The latest ranking of top steelmakers by one of the leading steel analysts and journals, World Steel Dynamics, has placed five Indian steel companies among the 35 units considered. The list includes JSW (4th), SAIL (7th), Tata Steel (11th), Essar Steel (19th) and RINL (31st).

It is worthwhile to mention that both public and private steel companies of India have achieved ranking according to their long-term strengths as evaluated by the chosen indicators. First three ranks have been obtained by Posco, NLMK of Russia and CSN of Brazil. Notably, Arcelor Mittal ranks 23rd. This ranking is being done thrice a year since October 2002. It has added new players since then and has also modified the weightages of the various parameters over the years. The final ranking is based on the weighted average of all the 23 parameters, currently chosen for the purpose. Maximum weightage of 6% each has been accorded to factors like size, expanding capacity, pricing power in home market, harnessing technical revolution, profitability and mergers and acquisitions.

However, among the factors considered most critical for the success and sustained growth of a steel company in India, availability of basic infrastructure like land, water and power, raw material security and ability to cater to the emerging growing needs from end-use sectors figure prominently. Fresh capacity addition to meet the growing demand may not be an important issue for the global majors. The success criterion for them would be utilisation of excess capacity in other countries by equity participation or JVs, that is if country?s domestic demand is stagnant. M&A activities, therefore, weigh high for global majors, not for India. Secondly, some Indian companies have recently been downgraded from investment point of view. High realisation from existing product profiles and income from other sources leading to rosy balance sheets needs to be distinguished from the fundamental strengths which remain with the company for a much longer period and generally may be outside the zone of consideration by the rating agencies. Health and safety indices must also be given higher weightages in evaluating the performance of the steel units.

Keeping all these factors in view, it is imperative that based on some identified parameters; Indian steel companies also get rated by an independent agency. Each indicator would be given an appropriate weightage based on their role in enabling the unit to face market dynamics and improve the long-term viability of the company. These ratings, if accomplished under an objective process of assessment can be used by the government in allotment of land, mines and other infrastructural connectivities.

The author is DG, Institute of Steel Growth and Development. The views expressed are personal