Description
This is a documentation is about company analysis of SAIL - Steel industry.
INDUSTRY ANALYSIS
INDIAN PERSPECTIVE:
Steel industry is a century old industry in India. Steel industry has been dominant in India since independence. The successive governments that came into power have helped in the development of the steel industry in India. Before 1991 economic reforms, all most all of the steel industries in India were under the public sector. During the 1990s, India was in a lot of financial crisis. The GDP was stagnant, foreign reserves could last only for a week and private investors were not allowed to invest in the industries. To bail India out of this situation, the then finance minister of India, Dr. Manmohan Singh with the help of the then Prime Minister P V Narsimha Rao, presented the budget in 1991 which led to the economic liberalization of India. It was after the 1991 policy that the public sector was made to go private and foreign investment was allowed in various sectors. Many of the steel industries were privatized. Due to privatization, the steel industry was open to foreign investments which also brought in a lot of advancement in technology. The 1991 reforms also made a provision that except for some locations, no licenses would be required for capacity creation. Later on in 1992, another reforms came in which the control over the pricing and distribution was removed which led to the modernization of Indian Steel Industry. This would make the steel industries in India more competitive and efficient. The government also promoted steel industry by providing easy tax structure, unrestricted external trade and low import duties. At present India is the 4th largest producer of steel in the world. India produces over 69 million tonnes of steel. The per capita consumption of steel in India is 51.7kgs whereas the average per capita consumption is 203kgs. Steel industry being a core sector helps in the long term overall economic growth. Various other sectors like automobile industry, infrastructure and consumer durable industries depend upon steel industries for raw materials. The steel industry in turn helps the development of the above industries. In India there is plenty of domestic raw materials and cheap labour which is beneficial to the steel industries. There are various other reasons which led to the successful development of the steel industries in India which are: ? ? ? ? Availability of iron-ore. Facilities for steel production. Increase in consumption of steel in automobiles and construction. Plenty of resources and cheap labour.
Between 1997 and 20012, the Indian steel industry went through a rough phase when the overall global steel faced downturn but then recovered after 2002. The domestic economic growth in India and the global demand for steel led to the revival of the steel industry.
GLOBAL PERSPECTIVE:
Steel industry has been booming globally. The increase in demand for steel was mainly due to various infrastructural and real estate projects which were booming recently. Steel industry was mainly dominated by the United States of America. But this scenario is changing. Indian steel companies have been on acquiring various global companies. The various mergers and acquisitions which have taken place are: ? The Mittal steel acquired the world’s largest steel company named Arcelor steel to become the largest producer of steel in the world named Arcelor-Mittal. Tata steel acquired Corus which is the 5th largest steel company.
?
The steel industry grew tremendously during the 2010-2011 period as the developing countries used steel for their infrastructural projects. The table below gives a summary of the major steel producing countries.
The table below gives a summary of the top steel producing companies.
The Eurozone crisis and the slowing down of the economy are having adverse effects on steel. Due to the boom that was present, the steel makers produced huge quantities of steel, but now there is oversupply of steel. The production is steel is more than the consumption of steel.
RECENT HAPPENINGS:
From 1910-1970, United States of America dominated the steel market. Then the scenario changed after countries like Japan and China entered the steel industry. In the recent years India and Brazil have shown tremendous growth. Though China is the largest producer of steel, the quality of steel produced in China is very low. Also India is emerging as the leader in steel production with Tata Steel acquiring Corus. Many companies are going for M&A’s. Due to the economic slowdown in 2009, steel which was the core of economic activity faced downturn. The production had declined. After the boom in the housing and redevelopment sector in 2010, steel production increased and the steel industry gained momentum. The demand for Steel Industries comes from the construction and infrastructure industry. Infrastructural and developmental works are on the rise in the developed and developing countries, due to which the demand for steel is rising. When USA witnessed a boom in the real estate sector, the demand for steel increased five times in a time span of 1 year. On the technology front, automobiles have also started using steel as the weight reduces by almost 25%.
COMPETITOR ANALYSIS:
The biggest competitor of SAIL has been Tata Steel Ltd. The Tata Iron and Steel Company Limited was established in 1907 at Mumbai. Over the years Tata Steel has shown tremendous growth. Tata Steel was the first Indian company to acquire overseas company. The acquisition of NatSteel was Tata steel’s first acquisition in 2004. Later Tata Steel acquires Corus in April 2007. Tata Steel has its presence globally in countries like USA, Africa, Europe, Australia and Asia. The distribution network of Tata steel is spread all over the world whereas SAIL has a network in India only. Tata steel being a private enterprise and with presence globally is technologically and financially way ahead compared to SAIL. The price of the share of Tata steel is Rs. 415.80 whereas the price of the share of SAIL is Rs. 93.35. The quality of steel manufactured by Tata steel is much higher as compared to that of SAIL. Also the cost of steel produced by Tata is more as compared to that of SAIL. Tata Steel has acquired various companies globally and is India’s leading steel producer globally. SAIL whereas has acquired various domestic companies and has not made a global
acquisition as yet. The turnover of Tata steel increased by 15.4% to Rs. 33933 crores in FY12 whereas the turnover of SAIL increased by 7% to Rs. 50348 crores in FY12.
The table below gives the details of Tata Steel Ltd.
PEST ANALYSIS:
POLITICAL FACTORS: ? ? The ministry of steel has been providing initiatives to companies setting up plant. After liberalization, import and export of steel is freely allowed.
ECONOMICAL FACTORS: ? ? Steel industry relies heavily on the economic growth. The privatization of steel industry after 1991 policy has helped bring foreign investors. The strengthening of dollar will benefit the exporters. Growth of automobile industry, infrastructure projects and construction will help the steel industries to grow.
? ?
SOCIAL FACTORS: ? Since India lacks in the per capita usage of steel, there is immense potential for the steel industry to grow. Steel industry provides employment to a large number of people and creates employment opportunities. Steel industries require labour which is available at cheaper cost in India.
?
?
TECHNOLOGICAL FACTORS: ? ? The foreign investment has led to the advancement in technology. Indian industries are yet to come at par with their international counterparts as in India the steel industries are labour based whereas the industries abroad use machinery.
SWOT ANALYSIS:
STRENGTHS: ? ? Forms the backbone of the economy. Core sector as other industries such as automobiles and infrastructure depend on steel industries for raw material. Government offers incentives. Labour easily available. Huge reserves of raw materials.
? ? ?
WEAKNESS: ? ? ? ? ? ? Lack of technology. Poor infrastructure. Low innovation. Unskilled and inexperienced labour. Not environmental friendly. Lack of R&D.
OPPORTUNITIES: ? ? ? Develop R&D centres. With liberalization, foreign investments can help raise capital. Since India is developing, the number of infrastructure and construction activities is higher thus aiding the growth of steel industries.
THREATS: ? ? The domestic industries face competition from the foreign industries. Many companies are going for M&A which pose a threat to other companies.
COMPANY ANALYSIS:
SAIL
Steel Authority of India Limited i.e. SAIL, is one of the leading company in India for steelmaking. It produces both basic and special type of steel which are used in domestic construction, railways, automobile, engineering and defence industries. SAIL is among the five Maharatna’s of the country’s Central Public Sector Enterprises. A large range of steel products are manufactured and sold by SAIL like galvanised sheets, electric sheets, plates, rods, bars, sheets and coils, stainless steel and other alloys. SAIL has 5 integrated plants and 3 special steel plants. These plants are strategically located in the central and eastern parts of India which are rich sources of raw materials for the steel industry. The company’s iron ore, dolomite and limestone mines are also located in the central and eastern parts. SAIL is the second largest producer of iron ore in India and has the second largest network of mines. Since iron ore, limestone and dolomite are in abundant supply for SAIL and they form they main components for making steel, giving SAIL a competitive edge in terms of captive availability. The long and flat steel products of SAIL are in demand in the domestic and international markets. The Central Marketing Organisation (CMO) carries out the transactions for SAIL. The CMO consists of ? ? ? ? 37 branch sales offices. 25 departmental warehouses. 42 consignment agents. 27 customer contact offices
SAIL has over 2000 dealers in India which helps to spread the availability of steel in every corner and district of our country. SAIL has an International Trade Division (ITD) which is located in New Delhi, which takes care of the exports of Pig iron and mild steel products. SAIL also has a Consultancy Division (SAILCON) which is located at New Delhi to offer consulting and services to their clients globally. The Vision of SAIL is “To be a respected world-class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.”
The headquarters of SAIL is located at New Delhi. The turnover of SAIl is over Rs 47,000 crore. It has over 132,000 employees. The current chairman of the company is Mr Chandra Shekhar Verma. Mr Verma took charge of the office on 11th June 2010. Prior to this, Mr Verma was the Director (Finance) at Bharat Heavy Electricals Limited (BHEL). SAIL was incorporated on 24th January, 1973, with an authorized capital of Rs. 2000 crore with five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. SAIL was restructured as an operating company in 1978.
The pie chart below gives the break-up of the shares of SAIL:
GDRs, 0.01 FIIs, 3.15 MFs, 0.7 Banks, 4.64 Financial institutions, 2.56
Cos., 0.71
Shares
Individuals, 2.41 GOI Financial institutions Banks MFs FIIs GOI, 85.82 GDRs Cos. Individuals
FINANCIAL PERFORMANCE OF SAIL:
The net sales of SAIL in 2010-2011 were 42,719 crores whereas the net sales in 2011-2012 are 45,654 crores. The quarter-wise profit before tax for Q4 FY12 was Rs. 2301 crores whereas for Q3 FY12 the profit was Rs. 904 crores. Therefore we can see that the company has been performing well in the fourth quarter of the FY12. The net worth of the company on 31/12/2011 was Rs. 38,618 crores whereas the net worth on 31/3/2012 is Rs. 39,811 crores.
The category wise sales volume is given below:
SWOT ANALYSIS OF SAIL:
STRENGTH: ? ? ? ? ? ? Being a government owned company; SAIL gets a lot of subsidiaries from the government. Government can help in the funding operation of the company. Located at places which are rich in the raw materials required for the production of steel. Steel is a core product which forms the basis for other industries like infrastructure and construction. Currently the second largest producer of steel in the country. Provides steel at subsidised rates.
WEAKNESSES: ? ? ? ? ? Competing with private players who are technologically advanced due to funds. Being a government venture, it is exposed to corruption and mishandling. Profit margins are low. Being a government owned company it provides grants to its employees, due to which the employee productivity decreases. Being a public sector company, it is responsible to the government for the decisions that it takes.
OPPORTUNITIES: ? ? ? With big players going for M&As, SAIL can also go for M&A of weaker companies and increasing its production. Being a government owned company; it can get the support to become a global company. Being under the central government, SAIL can go for growth and expansion.
THREATS: ? ? ? Biggest threat is from Tata steel in India which has acquired Corus recently. Also private sector companies offer higher packages to their employees compared to the public sector. Government policies and the economy could affect the working of SAIL.
STRATEGIES EMPLOYED:
During the year 2010-11, SAIL focussed towards taking new business initiatives including incorporation formation of new Joint Ventures, M&As and entering into Memorandum of Understandings (MOUs) for its long term strategic objectives.
Mergers and Acquisitions (M&As): ? SAIL merged with Maharashtra Elecktosmelt Limited (MEL). MEL became a unit of SAIL and it was renamed as Chandrapur Ferro Alloy Plant. SAIL has a 99.12% stake in MEL. MEL was acquired so that the requirement of Ferro-alloys for SAIL steel could be accomplished. Salem Refractory Unit of Burn Standard Company Limited was transferred to SAIL. This transfer was of immense importance as it will help SAIL in the long run as the requirement of the refractory material for SAIL was projected to increase with the completion of its modernisation and expansion plans.
?
JOINT VENTURES: ? SAIL setup a joint venture with M/S RITES called SAIL RITES Bengal Wagon Industry Pvt. Ltd." which has been incorporated in Decmber'2010. The work on the JV Company has already started and the unit will have the capacity to manufacture 1500 wagons per annum which will include BOXN-type wagons, specialized highend wagons and modern stainless steel wagons. SAIL acquired 50% of the shares held by the Government of Kerala (GoK) in Steel Complex Limited (SCL), Kozhikode and took over the operations of SCL on 13th February 2011. This joint venture will work for reviving SCL.
?
STRATEGIC ALLIANCE: ? SAIL is simultaneously working with Kobe Steel Limited [KSL], a renowned Japanese Steel maker, to ascertain the feasibility of using ITmK3 technology i.e. Iron Making Technology Mark Three which was developed by KSL for producing premium grade iron which would be in the form of nuggets using iron ore fines and non-coking coal. SAIL and M/s Burn Standard Company Limited (BSCL) which is a PSU under the Ministry of Railways signed an MOU for setting up a factory which will manufacture cast steel bogies, couplers and other related products.
?
MEMORANDUM OF UNDERSTANDING (MoU): ? SAIL signed a MoU with Kobe Steel Ltd from Japan for producing high value products. A steel plant at Jagdishpur will utilize technology of Direct Reduced Iron making (Gas based) and Electric Arc Furnace steel making for manufacture of value added products. MoU signed with IRCON International Limited which is a PSU under the Ministry of Railways for working on rail infrastructure projects in India and abroad.
?
The government has approved a 10.82% disinvestment of its share in SAIL. This disinvestment would fetch the government Rs. 4000crores. The shares would be either auctioned or offered for sale. The government is planning to sell some of its share in the PSUs and raise Rs. 30,000 crores. Initially government had invested in SAIL as not many industries were into manufacturing of steel. Now there are a lot of industries manufacturing steel. So now by disinvestment, the government can investment in other companies and help in their growth and overall development of other sectors.
doc_470937910.docx
This is a documentation is about company analysis of SAIL - Steel industry.
INDUSTRY ANALYSIS
INDIAN PERSPECTIVE:
Steel industry is a century old industry in India. Steel industry has been dominant in India since independence. The successive governments that came into power have helped in the development of the steel industry in India. Before 1991 economic reforms, all most all of the steel industries in India were under the public sector. During the 1990s, India was in a lot of financial crisis. The GDP was stagnant, foreign reserves could last only for a week and private investors were not allowed to invest in the industries. To bail India out of this situation, the then finance minister of India, Dr. Manmohan Singh with the help of the then Prime Minister P V Narsimha Rao, presented the budget in 1991 which led to the economic liberalization of India. It was after the 1991 policy that the public sector was made to go private and foreign investment was allowed in various sectors. Many of the steel industries were privatized. Due to privatization, the steel industry was open to foreign investments which also brought in a lot of advancement in technology. The 1991 reforms also made a provision that except for some locations, no licenses would be required for capacity creation. Later on in 1992, another reforms came in which the control over the pricing and distribution was removed which led to the modernization of Indian Steel Industry. This would make the steel industries in India more competitive and efficient. The government also promoted steel industry by providing easy tax structure, unrestricted external trade and low import duties. At present India is the 4th largest producer of steel in the world. India produces over 69 million tonnes of steel. The per capita consumption of steel in India is 51.7kgs whereas the average per capita consumption is 203kgs. Steel industry being a core sector helps in the long term overall economic growth. Various other sectors like automobile industry, infrastructure and consumer durable industries depend upon steel industries for raw materials. The steel industry in turn helps the development of the above industries. In India there is plenty of domestic raw materials and cheap labour which is beneficial to the steel industries. There are various other reasons which led to the successful development of the steel industries in India which are: ? ? ? ? Availability of iron-ore. Facilities for steel production. Increase in consumption of steel in automobiles and construction. Plenty of resources and cheap labour.
Between 1997 and 20012, the Indian steel industry went through a rough phase when the overall global steel faced downturn but then recovered after 2002. The domestic economic growth in India and the global demand for steel led to the revival of the steel industry.
GLOBAL PERSPECTIVE:
Steel industry has been booming globally. The increase in demand for steel was mainly due to various infrastructural and real estate projects which were booming recently. Steel industry was mainly dominated by the United States of America. But this scenario is changing. Indian steel companies have been on acquiring various global companies. The various mergers and acquisitions which have taken place are: ? The Mittal steel acquired the world’s largest steel company named Arcelor steel to become the largest producer of steel in the world named Arcelor-Mittal. Tata steel acquired Corus which is the 5th largest steel company.
?
The steel industry grew tremendously during the 2010-2011 period as the developing countries used steel for their infrastructural projects. The table below gives a summary of the major steel producing countries.
The table below gives a summary of the top steel producing companies.
The Eurozone crisis and the slowing down of the economy are having adverse effects on steel. Due to the boom that was present, the steel makers produced huge quantities of steel, but now there is oversupply of steel. The production is steel is more than the consumption of steel.
RECENT HAPPENINGS:
From 1910-1970, United States of America dominated the steel market. Then the scenario changed after countries like Japan and China entered the steel industry. In the recent years India and Brazil have shown tremendous growth. Though China is the largest producer of steel, the quality of steel produced in China is very low. Also India is emerging as the leader in steel production with Tata Steel acquiring Corus. Many companies are going for M&A’s. Due to the economic slowdown in 2009, steel which was the core of economic activity faced downturn. The production had declined. After the boom in the housing and redevelopment sector in 2010, steel production increased and the steel industry gained momentum. The demand for Steel Industries comes from the construction and infrastructure industry. Infrastructural and developmental works are on the rise in the developed and developing countries, due to which the demand for steel is rising. When USA witnessed a boom in the real estate sector, the demand for steel increased five times in a time span of 1 year. On the technology front, automobiles have also started using steel as the weight reduces by almost 25%.
COMPETITOR ANALYSIS:
The biggest competitor of SAIL has been Tata Steel Ltd. The Tata Iron and Steel Company Limited was established in 1907 at Mumbai. Over the years Tata Steel has shown tremendous growth. Tata Steel was the first Indian company to acquire overseas company. The acquisition of NatSteel was Tata steel’s first acquisition in 2004. Later Tata Steel acquires Corus in April 2007. Tata Steel has its presence globally in countries like USA, Africa, Europe, Australia and Asia. The distribution network of Tata steel is spread all over the world whereas SAIL has a network in India only. Tata steel being a private enterprise and with presence globally is technologically and financially way ahead compared to SAIL. The price of the share of Tata steel is Rs. 415.80 whereas the price of the share of SAIL is Rs. 93.35. The quality of steel manufactured by Tata steel is much higher as compared to that of SAIL. Also the cost of steel produced by Tata is more as compared to that of SAIL. Tata Steel has acquired various companies globally and is India’s leading steel producer globally. SAIL whereas has acquired various domestic companies and has not made a global
acquisition as yet. The turnover of Tata steel increased by 15.4% to Rs. 33933 crores in FY12 whereas the turnover of SAIL increased by 7% to Rs. 50348 crores in FY12.
The table below gives the details of Tata Steel Ltd.
PEST ANALYSIS:
POLITICAL FACTORS: ? ? The ministry of steel has been providing initiatives to companies setting up plant. After liberalization, import and export of steel is freely allowed.
ECONOMICAL FACTORS: ? ? Steel industry relies heavily on the economic growth. The privatization of steel industry after 1991 policy has helped bring foreign investors. The strengthening of dollar will benefit the exporters. Growth of automobile industry, infrastructure projects and construction will help the steel industries to grow.
? ?
SOCIAL FACTORS: ? Since India lacks in the per capita usage of steel, there is immense potential for the steel industry to grow. Steel industry provides employment to a large number of people and creates employment opportunities. Steel industries require labour which is available at cheaper cost in India.
?
?
TECHNOLOGICAL FACTORS: ? ? The foreign investment has led to the advancement in technology. Indian industries are yet to come at par with their international counterparts as in India the steel industries are labour based whereas the industries abroad use machinery.
SWOT ANALYSIS:
STRENGTHS: ? ? Forms the backbone of the economy. Core sector as other industries such as automobiles and infrastructure depend on steel industries for raw material. Government offers incentives. Labour easily available. Huge reserves of raw materials.
? ? ?
WEAKNESS: ? ? ? ? ? ? Lack of technology. Poor infrastructure. Low innovation. Unskilled and inexperienced labour. Not environmental friendly. Lack of R&D.
OPPORTUNITIES: ? ? ? Develop R&D centres. With liberalization, foreign investments can help raise capital. Since India is developing, the number of infrastructure and construction activities is higher thus aiding the growth of steel industries.
THREATS: ? ? The domestic industries face competition from the foreign industries. Many companies are going for M&A which pose a threat to other companies.
COMPANY ANALYSIS:
SAIL
Steel Authority of India Limited i.e. SAIL, is one of the leading company in India for steelmaking. It produces both basic and special type of steel which are used in domestic construction, railways, automobile, engineering and defence industries. SAIL is among the five Maharatna’s of the country’s Central Public Sector Enterprises. A large range of steel products are manufactured and sold by SAIL like galvanised sheets, electric sheets, plates, rods, bars, sheets and coils, stainless steel and other alloys. SAIL has 5 integrated plants and 3 special steel plants. These plants are strategically located in the central and eastern parts of India which are rich sources of raw materials for the steel industry. The company’s iron ore, dolomite and limestone mines are also located in the central and eastern parts. SAIL is the second largest producer of iron ore in India and has the second largest network of mines. Since iron ore, limestone and dolomite are in abundant supply for SAIL and they form they main components for making steel, giving SAIL a competitive edge in terms of captive availability. The long and flat steel products of SAIL are in demand in the domestic and international markets. The Central Marketing Organisation (CMO) carries out the transactions for SAIL. The CMO consists of ? ? ? ? 37 branch sales offices. 25 departmental warehouses. 42 consignment agents. 27 customer contact offices
SAIL has over 2000 dealers in India which helps to spread the availability of steel in every corner and district of our country. SAIL has an International Trade Division (ITD) which is located in New Delhi, which takes care of the exports of Pig iron and mild steel products. SAIL also has a Consultancy Division (SAILCON) which is located at New Delhi to offer consulting and services to their clients globally. The Vision of SAIL is “To be a respected world-class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.”
The headquarters of SAIL is located at New Delhi. The turnover of SAIl is over Rs 47,000 crore. It has over 132,000 employees. The current chairman of the company is Mr Chandra Shekhar Verma. Mr Verma took charge of the office on 11th June 2010. Prior to this, Mr Verma was the Director (Finance) at Bharat Heavy Electricals Limited (BHEL). SAIL was incorporated on 24th January, 1973, with an authorized capital of Rs. 2000 crore with five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. SAIL was restructured as an operating company in 1978.
The pie chart below gives the break-up of the shares of SAIL:
GDRs, 0.01 FIIs, 3.15 MFs, 0.7 Banks, 4.64 Financial institutions, 2.56
Cos., 0.71
Shares
Individuals, 2.41 GOI Financial institutions Banks MFs FIIs GOI, 85.82 GDRs Cos. Individuals
FINANCIAL PERFORMANCE OF SAIL:
The net sales of SAIL in 2010-2011 were 42,719 crores whereas the net sales in 2011-2012 are 45,654 crores. The quarter-wise profit before tax for Q4 FY12 was Rs. 2301 crores whereas for Q3 FY12 the profit was Rs. 904 crores. Therefore we can see that the company has been performing well in the fourth quarter of the FY12. The net worth of the company on 31/12/2011 was Rs. 38,618 crores whereas the net worth on 31/3/2012 is Rs. 39,811 crores.
The category wise sales volume is given below:
SWOT ANALYSIS OF SAIL:
STRENGTH: ? ? ? ? ? ? Being a government owned company; SAIL gets a lot of subsidiaries from the government. Government can help in the funding operation of the company. Located at places which are rich in the raw materials required for the production of steel. Steel is a core product which forms the basis for other industries like infrastructure and construction. Currently the second largest producer of steel in the country. Provides steel at subsidised rates.
WEAKNESSES: ? ? ? ? ? Competing with private players who are technologically advanced due to funds. Being a government venture, it is exposed to corruption and mishandling. Profit margins are low. Being a government owned company it provides grants to its employees, due to which the employee productivity decreases. Being a public sector company, it is responsible to the government for the decisions that it takes.
OPPORTUNITIES: ? ? ? With big players going for M&As, SAIL can also go for M&A of weaker companies and increasing its production. Being a government owned company; it can get the support to become a global company. Being under the central government, SAIL can go for growth and expansion.
THREATS: ? ? ? Biggest threat is from Tata steel in India which has acquired Corus recently. Also private sector companies offer higher packages to their employees compared to the public sector. Government policies and the economy could affect the working of SAIL.
STRATEGIES EMPLOYED:
During the year 2010-11, SAIL focussed towards taking new business initiatives including incorporation formation of new Joint Ventures, M&As and entering into Memorandum of Understandings (MOUs) for its long term strategic objectives.
Mergers and Acquisitions (M&As): ? SAIL merged with Maharashtra Elecktosmelt Limited (MEL). MEL became a unit of SAIL and it was renamed as Chandrapur Ferro Alloy Plant. SAIL has a 99.12% stake in MEL. MEL was acquired so that the requirement of Ferro-alloys for SAIL steel could be accomplished. Salem Refractory Unit of Burn Standard Company Limited was transferred to SAIL. This transfer was of immense importance as it will help SAIL in the long run as the requirement of the refractory material for SAIL was projected to increase with the completion of its modernisation and expansion plans.
?
JOINT VENTURES: ? SAIL setup a joint venture with M/S RITES called SAIL RITES Bengal Wagon Industry Pvt. Ltd." which has been incorporated in Decmber'2010. The work on the JV Company has already started and the unit will have the capacity to manufacture 1500 wagons per annum which will include BOXN-type wagons, specialized highend wagons and modern stainless steel wagons. SAIL acquired 50% of the shares held by the Government of Kerala (GoK) in Steel Complex Limited (SCL), Kozhikode and took over the operations of SCL on 13th February 2011. This joint venture will work for reviving SCL.
?
STRATEGIC ALLIANCE: ? SAIL is simultaneously working with Kobe Steel Limited [KSL], a renowned Japanese Steel maker, to ascertain the feasibility of using ITmK3 technology i.e. Iron Making Technology Mark Three which was developed by KSL for producing premium grade iron which would be in the form of nuggets using iron ore fines and non-coking coal. SAIL and M/s Burn Standard Company Limited (BSCL) which is a PSU under the Ministry of Railways signed an MOU for setting up a factory which will manufacture cast steel bogies, couplers and other related products.
?
MEMORANDUM OF UNDERSTANDING (MoU): ? SAIL signed a MoU with Kobe Steel Ltd from Japan for producing high value products. A steel plant at Jagdishpur will utilize technology of Direct Reduced Iron making (Gas based) and Electric Arc Furnace steel making for manufacture of value added products. MoU signed with IRCON International Limited which is a PSU under the Ministry of Railways for working on rail infrastructure projects in India and abroad.
?
The government has approved a 10.82% disinvestment of its share in SAIL. This disinvestment would fetch the government Rs. 4000crores. The shares would be either auctioned or offered for sale. The government is planning to sell some of its share in the PSUs and raise Rs. 30,000 crores. Initially government had invested in SAIL as not many industries were into manufacturing of steel. Now there are a lot of industries manufacturing steel. So now by disinvestment, the government can investment in other companies and help in their growth and overall development of other sectors.
doc_470937910.docx