‘Indian steel industry growth can surpass GDP growth’

Font Size

Print

Feedback

Email

Discuss

Related Articles

Gold the most preferred investment

: demand drivers for the industry and how do you plan to grow?

The Indian steel industry has a bright future. The demand drivers are strong and these will increase the steel consumption in India. One of the major steel consuming industries, the automobile industry, is growing at more than 19% in India. The infrastructure sector is growing quite fast and a huge amount of investment is lined up over the next five years. Similarly, the housing and white goods sectors are showing a double-digit growth in India.

Last year, the flat steel demand has grown at about 17% in India. Generally, in an economy the steel demand grows in line with the GDP growth for some time and then it takes off and surpasses the GDP growth. Today in India we are building up our economy from an infrastructure angle. In the years to come one can expect the Indian steel industry growth surpassing the GDP growth. The Indian steel demand from the existing 40 million tonne today is expected to grow at not less than 10% pa in the years to come. By the year 2010-11 the industry will have at least 65 million tonne of demand.

As coal and iron ore happens to be key raw materials for making steel, the rising raw material prices have compelled most of the industry players to secure supplies. What are your initiatives to subdue the soaring prices?

We have one of the most integrated steel plants and our cost of production is significantly low. Our EBDITA margin is the sixth highest in the world as per our internal estimates.

We have the advantage of operating our plant in the iron ore rich belt in the state of Karnataka; about 11% of the total iron ore reserves of India are located in this state. While as far as our security of the raw material sources namely iron ore is concerned, we have about 25-30% of our total requirement being met from our captive sources.

Being in this rich iron ore belt we do not find any difficulty procuring rest of the iron ore requirement at a competitive rate, because of the locational advantages we have. However, we are also making efforts for increasing our captive sources from 25-30% in the years to come.