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Part - VII

Production of Value added and International quality products
The industry should change its product mix with more importance given to Value added products (like automobile grade galvanized steel) so that a shift is made from being classed as a commodity to being a branded product. The brands of Tata Tiscon, Essar 24 Carat steel, Salem steel and Sail super value steel are being introduced as tools of aggressive marketing. The industry should try to integrate itself with the end user i.e. customer gained importance. India has the capability to produce a variety of grades of steel and that too, of international quality standards. As per the ratings of the "World Steel Dynamics", Indian HR products are classified in the Tier II category quality products - a major reason behind their acceptance in the world market. EU, Japan has qualified for the top slot, while countries like South Korea, USA share the same class as India. India in order to become globally competitive has to increase its quality to Tier I status and should have the right blend of product mix so that it can create a niche in the global market for its products.

Consolidation in the form of Mergers and Acquisitions
Europe has been credited for bringing consolidation in its steel industry through the creation of the world's steel giant Arcelor through the merger of Arbed, Usinor and Aceralia. The privately owned UK Dutch Company LNM Holdings (Ispat) experienced the fastest growth through its strategy of consolidation in Eastern Europe. India too has taken a step in this direction by forming an Indian Steel Alliance of five private players namely SAIL, Essar Steel, Tisco, Ispat Industries and Jindal Steel. The alliance objective is to promote domestic consumption of steel, take up common export efforts, fight protectionism in importing countries and make representations to the Government about policies to support steel industry. But most of the Indian Manufacturers are significantly small in size in relation to their global counterparts and hence consolidation has almost been absent on account of financial distress of most of the companies, leaving them with limited free cash and reluctance of investors to find such deals. To facilitate consolidation a strategy in which Banks and Financial Institutions are involved to provide loans at lower interest rates should be devised and International players should be asked to form Marketing Alliances with Indian companies.

Focus on Exports
India's share in the export market is negligible with only 2.7million tons exported out of the 30million tons production in 2001-02 only 9% the total production and around 1% of the world's steel trade. With the major demand coming from China where a lot of infrastructure development is taking place and a lot of demand coming from South East Asian countries. India being strategically placed can become a preferred exporter of steel to these regions.

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* Contributed by: -
Amit Chaddha,
B.E. (Metallurgy), MMS (Marketing),
School of Management Studies,
MNNIT Allahabad.