Financial Year 2022-23 - A Glance
MACRO-ECONOMIC SCENARIO
Global inflation is expected to subside only gradually, from an
estimated 9.3 percent in 2022 to 6.7 percent in 2023 and 4.3 percent in 2024. It is
expected that major central banks might end their tightening cycles by mid-year as
inflation slows, but rates will remain high in 2023 24. The Global GDP trends and
forecasts is shown below:
However, developing economies will observe comparatively higher growth
rates. The emerging market and developing economies across all regions are expected to
grow by ~4.2 percent in 2024. Moreover, India will continue to be the bright spot in the
world economy, accounting for ~15 percent of global growth in 2023.
Despite strong global headwinds and tighter domestic monetary policy,
India is still expected to grow between 1000 6.5 percent and 7.0 percent as shown in
below. This reflects Indias underlying economic resilience and ability to recoup,
renew, and re-energize the growth drivers of the economy. 500
Global steel production has increased from 850 MT in 2000 to 1,878.5 MT
in 2022, due to an increase in demand (majorly because of rapid industrialization). Steel
production grew at an accelerated rate of ~6 percent from 2000 to 2008. The growth was
fueled by China, Japan, the US, Russia, and Germany. During the same period, China and
Indias steel production grew at a CAGR of 18.7 percent and 10 percent, respectively.
In 2006, India became the fifth-largest steel- producing country. The years 2008 2015 saw
a steady growth in global steel production led by China, Japan, and India. During this
period, steel production in China and India grew at a CAGR of 7 percent and 6.3 percent,
respectively. India surpassed the USA in 2015 to emerge as the third-largest steel
producer after China and Japan. The next seven years saw decent growth in steel production
amidst the impact of COVID-19 and the subsequent shortage of raw materials. However, India
overtook Japan to become the second-largest producer of steel in 2018. Today, the global
steel industry remains a critical part of the global economy, with China being the
worlds largest producer of steel, followed by India, Japan, the US, and Russia. The
Global crude steel production trend of China, India and Rest of the World is shown in
Figure below:
Overview of Indian Steel Industry
India Worlds Second Largest producer of Crude Steel
India is the second-largest producer of crude steel globally with 125.5
MT of crude steel production in FY 23, registering an increase of ~4.8 percent compared
with 119.8 MT produced in FY 22. Indias crude steel production grew at a CAGR of 7.2
percent from 2000 to
2022. Crude steel production fell by ~6.4 percent during FY 21 to 102.1
MT as most of the steel-producing regions witnessed a decline in crude steel output (due
to production cuts amidst a more stringent lockdown in the country). However, the domestic
steel industry witnessed a significant boost in production levels growing at ~17.4 percent
to reach 119.8 MT in FY 22. Indias crude steel productionfinishedsteel production,
and consumption. In FY22, the production of crude steel and finished respectively. In
April-Oct 2022, the production of crude steel and finished steel stood at 71.56 MT and
68.17 MT respectively. In FY22, crude steel production in India is estimated to increase
by 18%, to reach 120 million tonnes, driven by rising demand from customers. The
consumption of finished steel stood at 105.751 MT in FY22. In July 2022, the consumption
of finished
Source: Steel Mint
There has been a gradual shift in steel production routes over the past
few years from induction furnaces to Electric Arc furnaces (EAF) by steel producers,
primarily due to the inferior quality of products through the former route. The share of
steel production through the Basic Oxygen Furnace (BOF) route is expected to increase in
the future (mainly due to better product quality and the low availability of graphite
electrodes).
At present, India produces 55 percent of its steel through the EAF/IF
(Electric Arc Furnace/ Induction
Furnace) route. However, the NSP envisages reducing this share to 35 40
percent while the remaining 55 60 percent is envisaged to come from the Blast Furnace
route. Globally, the share of the EAF/ IF route is considerably small at 26.8 percent
while that of China is a mere 9 percent.
| S. No. |
Company |
Existing Capacity in MT (FY22) |
Expansion Plans in MT (FY30) |
| 1 |
JSW |
27 |
50 |
| 2 |
Tata Steel |
20.6 |
40 |
| 3 |
SAIL |
23.3 |
50 |
| 4 |
JSPL |
9.6 |
50 |
| 5 |
AMNS |
9 |
30 |
| Sub-total |
|
89.5 |
220 |
Steel manufacturing companies in India are classified into integrated
steel producers and secondary producers based on their presence in the value chain.
Integrated players, such as JSPL, JSW Steel, Tata Steel, SAIL, Essar Steel, Rashtriya
Ispat Nigam account for ~61 percent of the total finished steel production. Traditionally,
India was a net importer of finished however, the tide turned in FY17 when India became a
net exporter. With the only exception in FY19, India has always been a net exporter of
finished steel since then.
Even during FY23 when the government had imposed export duty on steel
products for half of the year, India has still managed to be a net exporter. Finished
Steel trade in India. Some key factors that helped India revive its trade deficit finished
steel include domestic support to the industry, the introduction of anti-dumping duties
and safeguard duties for steel products. The latest anti-dumping duties imposed by India
include the import of stainless steel, seamless tubes, and pipes from China and the import
of electro galvanized steel from Korea RP, Japan, and Singapore. All such measures were
not only directed to restrict the import of steel products at a competitive landed price,
but also to improve capacity utilization, price realization, and profitmargins for
domestic producers.
In FY22, exports and imports of finished steel stood at 13.49 MT and
4.67 MT, respectively. In FY22, Indias export rose by 25.1% YoY, compared with 2021.
Indias per capita consumption of steel grew at a CAGR of 4.43% from 46 kgs in FY08
to 74.10 kgs in FY19. In July 2022 exports of finished steel stood at 3.80 lakh MT.
The government has proposed to introduce new Brand India labelling
norms for certain steel products manufactured under identified quality control metrics.
The label steel, would be given to products manufactured by following 13 sector specific
metrics designed by the steel . consultation with the industry. These metrics includes the
production process, location, product design and quality standards for steel products.
Currently, SAIL and Jindal Stainless will initiate a pilot
manufacturing process of these world class steel products that would carry the Brand India
label. After the completion of the pilot process, the government proposes to bring all
local steel manufacturers to join the initiative and start promoting Brand India Steel in
domestic as well as global markets. This will set new benchmarks for credibility and
quality and strengthen countrys domestic manufacturing in line with the Atmanirbhar
Bharat initiative and showcase the strength of the Indian steel industry by leveraging the
‘Brand India label on steel products in both domestic and export markets.
Indian Economy
Opportunities for the Indian Steel Industry
Self-reliance and emergenceas a manufacturing hub
The Indian government has embarked on ambitious missions such as
Atmanirbhar Bharat and Make in India.
As part of the Atmanirbhar Bharat PLI scheme was recently introduced
for multiple sectors.
Renewable energy and battery storage
Industry consolidation Government has set an ambitious target to
achieve 450GW renewable energy by 2030.Batteries will enable current energy transition
towards electric mobility, integration of renewable energy through grid scale storage and
increase energy access in India.
Global Recycling and circular steel economy
Urbanisation
Transition to circular steel economy and Trends production of steel
through the recycled route entails lower carbon emissions, lower resource Indian
consumption and lower energy utilization.
Government has notified the steel scrap recycling policy in 2019 to
enable availability of De-carbonisation quality domestic scrap to the steel sector. and
sustainability
Infrastructure
Investments in physical and digital infrastructure via theSmart Cities
mission, PMAY, Digital India Protectionism and will be instrumental in meeting the needs
of Industry 4.0 resource nationalism connectivity and urbanization
Source: Deloitte Analysis, Secondary Research, Press Information Bureau
Further, Government has taken various steps to boost the sector
including the introduction of National Steel Policy 2017 and allowing 100% Foreign Direct
Investment
(FDI) in the steel sector under the automatic route. According to the
data released by the Department for Promotion of Industry and Internal Trade (DPIIT),
between April 2000 - September 2022, Indian metallurgical industries attracted FDI inflows
of US$ 17.09 billion. The Governments National Steel Policy 2017 aims to increase
the per capita steel consumption to 160 kgs by
2030-31.
The Government has also promoted policy which provides a minimum value
addition of 15% in notified steel products covered under preferential procurement.
In 2019, the Government introduced Steel Scrap
Recycling Policy with an aim to reduce import.
The industry is also benefitting from the developments happening across
various industries. The new Vehicle Scrappage policy will help in reducing the steel
prices since the policy enables recycling the materials used in old vehicles.
Source: https://www.ibef.org/industry/steel-presentation
Advantage India
1. Robust Demand
Indias finished steel consumption stood at 75.34 MT in April-November
2022.
According to Mr. Arnab Kumar Hazra, Deputy Secretary-General of Indian
Steel Association, in CY23, crude steel production is expected to touch 134 MT finished
production to around 127-128 MT.
To drive post COVID-19 economic recovery, for the government has
planned investments in roads, railways, metro connectivity, industrial parks, industrial
corridors, DFC, transportation of water, oil and gas, transmission towers, affordable
housing. All these sectors will drive demand for steel.
2. Competitive Advantage
In April-November 2022, the production of crude steel in India stood at
81.96 MT.
Easy availability of low-cost manpower and presence of abundant iron
ore reserves make India competitive in the global set up.
India is home to fifth-of iron ore in the world.
3. Policy Support
In October 2021, the government announced guidelines for the approved
specialty steel production-linked incentive (PLI) scheme.
Export duty of 30% has been levied on iron ore* (lumps and fines) to
ensure supply to the domestic steel industry.
Under the Union Budget 2023-24, the reserves government allocated Rs.
70.15 crore (US$ 8.6 million) to the Ministry of Steel.
4. Increasing Investment
To achieve steel capacity build-up of 300 MTPA by 2030, India would
need to invest US$ 156.08 billion by 2030- 31.
The industry is witnessing consolidation of players, which has led to
investment by entities from other sectors. The ongoing consolidation also presents an
opportunity to global players to enter the Indian market.
Outlook
Our key segment of business is Wire division and Plastic Division. We
have expanded our capacity by 3 times in last 5 years in wire division. In plastics
division, our capacity is increased by 2 times in last 5 years of business. We continue to
grow faster with facing challenges and overcome with all obstacles.
Strengthening Capacities to enable Growth
Planning to expand capacities further to enable growth
We further planning to expand our footprint to emerging markets and
therefore we need to expand further capacities in wire and plastic division. Our primary
focus on wire division in which we are planning to increase our bandwidth and meet our
customers requirements.
The Company has wide basket of products which cater to our customers
across the globe with presence in countries like Nepal, Oman, Doha, Muscat, Sri Lanka.
R&DDepartment of the Company looks after the innovation and also takes into
consideration the standards laid down under the ISO certification 9001:2015. Atpresent
there are only three suppliers who are dealing in Stranded Wires andwe are an approved
supplier of various
Government authorities like NationalHighway Authority in India(NHAI),
National Thermal Power Corporation Limited(NTPC), Delhi Metro Rail Corporation
Limited(DM-RC), Public Work Department(PWD), Central Public Work
Department(CPWD), Railways, large public and private sector industries.
Due to increased overseas demand and technological advancement the Company has vide
opportunities to expand its existing production capacity, business operations and product
base across the
Globe.
The development of a countrys infrastructure is vital to the
growth of its sectors and the overalleconomy. There is an opportunity for DP Wires Limited
to become more organized, through growth and acquisitions. This would improve overall
construction quality. Strong population growth and a growing economy is fueling demand for
infrastructure. The governmentis looking to attract private companies to invest in
infrastructure through public-private partnership (PPPs). With emphasis on “Vocal for
local”, the company sees many opportunities in renewable power in India. We have set
up wind energy based 2 wind farms of 0.80 MW each in village
Okha-Madhi and Jodhpur in District Jamnagar, Gujarat. These wind farms
are connected by 33kV grid capacity Enercon Site, sub-station at Bhogat.Global slowdown in
international market, logistics and transportation hurdles, increased competition,
technological changes etc. remains as threats.
+91-9892691696
