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Case Title:

Steel Authority of India: Facing New Challenges

Publication Year : 2007

Authors:  I B Saravanan

Industry: Minerals, Metals and Mining

Region:India

Case Code: CCA0045C

Teaching Note: Available

Structured Assignment: Not Available

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Abstract:
The Indian steel industry was the third fastest growing steel industry in the world next only to China. The demand for Indian steel was growing at 8-9 % as against a global average of 5-6 %. By 2006, with a current capacity of 38 million tonnes per annum (MTA) the Indian Steel Industry was the 8th largest producer of steel in the world. With capital investments of over Rs. 100,000 crore, the Indian steel industry provided direct/indirect employment to over 2 million people. Over the years, India produced international quality steel of almost all grades/varieties and had also been a net exporter of steel, though in smaller quantities. On November 4 2005, the Indian Government gave its approval for the National Steel Policy (NSP), which aimed at hiking production to over 100 Million Tonnes Per Annum (MTA) to make the Indian steel industry globally competitive in terms of cost, quality and product mix. The NSP anticipated achieving 100 MTA by 2019-20 from 38 MTA in 2004-05. On the demand side, the strategy was to create additional demand for steel through promotional efforts, awareness creation and strengthening the delivery chain, especially in rural areas. On the supply side, the strategy was to create additional capacity, remove procedural and policy bottlenecks in the availability of inputs such as iron ore and coal, make higher investments in R & D and human resource development and improvise infrastructure such as roads, railways and ports. The core of this vision was Steel Authority of India Ltd. (SAIL), one of Indian governmentís ĎNavratnaí public sector undertakings (PSU). SAILís impeccable record in supporting the countryís infrastructural growth by innovative metallurgical products like special alloy steels, was being challenged by its own ageing plants and increasing competition. S.K. Roongta, CMD affirmed that by going the merger and acquisition way that other steel manufacturers preferred, SAIL would also look for steel plants to acquire. Expressing confidence about SAILís opportunities in facing up to the new challenges, the SAIL CMD confirmed,"We are able to maintain our market share despite new producers coming up in nineties and we shall continue to do so.Ē

Pedagogical Objectives:

  • The case anticipates familiarizing the students on
  • Steel Industry in India and SAILís stature in it
  • The evolution of SAIL over the years
  • The dynamics of Indian and Chinese Steel industries
  • The growth route adopted by other Indian steel makers
  • SAILís short term and long term strategies
  • Challenges for SAIL
  • SAILís growth and consolidations plans to reach the targets set by NSP

Keywords : Core Competency & Competitive Advantage Case Study; Steel Authority of India Limited Ė SAIL; National Steel Policy S.K. Roongta; Tata Steel; Mittal-Arcelorí plans for India; Joint ventures of SAIL; Natsteel; SAILís growth by expansion; SAILís growth by consolidation; Coking coal requirement; SAILís Joint development of coal mines; Essar Steel; Cost cutting at SAILís manufacturing; Foreign acquisitions of SAIL; SAILís short term strategies

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