.49 0.00 3,708.97 35.00 3,743.97 159.52 0.00 9,382.93 717.08 -1.16
118.04 1,368.38 579.83 3.30 1,951.51 1,457.67 89.22 3,498.40 0.00 2,770.71 33.34 2,804.05 694.35 0.00 10,126.65 639.31 5.54
113.59 1,056.19 645.02 252.43 1,953.64 1,402.46 75.22 3,431.32 0.00 2,136.94 28.81 2,165.75 1,265.57 0.00 11,257.17 598.41 5.16
2,040.56 1,934.17
2,436.77 2,716.41 2,390.42 1,761.15 594.24 0.00 580.89 179.79 0.00 36.51 5,421.43 4,657.35 3,351.80 4,080.93 3,932.69 4,117.44 1,488.74 539.91 0.00 0.00 8,959.16 8,760.36 393.92 0.09 613.75 -3.34
Source : Dion Global Solutions Limited
PROFIT AND LOSS ANALYSIS:
Profit & Loss account of JSW ISPAT ------------------- in Rs. Cr. ------------------Steel Jun '11 12 mths Income Sales Turnover Excise Duty Net Sales Other Income 9,100.50 11,079.40 770.14 879.95 8,330.36 10,199.45 -1,095.88 180.91 9,181.29 917.28 8,264.01 -391.74 9,478.75 1,116.56 8,362.19 580.29 8,417.56 889.80 7,527.76 79.25 Jun '10 15 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths
Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
93.07
267.20
-105.05 7,767.22 5,022.01 1,289.81 207.60 149.20 310.14 57.50 0.00 7,036.26 Mar '09 12 mths 1,122.70 730.96 1,129.74 -398.78 646.62 2.47 -1,047.87 23.98 -1,023.89 -335.78 -688.11 2,014.25 0.00 0.00 0.00 12,224.42 -5.63 0.00
-159.16 8,783.32 4,936.42 1,250.41 202.60 145.95 324.25 73.51 0.00 6,933.14 Mar '08 12 mths 1,269.89 1,850.18 1,108.09 742.09 638.12 0.00 103.97 11.65 115.62 80.82 34.80 1,996.72 0.00 0.00 0.00 12,224.42 0.28 0.00
28.13 7,635.14 4,123.47 1,153.52 165.34 110.75 339.20 64.80 0.00 5,957.08 Mar '07 12 mths 1,598.81 1,678.06 1,099.62 578.44 623.83 0.00 -45.39 38.55 -6.84 12.90 -9.53 1,833.61 0.00 0.00 0.00 12,224.42 -0.08 0.00
7,327.55 10,647.56 5,962.38 6,411.62 1,400.97 1,823.73 234.81 152.48 305.74 51.96 -1.47 Jun '11 12 mths 273.36 172.01 342.78 70.93 -2.33 Jun '10 15 mths 1,374.55 1,555.46
8,106.87 9,092.10
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%)
316.56 -779.32
1,015.60 1,369.98 -1,794.92 185.48 596.26 2.08 23.11 -564.27 773.95 3.47 10.52 -259.08
-2,393.26 -591.94 -2,370.15 -581.42 -1,805.88 -322.34 2,144.49 2,680.48 0.00 0.00 0.00 0.00 0.00 0.00
23,867.99 12,224.42 -7.57 0.00 -2.64 0.00
Book Value (Rs)
0.09
-3.34
-1.16
5.54
5.16
Source : Dion Global Solutions Limited
SWOT Analysis Strsngth 1. JSW has good reputation in steel market. It is the result of long experience of around 3 decades in the steel industry. 2. JSW ISPAT Steel Limited (JISL) has consistently placed an added emphasis on quality processes within the organization. Its strict adherence to standards of excellence in quality has seen the company attain the QS 9000 and ISO 14001 certifications. 3. Dual technology allows Ispat the freedom to choose its raw material feed, like pig iron, sponge iron, iron ore, scrap or any combination of various feeds. Weakness 1. High Transportation cost, due to increase in the price of fuel. 2. Due to increase in exchange rates i.e. the price of rupee depreciating against the dollar, essential raw materials for the production have become costly. 3. Lack of skilled manpower and workers. 4. There are problems faced with Infrastructure, due to location of the plant away from the market. Opportunities 1. Development of captive mining facilities and upstream integration which can result in lower cost of production and higher productivity and can also reduce incidence of price volatility of raw materials. 2. It is situated very close to India's commercial capital - Mumbai, 3. Dolvi plant has easy access to major markets in Western India. 4. The demand of infrastructure and automobile sector can lead to demand of steel. 5. Large unexplored market in southern part of the country. Threats: 1. Threats from other materials like cement, plastic and alluminium. 2. Increase in Power Tariffs. 3. There is intense competition from major companies like Tata Steel, POSCO.
Strategies Employed: JSW Steel acquired a majority stake in Ispat Industries in December 2010 for Rs 2,156 crore and renamed it JSW Ispat Steel Ispat is undertaking iron ore mining operations in Brazil, and coal mining operations in Columbia and Mozambique, through subsidiaries, in joint ventures. In India, Ispat has been awarded prospecting iron ore leases in Damkodwadvi, Maharashtra and work has thus commenced. JSW Steel has finalized a Rs 2,140-crore investment plan in its subsidiary JSW Ispat Steel Ltd to set up a coke oven, a pellet plant and a cold rolling mill - Jan 25, 2012 JSW ISPAT Steel allotted 13 crore equity shares of Rs 10 each of the company, on preferential basis, at a premium of Rs 4.74 a share, to its CDR lenders. – May 22,2012
The Business of JSW Ispat steel is divided as 1. An Integrated Steel Plant at Dolvi, Maharashtra. It has a captive port located close to it on the Amba River, that opens into the Arabian Sea. This port can handle barges and mini-bulk carriers up to 4000 dry weight tonnage (DWT). Moreover there is a jetty adjoining the complex which is capable of handling cargo of up to 10 million tonnes per annum. It provides with the Manufacturing of the following products: DRI - Sponge Iron Plant Blast Furnace Compact Strip Production 2. An Integrated Steel Plant at Kalmeshwar, Maharashtra This plant uses the latest steel manufacturing technology to produce galvanized sheets and products, apart from cold rolled coils. The Kalmeshwar complex has a total of three advanced plants - a 0.325 million tonnes Galvanized Plain/Galvanized Corrugated plant, a 0.33 million tonne Cold Rolled Coils plant and a 60,000 tonne Color Coated Sheets plant. It provides with the Manufacturing of the following products: Cold rolling mill Galvanizing line Color coating line
doc_580779073.docx
It explains about Industry Trends of steel industry, PEST Analysis of Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about JSW ISPAT STEEL, it's Finance performance, SWOT analysis and Various Strategies employed by JSW ISPAT STEEL .
STEEL INDUSTRY ANALYSIS
1. Industry trends: Indian and Global perspectives, recent happenings. Steel is the back bone of human civilization, it is very crucial in development of a modern economy. The per capita consumption of steel shows the living standard of people in any country. Global Perspective: The industry directly employs about more than two million people worldwide, with a further two million contractors and four million people in the supporting industries. Considering steel’s position as the key product supplier to industries such as automotive, construction, transport, power and machine goods, and using a multiplier of 25:1, the steel industry is at the source of employment for more than 50 million people. World crude steel production has increased from 851 mega tonnes (Mt) in 2001 to 1,527 Mt in 2011. (It was 28.3 Mt in 1900).World average steel use per capita has steadily increased from 150 kg in 2001 to 215 kg in 2011. India, Brazil, South Korea and Turkey have all entered the top 10 steel producers list in the last 40 years.
World Steel in Figures 2012 The World Steel Association (world steel) has published the 2012 edition of World Steel in Figures. World Steel in Figures provides essential facts and statistics about the global steel industry. The book contains comprehensive information on crude steel production, apparent steel use, pig iron production, steel trade, iron ore production and trade, and scrap trade. World Steel in Figures lists major steel-producing countries, top steel-producing companies, and top steel-consuming countries. Table 1: Major steel-producing countries 2011 1. 2. 3. 4. 5. China Japan United States India Russia 683.9 Mt 107.6 Mt 86.4 Mt 71.3 Mt 68.9 Mt China Japan United States India Russia 2010 637.4 Mt 109.6 Mt 80.5 Mt 68.3 Mt 66.9 Mt
Table 2: Top steel-producing companies 2011 1. 2. 3. 4. 5. Arcelor Mittal Hebei Group Baosteel Group POSCO Wuhan Group 97.2 Mt 44.4 Mt 43.3 Mt 39.1 Mt 37.7 Mt 6 7 8 9 10 Nippon Steel Shagang Group Shougang Group JFE Ansteel Group 33.4 Mt 31.9 Mt 30.0 Mt 29.9 Mt 29.8 Mt
Table 3: Countries with the highest apparent steel use per capita 2011 1. 2. 3. 4. 5. South Korea Taiwan, China Czech Republic Japan Germany 1,156.6 kg 784.4 kg 595.7 kg 506.7 kg 479.6 kg 6 7 8 9 10 Austria China Italy Sweden Belgium-Luxembourg 473.1 kg 459.8 kg 459.5 kg 424.5 kg 422.5 kg
Indian Perspective: 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 liberalizationreforms were introduced, the steel industry continued to be under the control of IndianGover nment, regulation were constituted such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the government; foreign investment was restricted; and there were restrictions on imports as
well as exports. But after liberalization many reforms and regulation were changed which brought the new era for development in steel industry. Some of the major developments were : 1. Large plant capacities that were reserved for public sector were removed; 2. Export restrictions were eliminated; 3. Import tariffs were reduced from 100 percent to 5 percent; 4. Decontrol of domestic steel prices; 5. Foreign investments was encouraged, and the steel industry was part of the high priority industries for foreign investments implying automatic foreign equity participation up to 100 percent; and 6. System of freight ceiling was introduced in place of freight equalization scheme. Due to this, the domestic steel industry has since then, become market oriented and integrated with the global steel industry. This has helped private players to expand their operations and bring in new cost effective technologies to improve competitiveness not only in the domestic but also in the global market.
The Indian steel industry comprises of the producers of finished steel, semi-finished steel, stainless steel and pig iron. Indian steel industry, having participation from both public sector and private sector enterprises, is one of the fastest growing markets for steel and is also increasingly looking towards exports as driving the growth of the industry. Indian steel Industry Structure: Indian iron and steel industry can be divided into two main sectors: Public sector and Private sector. Further on routes of production it can be classified as: Integrated producer which convert iron ore into steel e.g. SAIL, TISCO, etc and Secondary producer which make steel from sponge iron or scrap e.g. ISPAT Industries, Essar. Key Drivers of Steel Industry India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of the total steel used is for kitchenware. However, its use in railway coaches, wagons, airports, hotels and retail stores is growing immensely. Construction: The construction industry has been witnessing a growth rate of 12%-14% in recent times. Steel construction is now identified with speed and since India is in need of speedy project implementation, steel is the best alternative for fast track construction. With economy surging ahead and expected increase in income levels of population, it is believed that demand for steel from this sector will continue to grow at current rates if not improve
Automobile: The domestic automobile industry has also grown at more than double-digit rates in the past five years. The Indian automobile sector is the second fastest growing market after Chinaand has emerged as a prime demand driver for alloy steel. Automobile sector which isexperiencing growth and competition is likely to be one of the major drivers for steelconsumption in the coming years and most likely, its contribution in the overall demand pie is likely to improve from the current levels. Auto components Industry: During the last five years, auto components market has grown at19% CAGR, led by both robust domestic demand as well as exports. India is fast emerging ashub for auto components. International companies such as General Motors, Ford, Daimler Chrysler, Toyota and Volkswagen are outsourcing auto parts from India as it has cost advantage with regard to forgings and castings. Also, the growing domestic automobile industry, which relies on steel industry for its parts manufacturing, will enhance the demand for steel in India. Infrastructure: Infrastructure sector comprises of roads, railways, airports and power. The 11thFive-year plan has lined up huge investments in all the above related sectors of infrastructure. The sector wise anticipated investment are $200bn in power, $80bn in railways, $48bn in roads,$13bn in ports and $9bn in airports. Because of surge in the above activities, the demand for long products of steel will be increasing in years ahead. Consumer Durables: The consumer durables sector has also been witnessing robust growth. It has grown at an average of 10% per annum and is expected to grow at double-digit rates for coming years. The share of white goods and utensils is predominant in India. The domestic appliances market which includes spin driers of washing machine, thermo ware, water filters, dishwashers, microwave ovens, catering equipments, cutlery, furniture etc have opened new opportunities for steel consumption, thus ensuring a steadily growing trend of steel off take. Oil & Gas Industry: Oil & gas sector is the major consumer of steel tubes and pipes. The pipe consumption in oil & gas sector is expected to grow at a rate of 25% CAGR as this sector is set to witness massive capital investment. Apart from laying cross-country pipelines, exploration and production activities are also experiencing strong growth in both international as well as domestic markets.
2. PEST Analysis Political Factors: It includes a lot of policies given by the Indian steel ministry; it includes industrial policies, electricity policies, national mineral policies, foreign trade policies, environmental policies, etc. there are also other factors including government ownership at local and national levels and other legislations and licenses involved. The Government has approved the National Steel Policy (NSP) in November 2005.The long-term goal of the NSP is for India to have a modern and efficient steel industry of world standards. The focus of the policy is to achieve global competitiveness not only in terms of cost, quality and product-mix but also in terms of global benchmarks of efficiency and productivity. The policy targets to increase steel production at a compounded annual growth rate of 7.3% to 110 mt by 2019-2020. It projects domestic consumption to grow at annual growth rate of 6.9% to 90 mt during this period. The policy envisages the share of exports to increase to 25% from present share of 10% 100% FDI is allowed under the automatic route for metallurgy and processing of all metals. Economic Factors: Inflation: the inflation has grown to about 7.25 percent so there is rise in price of all the goods, and also production efficiency has decreased. Currency fluctuation and exchange rates: With increase in the value of dollar, the industry needs to give a large amount in exchange rates. Moreover there is a rise in price of crude oil and has cost transportation charges to increase Economic Crisis: due to economic crisis in Europe led to decrease in demand of finished goods in the foreign market and has led to a trade deficit. Consumer expenditure: Due to high inflation rate the prices of product has increased leading to more expenditure of the customer. Social Factors: shift in value and culture of people, a positive attitude towards work, green environment issue, product safety issue, employment and safety laws Technological Factors: There is a need for new government investment policies. New patents and products for extracting ores, manufacturing purpose should be implemented where ever necessary to rapid the pace and improve quality of the products. The current level of investment in R&D in the Indian Steel Plants is less than 0.24% of their total turnover. In order to encourage R&D activities in Iron and Steel sector, Ministry of Steel is providing financial assistance. 3. Competitor Analysis: The Major competitors to steel industry are plastic industry, alluminium industry and cement industry. Though their cheap prices they cannot replace steel in essential products like automobile, machineries
and in construction of bridges and other infrastructure. Although a small sector of steel is affected by plastic industry as steel is replaced by plastic in some kitchenware articles, and furnitures.
4. SWOT Analysis Strengths Availability of iron ore and coal: India has abundance of iron ore, coal & other rawmaterials required for iron & steel making. It has 4th largest iron ore reserves (13 bn tons)in the world. Low labor wage rates: India has low unit labor cost, this gets reflected in low cost of production Abundance of quality manpower: It has 3rd largest pool of technical manpower, next toUnited States & erstwhile USSR, capable of understanding and assimilating newtechnologies. Mature production base Weakness Unscientific mining: India is deficient in raw materials required by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India's hard coal deposits are of low quality Low productivity: According to an estimate crude steel output at the biggest Indian steel maker is roughly 150 tonnes per worker per year, whereas in Western Europe the figure is around 600 tonnes. Power shortages: Steel production in India is also hampered by power shortages. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure hamper the growth of Indian steel industry Low R&D investments: There are inadequate investments in infrastructure. Lack of best quality and trained professionals has been a major drawback. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high. Opportunities Unexplored rural market: The Indian rural market remains fairly unexposed to the multi-faceted use of steel. Growing domestic demand: There is enormous scope for increasing consumption of steel in almost all sectors in India.
Export Market Penetration: It is estimated that world steel consumption will double in next 25yrs. Quality improvement of Indian steel combined with low cost advantages will definitely help in substantial gain in export market Consolidation: As global companies have realized the threat of excess supply, they are looking at M&A (mergers and acquisitions) option to retain market share and improve margins. Threats Technological change: Technological changes force the industry structure to change. In India where capital itself is costly, technological obsolescence is a major threat. Price sensitivity & Demand volatility: The demand for steel is derived demand and the purchase quantity depends on end-use requirements. The traders are price sensitive and buy when there are discounts. Dumping of steel by developed countries: High quality products for developed countries available for imports at competitive prices. Slow Industry Growth
JSW ISPAT STEEL LTD. COMPANY ANALYSIS
1. About: Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector producer of hot rolled coils in India. Set up as Nippon Denro Ispat Limited in May 1984 by founding Chairman Mr. M L Mittal, IIL has steadily grown into a Rs 9,400-crore company, assuming its position as flagship of the reputed Ispat Group. A corporate powerhouse with operations in iron, steel, mining, energy and infrastructure, the Group today figures among the top 20 business houses in the country. On 21 December 2010 JSW Steel bought interest in Ispat Industries at an enterprise value of $3 billion to emerge as India's largest producer of the commodity with an annual capacity of 14.3 million tonnes. The company’s name thus changed to JSW Ispat Steel Ltd. 2. Headquarter: Mumbai.
3. Total number of Employees: 3000
4. Top Management and H.O.D Mr. Sajjan Jindal: Chairman Mr. Vinod Mittal: Vice Chairman Mr. B K Singh Chief Executive Officer Mr. Ashok Aggarwal Joint Chief Executive Officer Mr. Rajesh Asher Executive Director (Corporate) Mr. Ashok V Bharadwaj Director (Marketing) Mr. Alok Chandra Chief Operating Officer Mr. T P Subramanian President & Company Secretary Mr. Nilesh Dattani President (SCM) Mr. B K Das Senior Vice President (Projects)
5. The company is listed on Bombay Stock Exchange and National Stock Exchange of India BSE:500305 | NSE:JSWISPAT | ISIN 136A01022 Market Cap: Rs 2824 crore Industry: Steel(Large)
6. Share Holding Pattern (in %): CATEGORY OF SHAREHOLDER NO. OF SHAREHOLDERS TOTAL NO. OF SHARES TOTAL NO. OF SHARES HELD IN DEMATERIALIZED FORM TOTAL SHAREHOLDING AS A % OF TOTAL NO. OF SHARES AS A % OF (A+B) AS A % OF (A+B+C)
SHARES PLEDGED O OTHERWISE ENCUMBER NUMBER OF SHARES AS A % OF TOTAL NO. OF SHAR
(A) Shareholding of Promoter and Promoter Group (1) Indian Individuals / Hindu Undivided Family Bodies Corporate Sub Total (2) Foreign Individuals (Non-Residents Individuals / Foreign Individuals) Bodies Corporate Sub Total Total shareholding of Promoter and Promoter 1 677,576 677,576 0.03 0.03 3 6,441,236 6,441,236 0.27 0.27 1,329,236
29
1,394,274,230
1,394,274,230
58.42
58.42
210,831,738
32
1,400,715,466
1,400,715,466
58.69
58.69
212,160,974
8
269,071,893
265,731,093
11.27
11.27
265,569,489
9 41
269,749,469 1,670,464,935
266,408,669 1,667,124,135
11.30 69.99
11.30 69.99
265,569,489 477,730,463
Group (A) (B) Public Shareholding (1) Institutions Mutual Funds / UTI Financial Institutions / Banks Central Government / State Government(s) Insurance Companies Foreign Institutional Investors Sub Total (2) NonInstitutions Bodies Corporate Individuals Individual shareholders holding nominal share capital up to Rs. 1 lakh 2,841 105,515,534 105,427,985 4.42 4.42 17 2,302,464 1,334,151 0.10 0.10 -
43
105,128,167
105,123,214
4.40
4.40
-
1
12,768
12,768
-
-
-
8
48,308,107
48,297,989
2.02
2.02
-
46
51,232,966
51,225,826
2.15
2.15
-
115
206,984,472
205,993,948
8.67
8.67
-
291,782,891 709,605
281,836,889
12.22
12.22
-
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh Any Others (Specify) Non Resident Indians Foreign Corporate Bodies Hindu Undivided Families Trusts Clearing Members Market Maker
72,609,363 2,335
72,583,383
3.04
3.04
-
6,288
39,441,935
37,264,296
1.65
1.65
-
4,762
28,427,594
27,982,755
1.19
1.19
-
1,732,800 8
-
0.07
0.07
-
1,166,581 1,114
1,166,581
0.05
0.05
-
15 287
30,145 7,019,446
30,145 7,019,446
0.29
0.29
-
97
1,038,069
1,038,069
0.04
0.04
-
Overseas Corporate Bodies Foreign Nationals Sub Total
300 1
300
-
-
-
4 721,069
27,000
27,000
-
-
-
509,349,723
497,112,553
21.34
21.34
-
Total Public shareholding (B) Total (A)+(B) (C) Shares held by Custodians and against which Depository Receipts have been issued-m (1) (2) Sub Total Total (A)+(B)+(C)
721,184
716,334,195
703,106,501
30.01
30.01
-
721,225
2,386,799,130
2,370,230,636
100.00
100.00
477,730,463
-
-
-
-
-
-
721,225 2,386,799,130
2,370,230,636
-
100.00
477,730,463
7. Major units 1. Integrated Steel Plant at Dolvi, Maharashtra. The Dolvi complex has a captive port located close to it on the Amba River, which opens into the Arabian Sea. This port can handle barges and mini-bulk carriers up to 4000 dry weight tonnage (DWT). Moreover, a jetty adjoining the complex is capable of handling cargo of up to 10 million tonnes per annum. Manufacturing Facilities: DRI - Sponge Iron Plant Blast Furnace Compact Strip Production 2. Integrated Steel Plant at Kalmeshwar, Maharashtra The integrated steel plant at Kalmeshwar uses the latest steel manufacturing technology to produce galvanized sheets and products, apart from cold rolled coils. The Kalmeshwar complex houses a total of three advanced plants - a 0.325 million tonnes
Galvanized Plain/Galvanized Corrugated plant, a 0.33 million tonne Cold Rolled Coils plant and a 60,000 tonne Color Coated Sheets plant. Manufacturing Facilities Cold rolling mill Galvanizing line Color coating line BALANCE SHEET
Balance Sheet of JSW ISPAT Steel
------------------- in Rs. Cr. ------------------Jun '11 12 mths Jun '10 15 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 3,354.92 2,225.09 2,386.09 1,221.71 150.96 968.83 884.34 18.00 1,003.38 965.94 2,272.51 1,221.65 51.98 1,050.86 -1,363.05 1,070.44 2,031.88 7,150.81 200.24 7,351.05 9,382.93 Mar '09 12 mths 2,294.03 1,221.58 0.00 1,072.45 -544.34 1,151.92 2,901.61 6,940.05 284.99 7,225.04 10,126.65 Mar '08 12 mths 2,288.74 1,218.40 0.00 1,070.34 -587.07 1,240.00 2,941.67 7,849.07 466.43 8,315.50 11,257.17 Mar '07 12 mths
-2,363.82 -1,630.42 2,026.40 1,578.61 5,911.10 7,156.90 1,021.66 24.85 6,932.76 7,181.75 8,959.16 8,760.36 Jun '11 12 mths Jun '10 15 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress 13,438.70 13,456.02 6,193.56 5,528.67 7,245.14 7,927.35 61.86 63.73 13,557.39 4,669.58 8,887.81 102.71 13,167.93 3,961.92 9,206.01 108.25 13,067.37 3,244.04 9,823.33 54.68
Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
163.42 394.57 1.64
229.37 758.97 23.27
232.89 1,382.93 560.09 3.03 1,946.05 1,881.55 75.89 3,903.49 0.00 3,708.97 35.00 3,743.97 159.52 0.00 9,382.93 717.08 -1.16
118.04 1,368.38 579.83 3.30 1,951.51 1,457.67 89.22 3,498.40 0.00 2,770.71 33.34 2,804.05 694.35 0.00 10,126.65 639.31 5.54
113.59 1,056.19 645.02 252.43 1,953.64 1,402.46 75.22 3,431.32 0.00 2,136.94 28.81 2,165.75 1,265.57 0.00 11,257.17 598.41 5.16
2,040.56 1,934.17
2,436.77 2,716.41 2,390.42 1,761.15 594.24 0.00 580.89 179.79 0.00 36.51 5,421.43 4,657.35 3,351.80 4,080.93 3,932.69 4,117.44 1,488.74 539.91 0.00 0.00 8,959.16 8,760.36 393.92 0.09 613.75 -3.34
Source : Dion Global Solutions Limited
PROFIT AND LOSS ANALYSIS:
Profit & Loss account of JSW ISPAT ------------------- in Rs. Cr. ------------------Steel Jun '11 12 mths Income Sales Turnover Excise Duty Net Sales Other Income 9,100.50 11,079.40 770.14 879.95 8,330.36 10,199.45 -1,095.88 180.91 9,181.29 917.28 8,264.01 -391.74 9,478.75 1,116.56 8,362.19 580.29 8,417.56 889.80 7,527.76 79.25 Jun '10 15 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths
Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
93.07
267.20
-105.05 7,767.22 5,022.01 1,289.81 207.60 149.20 310.14 57.50 0.00 7,036.26 Mar '09 12 mths 1,122.70 730.96 1,129.74 -398.78 646.62 2.47 -1,047.87 23.98 -1,023.89 -335.78 -688.11 2,014.25 0.00 0.00 0.00 12,224.42 -5.63 0.00
-159.16 8,783.32 4,936.42 1,250.41 202.60 145.95 324.25 73.51 0.00 6,933.14 Mar '08 12 mths 1,269.89 1,850.18 1,108.09 742.09 638.12 0.00 103.97 11.65 115.62 80.82 34.80 1,996.72 0.00 0.00 0.00 12,224.42 0.28 0.00
28.13 7,635.14 4,123.47 1,153.52 165.34 110.75 339.20 64.80 0.00 5,957.08 Mar '07 12 mths 1,598.81 1,678.06 1,099.62 578.44 623.83 0.00 -45.39 38.55 -6.84 12.90 -9.53 1,833.61 0.00 0.00 0.00 12,224.42 -0.08 0.00
7,327.55 10,647.56 5,962.38 6,411.62 1,400.97 1,823.73 234.81 152.48 305.74 51.96 -1.47 Jun '11 12 mths 273.36 172.01 342.78 70.93 -2.33 Jun '10 15 mths 1,374.55 1,555.46
8,106.87 9,092.10
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%)
316.56 -779.32
1,015.60 1,369.98 -1,794.92 185.48 596.26 2.08 23.11 -564.27 773.95 3.47 10.52 -259.08
-2,393.26 -591.94 -2,370.15 -581.42 -1,805.88 -322.34 2,144.49 2,680.48 0.00 0.00 0.00 0.00 0.00 0.00
23,867.99 12,224.42 -7.57 0.00 -2.64 0.00
Book Value (Rs)
0.09
-3.34
-1.16
5.54
5.16
Source : Dion Global Solutions Limited
SWOT Analysis Strsngth 1. JSW has good reputation in steel market. It is the result of long experience of around 3 decades in the steel industry. 2. JSW ISPAT Steel Limited (JISL) has consistently placed an added emphasis on quality processes within the organization. Its strict adherence to standards of excellence in quality has seen the company attain the QS 9000 and ISO 14001 certifications. 3. Dual technology allows Ispat the freedom to choose its raw material feed, like pig iron, sponge iron, iron ore, scrap or any combination of various feeds. Weakness 1. High Transportation cost, due to increase in the price of fuel. 2. Due to increase in exchange rates i.e. the price of rupee depreciating against the dollar, essential raw materials for the production have become costly. 3. Lack of skilled manpower and workers. 4. There are problems faced with Infrastructure, due to location of the plant away from the market. Opportunities 1. Development of captive mining facilities and upstream integration which can result in lower cost of production and higher productivity and can also reduce incidence of price volatility of raw materials. 2. It is situated very close to India's commercial capital - Mumbai, 3. Dolvi plant has easy access to major markets in Western India. 4. The demand of infrastructure and automobile sector can lead to demand of steel. 5. Large unexplored market in southern part of the country. Threats: 1. Threats from other materials like cement, plastic and alluminium. 2. Increase in Power Tariffs. 3. There is intense competition from major companies like Tata Steel, POSCO.
Strategies Employed: JSW Steel acquired a majority stake in Ispat Industries in December 2010 for Rs 2,156 crore and renamed it JSW Ispat Steel Ispat is undertaking iron ore mining operations in Brazil, and coal mining operations in Columbia and Mozambique, through subsidiaries, in joint ventures. In India, Ispat has been awarded prospecting iron ore leases in Damkodwadvi, Maharashtra and work has thus commenced. JSW Steel has finalized a Rs 2,140-crore investment plan in its subsidiary JSW Ispat Steel Ltd to set up a coke oven, a pellet plant and a cold rolling mill - Jan 25, 2012 JSW ISPAT Steel allotted 13 crore equity shares of Rs 10 each of the company, on preferential basis, at a premium of Rs 4.74 a share, to its CDR lenders. – May 22,2012
The Business of JSW Ispat steel is divided as 1. An Integrated Steel Plant at Dolvi, Maharashtra. It has a captive port located close to it on the Amba River, that opens into the Arabian Sea. This port can handle barges and mini-bulk carriers up to 4000 dry weight tonnage (DWT). Moreover there is a jetty adjoining the complex which is capable of handling cargo of up to 10 million tonnes per annum. It provides with the Manufacturing of the following products: DRI - Sponge Iron Plant Blast Furnace Compact Strip Production 2. An Integrated Steel Plant at Kalmeshwar, Maharashtra This plant uses the latest steel manufacturing technology to produce galvanized sheets and products, apart from cold rolled coils. The Kalmeshwar complex has a total of three advanced plants - a 0.325 million tonnes Galvanized Plain/Galvanized Corrugated plant, a 0.33 million tonne Cold Rolled Coils plant and a 60,000 tonne Color Coated Sheets plant. It provides with the Manufacturing of the following products: Cold rolling mill Galvanizing line Color coating line
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