The Indian steel sector is well placed to reach its production target of 200 million tonnes by the year 2020. This was made clear at the CII Steel Summit 2012 here today as private and public sector steel makers discussed their expansion plans.
While the per capita consumption has grown from 31 kg in 2003 to 56 kg in 2011, it is still less than 30% of global average, presenting significant potential for growth. Further the Twelfth Plan envisages an investment of USD 1 trillion in infrastructure, which will boost the demand for steel.
But for India to attain this growth, several infrastructural and operational challenges needed to be overcome. As Mr Dilip Oomen, Managing Director and CEO, Essar Steel India Ltd, said it was imperative that government policies be an enabler for growth. He called for transparency in pricing, policy commitment and raw material security.
Mr Arun Kumar Sinha, Joint Secretary, Department of Public Enterprises, discussed the performance of the steel public sector enterprises. He noted that large investments were being made in modernization and capacity addition. He expected steel demand to grow in double digits in the next year.
Discussing global megatrends and imperatives for Indian steel companies. Mr Abhishek Poddar of AT Kearney Ltd, said Indian steel makers needed to focus on the following areas:
- Define and focus on the right competitive positioning
- Adjust the innovation agenda
- Excel in capital investments and project execution
- Pursue M&A for gains in raw materials, markets and technology
- Not forget the ‘old’ virtues of cost management, procurement management and supply chain management
He said there was need for network specialization as there was also increasing demand for greater innovation and special steels, especially from the auto sector. Volatility along the steel value chain has also increased. This called for raw material linkages and value addition within the country. To improve efficiencies, steel makers were increasingly focused on automation and IT.
Adequate supplies of critical raw materials such as iron ore and coal at competitive prices need to be attained and the industry looked to the government for support in this regard.