The latest report on Steel Flat Products brought out by Information Products & Research Services Pvt Ltd (Infac) is an excellent reference book for banks, financial institutions, traders, equipment suppliers and of course equity analyst, merchant bankers etc.

The book provides an assessment of the prospects of producers of flat-steel products in the context of domestic oversupply situation and the sharp decline in international prices.

Even for management students the book provides an easy understanding of the complex structure of the steel industry. The first two chapters describe in a structured manner the various products manufactured by the flat steel producers and also a flow chart of the processes for making steel right from iron ore to cold-rolled products. The beauty of the flow-charts is that it gives readers an idea about the various processes - an understanding ofwhich is a must if one has to find out the state of the Indian steel industry.

Further on the book analysis the parameters effecting the demand for steel in the country. "Imports of heavy sections as part of project imports may rise", has been cited as an unfavourable parameters effecting the demand of steel in India. This is quite likely since project imports of machinery could be accompanied by steel imports and literally decrease the offtake of Indian steel producers. On the positive side there is mention of high growth in oil and gas, petrochemicals and chemical machinery among others. An interesting aspect of the report is that the firm has presented a demand break-up of steel products into individual categories such as defense, coal, cylinders etc. The consumption pattern also gives regional demand of various products.

The state of the industry can also be understood by the structural change seen in the last five years. "The level of integration in the secondary sector has been increasing withforward and backward integration of the players over the past 2-3 years", say the authors.

Trade and tariffs form an essential study for the industry and the report has an exhaustive coverage on it-especially the impact of the imposition of the floor price by the Government of India in December 1998. The effective price for imports of HR coils (including customs duty of 27.5 per cent) is $385 per tonne, says the report.

For analysts dealing with the steel sector, one of the most important factors, the cost structure has been extensively discussed. "The product-wise cost sheets of flat producers provide a comparative assessment of producers on various cost heads.

In addition the indicative cost structures for two consecutive years highlight the effectiveness of the various cost control measures taken by the players.

Importantly the report goes beyond just stating the changes in the cost structure and parameters that have caused it. A comparison of product-wise direct costs, operating costs and totalcosts of Indian producers with those of the reference plants of the key steel producing countries. Export competitiveness of Indian producers has been assessed on the basis of the effective costs after the adjustment for DEPB benefits.

Going ahead, the report gives the prices of products and then comments on the outlook. The authors believe that the operating cost of Indian producers are likely to decline gradually due to improvement in material, energy and manpower efficiencies. Hence profitability of the players would improve. Some of the players would either focus on strengthening their distribution network in order to widen their reach, or increase the captive consumption of HR coils. The outlook would also depend on the demand-supply scenario and the demand forecast has been made by three methods - aggregate method, GDP elastic method and end-use method. Similarly export projections for each individual products have been discussed.

On a micro basis steps taken by each company to face the challengesfaced have been discussed. The parameters are quite exhaustive and range from degree of integration, locational advantage, technologies, modernisation program, strategies for sourcing inputs, operational efficiencies, marketing infrastructure, market strategies and summaries of the financial performance.