In India, we have a handful of companies in this line of business--Hindustan Construction Ltd, Tata Korf Engineering Services and Flat Products Ltd. Even Mukand has an engineering division, which initially started making heavy duty cranes, but can now supply the entire range of steel products.

Presently, there is little activity in the purchase of new steel equipment. The bulk of the purchases made by the new integrated players were second-hand machinery resulting in revenues to these companies coming from refurbishing the plant rather than the supply of new machinery. This has resulted in a major problem for most of these companies.

To add to their woes, none of the finance companies in India have the leverage to provide equipment finance. Hence most of the equipment suppliers have been at the mercy of international traders who get thefinances arranged and then give the local players some of the less value-added contracts. Indian equipment suppliers have neither the technology nor the funds to become world-class players, and they, in fact, are having great difficulty in hanging on to their share of the Indian market.

Traditionally, the development of these companies was basically an extension of the maintenance department of the steel companies--wherein apart from maintaining the plant, the companies began to supply an entire range of goods and services for setting up new plants.

Worldwide there has been a global consolidation amongst the equipment suppliers themselves. The idea being that steel-making technology, especially the high value-added, low-cost steel production, should be limited to a few players.

For example, SMS, the German steel making gaint has taken over the equipment manufacturing business of some of the Japanese producers. United Engineering is buying the Thyssens group's engineering division. Even the Italy-basedDanielli--the second biggest equipment supplier in the world--has taken over some engineering divisions in Europe. For Indian manufacturers there can be two options--either sell off their stake to these foreign players or be relegated to mere suppliers of ancillaries such as cranes and other spare parts. The choice is limited and we are likely to see the exit of a couple of players in this industry soon.