SUMMER TRAINING PROJECT REPORTONEXPORT POTENTIAL OF STEEL BILLETS AND HOT ROLLED COIL IN MENA AND SOUTH EAST ASIAN REGION Undertaken at

Submitted for the Partial fulfilment of the requirementTowards the award of Degree ofMaster of International Business (MIB)Session 2011-13Submittedby

Under the Supervision of Mr. VINOD KUMAR SINGHAL AGM, (M-ITD), SAIL

CENTRE FOR MANAGEMENT STUDIES JAMIA MILLIA ISLAMIA New Delhi-110025

DECLARATION

I, .., a bonafide student of MIB (Full Time) Programme at the Centre for Management Studies, Jamia Millia Islamia, New Delhi, hereby declare that I have undergone the Summer Training at STEEL AUTHORITY OF INDIA LTD, INTERNATIONAL TRADE DIVISION, India under the supervision of Mr. Vinod Kumar Singhal on export potential of Steel Billets and Hot rolled coil in MENA and South East Asian region

I also declare that the present project report is based on the above summer training and is my original work. The content of this project report has not been submitted to any other university or institute either in part or in full for the award of any degree, diploma or fellowship.

Further, I assign the right to the university, subject to the permission from the organization concerned, use the information and contents of this project to develop cases, case lets, case leads, and papers for publication and/or for use in teaching.

ACKNOWLEDGEMENT

I am heartily thankful to my supervisor Mr. Vinod Kumar Singhal, AGM, (Marketing-ITD), whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the project .It is his support and guidance due to which I remain able to come out with this project report.

I owe the highest sense of appreciation for the talented, Cooperating and hardworking team of SAIL (ITD) especially Mrs. Shanta Rao, DGM (Marketing-ITD) and numerous other officials including Mr. Rohan Singh Meena, Jr. Manager (M-ITD), SAIL and Mr. S.M. Razi, Jr. Manager (M-ITD) SAIL for cooperating during the Internship and for providing me the most valuable comments and suggestions without which this report might not have been complete.

I also wish to express my gratitude to the management of SAIL-INTERNATIONAL TRADE DIVISION, who rendered their help during the period of my project work.

Last but not least I wish to avail myself of this opportunity, express a sense of gratitude and love to my friends and my beloved parents, specially my mother for their immense support, strength, their faith in me and for everything.

EXECUTIVE SUMMARYSteel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the five Maharatnas of the country's Central Public Sector Enterprises.

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railways products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias second largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making.SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions,25 DepartmentalWarehouses, 42 Consignment Agentsand 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealersover 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country.SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants.The research has been carried out to Estimate the Export Potential of steel billets and Hot Rolled coil with focus on MENA (Middle East & North Africa) and South East Asian region. The report is based on the desk research methodology .The study covers the annual imports, exports, consumption and future demand of the respective products in the regions.

The Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented.The Middle East and North Africa (MENA) remains a source of high demand for steel, which continues to outpace the rest of the world. Meanwhile, a persistent trend of recycling high gas and oil prices into construction and capital investments in the region continues to serve fast-growing, increasingly wealth populations. These trends have been in place for nearly a decade now as a result supply is being developed to meet the higher levels of demand. Nonetheless, external suppliers remain important players as they fulfil over one-third of demand generated in the MENA region.Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries and in 2010, Egypt and Saudi Arabia ranked 24th and 28th respectively. And in 2011 Egypt and Saudi Arabia ranked 24th and 27th respectivelyThere are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year.The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favourable demand ,congenial environment and relatively cheap energy prices.The Egyptian steel industry represents one of the cornerstones of Egypts economic growth and development, due to its linkages to almost all other industries that stimulate economic expansion. Steel is everywhere, in construction, housing, infrastructure, consumer goods and automotive industry, all rely heavily on the steel industry and so, the importance and development of the steel sector is imperative for the progress of the Egyptian economy in general.Egypt is definitely playing a key role as a major producer of steel in the Middle East & North Africa. In a ranking of 59 countries, "FDI Intelligence" ranks Egypt 2nd in Africa with regard to Foreign Direct Investment (FDI) in FY 2010/11. This affected on the growing of the steel industry in Egypt.The political uprising in MENA region has certainly affected the business but there is a bigger opportunity for Exporters to MENA region as the governments of Kuwait, Kingdom of Saudi Arabia and Republic of Syria has announced the Billions of dollar packages of developments to suppress the dissent in protestors even by distributing cash subsidy and money to buy homes for them which will boost the demand for housing and infrastructure sectors once again in MENA region. Kingdom of Saudi Arabia has allotted US $ 6 billion for housing projects for enabling people to buy home.

Morocco was ranked 3rd, Sudan 15th and Ethiopia 10th by Grail Research among African nations in Steel producing capabilities. The Sudanese iron and steel industry begancontributing to meeting the growing domestic needs of the iron and steel products represented in the reinforcing steel, wire rods and tubes and pipes. This industry has seen its start-up in concurrence with founding Giad industrial city established by the Sudan Master Technology Company. The annual production capacities are estimated by 60 thousand tons of crude steel, 150 thousand tons of long products and 140 thousand tons of pipes. Sudan Master Technologies Company completed the iron and steel complex consisted of two mills, the first specialised in billets production with a capacity of 60 thousand tons per year, which comprises one electric arc furnace, and one Ladle furnace to receive the molten metal with the capacity of 25 tons charge. The second mill is specialised in reinforcing steel production of a range of 8 25 mm diameters, angles of 25 to 50 mm sizes and 3-4 mm thickness, and flats with 16-60 mm sizes and 3-10 mm thickness.The investment value in this mill is 38 million U.S dollars. It employs 130 workers, engineers and administrative personnel. It extends over an area of 33 km2.The production of crude steel of MENA region has risen by 13% in 2010-2011.This is also due to the upcoming football world cup in 2022 in Qatar and the proposed housing projects by many Arab nations.South-East Asia South East Asias appetite for steel is expanding more rapidly. The region comprises several countries whose economies are growing and changing, and it is well located on major seaborne trade routes. It also has free-trade agreements in place with over half of the worlds population the steel industry in ASEAN registered a double digit growth of 16.8% in 2010, mainly due to the high growth rates in Indonesia, Malaysia and Thailand. The integration of Southeast Asias economies into a single production base, the ASEAN Free Trade Area (AFTA), is yet another attraction of the region as tariff barriers are eliminated among its member countries. As far as the production is concerned the Malaysia was ranked 26th with production of 5.7 million tonnes of steel in 2010, and in 2011 Malaysia remained at the same position that is 26th with production of 6.0 million tonnes of steel. Vietnam was ranked 32nd in both the year 2010 and 2011 with the production of 4.3 and 4.6 million tonnes of steel respectively. The position of Thailand was changed from 34th to 33rd from 2010 to 2011, with the production of 4.1 million tonnes and 4.4 millions tonnes of steel respectively Indonesia was ranked 37th in both the years that is 2010 and 2011 with production of 3.7 million tonnes and 3.8 million tonnes of steel Preliminary data compiled by SEAISI revealed that apparent steel consumption in ASEAN expanded by 4% y-o-y to 50.5 million tonnes in 2011. Singapores steel consumption surged significantly by more than a million tonnes to 3.8 million tonnes in 2011. Surprisingly, Thailands steel consumption increased by 3% y-o-y amidst the severe flood situation and the economic slowdown in the country. Steel consumption in Indonesia and Philippines rose by 8% to 9.7 milliion tonnes and 4.3 million tonnes in 2011, respectiviely. On the other hand, Malaysia and Vietnam both experienced declines in steel demand. Malaysias steel consumption of 8.05 million tonnes in 2011 was a decline of 3.2% y-o-y while Vietnams tight monetary and fiscal policies slowed down its domestic steel demand to 10 million tonnes, a decline of 5.4% y-o-y. South east asian region are the net importer of the steel as the production is far less than the demand infact the top 15 net importer of steel in the world, according to world steel association, is comprises of six nation of the south east Asia. In year 2011, Thailand ranked 2nd largest net importer of the steel in the world with import of 10.9 million tonnes, Vietnam ranked 3rd with net import of 8.3 million tonnes, whereas Indonesia occupied the 5th position with net imports of 7.3 million tonnes, Philippines 9th with 3.8 million tonnes of net imports, Singapore ranked 10 with 3.1 million tonnes of net imports and Malaysia ranked 15th with 2.6 million tonnes of net imports We can see that a large portion of net importer is occupied by the south east asian region that shows that there is an immense export potential of steel in south east asia

CONTENTS CHAPTER 1 1.1 Export potential of product: a brief background of issues 9 1.2 Export potential of product of sail 10

1.1 EXPORT POTENTIAL: A BRIEF BACKGROUND OF ISSUES Export Potential involves studying, analysing the actual potential of a Product in an International Market. Export Potential involves doing a complete market research on a prospective market. It is through International Market Research that a Potential of a product is estimated and then implemented. The techniques or methods of estimating the export potential are, by and large, the same/familiar for different markets but these may have to be varied depending upon the market characteristics, the time and money to be spent and the availability of data or information. Export potential is a highly technical and scientific activity, requiring good planning and methodology to find out the accurate information on the market.EXPORT POTENTIAL COVERSEstimating the Export Potential usually involves the following attributes:A. Exporting Country Trade Regulations.B. Market Access covering tariffs and Quotas, internal taxes, currency restrictions, health and political factorsC. Market Size covering production, imports, exports, consumption, derived demand and market segmentationD. Factors affecting demand such as economic , climate, geography, social and cultural factorsE. The most important and foremost is the level of CompetitionF. Product research covering such as packing for shipment and the product pack.G. Marketing Practices covering such as Transport logistics, Sales and Distribution, Pricing etc RESREARCH TECHNIQUES OF ESTIMATING EXPORT POTENTIALThe numbers of research techniques are used for appropriate information for export marketing. Different methodology is employed according to the objective and scope defined for research.Basically there are two methodsA. Desk Research or Secondary ResearchB. Field Research or Primary ResearchDESK RESEARCH/SECONDARY DATADesk or secondary research is the search for information from relevant data already available. The data could take the form of information from censuses or information readily available from industry and trade directories.A. Desk Research uses secondary data from:B. Internal sources i.e. company itselfC. External sources using libraries of industry and trade associations, chambers of commerce, export promotion organizations, international bodies such as International Trade Centre, Geneva, CBI, Holland etcD. Internet sites of various agencies/organizations such as ITPO,WTO,IMF,ITC etcE. Publications(books, magazines, journals, newspapers)F. Market study/survey reportsG. Trade delegation reportsH. Catalogues of MNCs or leading world manufacturersI. Company profilesJ. Market intelligence reports FIELD RESEARCH OR PRIMARY RESEARCHField research is employed to collect primary data by:A. Observation methodB. Survey methodField Research focuses on consumer or buyers motives (e.g. Why they will buy your product instead of your competitors product), which forms the basis of the positioning strategy.The process of conducting field research in estimating the export potential includes1. visiting the researcher own country2. Visiting potential overseas markets which involvesA. Planning of visitsB. Seeking /making appointments with target companies/organizationsC. Field research in exhibitions/trade fairs which involves Right TimingD. Questionnaire1.2 EXPORT POTENTIAL OF PRODUCTS OF STEEL AUTHORITY OF INDIA LIMITED: A BRIEF BACKGROUNDSteel Authority of India Limited exports its Steel Products through its International Trade Division. International Trade Division (ITD) of SAIL at New Delhi an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants. SAIL from time to time conducts International Marketing research for estimating Export potential of its Steel Products. SAIL maintains a close liaison with various information agencies, bodies, organizations for extracting a relevant PRODUCT-MARKET match. ITD is vigilant in meeting the demands of its global customers; ITD maintains a close liaison with customers and the production units to cater to the customized requirements of its customers both in terms of quality and sizes. ITD exports its product through Vizag, Vishakhapatnam, Haldia, Paradip ports.ITD exports steel products mentioned below via its joint venture service centreA. Rails, Structurals, Merchant Products, Wire Rods, Re-bars, Plate Mill Plates, Hot Rolled Coils, B. Hot Rolled Plates / Sheets, Cold Rolled steels, Chequered Plates, Slabs, Billets and Pig Iron.JUSTIFICATION OF MARKET RESEARCHSAIL is the largest steel producer in India and has a good presence in International market too. But the total export of SAIL last year was a less than 3% of their total sales (Rs 1100 Cr aprox.) Demand/Imports of steel products in MENA region is 40 Million Ton a year. Exports are not commensurate with the potential that the MENA region possesses. Similar is the case with south east asian region, where there is huge potential for export but also export does not commensurate with the demands, secondly south east asia is highly developing market for steel, shoeing a huge potential for the steel. It is against that background that a Market research has been done to understand the region demand, competition and imports so that appropriate export policies can be framed to increase market share of SAIL product. 1.3 OBJECTIVES OF RESEARCH STUDY1.3.1 TO STUDY THE EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENA REGION AND SOUTH EAST ASIAN REGION A. To study the world steel market scenario B. To study the Indian steel industry with focus on the plant capacity expansion and future prospectsC. To study the SAILs plants details, production, product line, industry performance, capacity expansion and CSR D. To study the role of ITD and CMO E. To study the product (billets and HR coil) information with focus on world steel trends F. To study the export potential of billets and HR coil with focus on MENA regionG. To study the export potential of billets and HR coil with focus on South EastAsian region1.4 SCOPE OF STUDYThe research study covers the Export Potential of billets and HR coil in MENA and South East Asian region. The study looks into the competition patterns of both the products globally as well as regionally. The study also covers the duty structure of both the products in prospective markets. 1.5 RESEARCH METHODOLOGYThe data for determining the Export Potential was based on secondary research and was entirely a desk based research. The data was collected in combination of literature search and analysis. Data from secondary sources such as research papers, internet and magazines was collected. The raw data were tabulated, processed and analyzed using the appropriate statistical techniques such as percentage averages, Co-relation values and presented in the form of Bar Chart in the light of clarity obtained in the course of the type of data encountered. DATA COLLECTIONThe present study has made the use of the following sources of secondary study:1. Iron and steel bulletins such as Metal Bulletin.2. Relevant books, Magazines, newspapers such as Hindu, Economic Times3. Relevant public records and statistics, historical documents and other sources of public information related with iron and steel trade4. Relevant websites of international organizations such as WTO, IMF, ITC 5. Information from within Steel Authority of India Limited6. Government websites such as Customs Australia, DGFT India, DGCI&SThe sources for unpublished data are many, for example relevant data may be available with scholars and research workers. However, these sources are not easy to access and need a lot of persuasion and lot of time. The researcher has not used such resources given the limitation of time available. The researcher has made used secondary data in formulation of research problem and identification of research objectives. Due care was taken to assess such data for its suitability for the study, because many such secondary data was found to be irrelevant to the research problem as also inadequate in the context of the problem which researcher want to study. 1.6 SCHEMATIC ACTION PLAN FOR PROJECT PREPARATIONFrom 24 may onwards the job was to study the INCOTERMS From 1 June onwards the job was to study contracts From 8 june onwards the job was to study UCPDC norms and Export Import documentation From 17 June onwards the job was to study the RBI regulation, central excise duties etc. As far as report is concerned following plan was followed Consultation of published literature on the subject 18-6-12

Tabulation and Data analysis 25-6-12

Report writing 10-7-12

2. WORLD STEEL SCENARIOThe 2009 global downturn and the subsequent recovery have brought to light the increasing importance of China and India to the world steel industry. In 2010, recovery in steel demand was far from consistent across the globe and steelmakers had to work hard to manage their working capital as a result of fluctuating demand. However, while most of the global steel industry continued to feel pressure from the recessionary trends of 2009, steel demand and associated production in the BRICK (Brazil, Russia, India, China and Korea) regions continued to be a key driver in growth. Brazil and South Korea recovered strongly from the economic crisis and are expected to register higher steel production in the medium term.However, the real shining lights on the horizon as far as growth in crude steel production, and the next frontier of growth, can be seen in both China and India. Both countries domestic steel demand not only survived the economic slowdown, but they also grew at a significant rate. As a consequence, China has become the virtual engine of the global steel industry, accounting for 45% of production in 2010, but India too has shown it is rapidly becoming an important part of the international steel market place. Indeed, it was recently confirmed as the fifth largest steel producer in the world, and there are strong predictions it will become the second largest steel producer globally in coming years.In 2012, global steelmakers are hoping for a more stable rate of recovery in demand. This will be dependent on whether there is an increase in consumer spending and business investment, to compensate for the potential lessening of government fiscal stimuli. Due to the sovereign debt crisis of many developed countries, there has been a marked shift from stimuli to austerity. In addition, the massive rise in oil prices inspired by political turmoil in the Middle East, coupled with the recent catastrophic events in Japan, increases the risks of a slowdown in growth during 2011. Global trade is estimated to grow by 5.7% in2011, which is a significant softening from 2010 when global restocking fuelled an 11.5 % increase. The future of both the developed and the developing world will be governed by different sets of factors. The emerging markets of China and India will continue to witness strong growth in their steel industries due to robust demand for construction and civil engineering, automotive and mechanical engineering .The growth of developed market show ever will be more dependent on supply-side response, innovative product offerings and substitutions. The key driving factor for the profitability of all steel players will ultimately depend on more tightly managed operating expenses and capital expenditure.Global Economy projected to grow by 4.4 percent in 2011 after clocking 5.0 percent in 2010. Subdued steel demand in EU, Japan and USA. Restriction on real estate and restructuring of small scale polluting steel units accompanied by infrastructure build up of backward areas inside the coastal belt in China maintain a moderate growth in demand in China. Rising trend in Finished Steel prices particularly in flat prices following rise in Coal and Iron Ore prices more backed up by cost of raw materials rather than by effective demand.Steel industry will witness big changes such as less imports, higher domestic production and greater investment in raw material. In 2011, it is expected that imports would consist mainly of raw material and nearly zero semis and finished construction steel. Construction steel is a big sector that gathers many top domestic steel businesses. Demand forecasts of construction steel, steel pipe and galvanized products are optimistic. However, development of pipe and galvanized sections will meet difficulty because of constrained supply of raw material. 2.1 World crude steel output increases by 6.8% in 2011 World crude steel production reached 1,527 megatonnes (Mt) for the year of 2011. This is an increase of 6.8% compared to 2010 and is a record for global crude steel production. All the major steel-producing countries apart from Japan and Spain showed growth in 2011. Growth was particularly robust in Turkey, South Korea and Italy.Figure 1: Annual crude steel production (Mt)

Annual production for Asia was 988.2 Mt of crude steel in 2011, an increase of 7.9% compared to 2010. The regions share of world steel production increased slightly from 64.0% in 2010 to 64.7% in 2011. Chinas crude steel production in 2011 reached 695.5 Mt, an increase of 8.9% on 2010. Chinas share of world crude steel production increased from 44.7% in 2010 to 45.5% in 2011. Japan produced 107.6 Mt in 2011, a -1.8% decrease from 2010. In 2011, South Koreas crude steel production was 68.5 Mt, a 16.2% increase compared to 2010.The EU recorded an increase of 2.8% compared to 2010, producing 177.4 Mt of crude steel in 2011. Spain produced 15.6 Mt of crude steel in 2011, a -4.6% decrease on 2010 while Italy produced 28.7 Mt in 2011, an 11.3% increase over 2010.In 2011, crude steel production in North America was 118.9 Mt, an increase of 6.8% on 2010. The US produced 86.2 Mt of crude steel, 7.1% higher than 2010.The CIS showed an increase of 4.0% in 2011, producing 112.6 Mt of crude steel. Russia produced 68.7 Mt of crude steel, a 2.7% increase on 2010 and Ukraine recorded an increase of 5.7% with a year-end figure of 35.3 Mt. Annual crude steel production for South America was 48.4 Mt in 2011, an increase of 10.2% on 2010. Brazil produced 35.2 Mt in 2011, 6.8% higher than 2010.Figure 2: Crude steel production annual growth trend (%)

Figure 3: Share of world crude steel production 2011, 2010

2.2 World Steel Demand Assessment (In 2011)2.2.1. Demand by RegionRegionSteel Demand, mt

EU (27)153

Other Europe33

CIS54

NAFTA121

Central & South America46

Middle East & Africa71

Asia & Oceania895

World1373

Figures above are finished steel product demand estimates for 2011 in millions of metric tonnes. 2.2.2. Demand by Product ShapeSteel shapeSteel Demand, mt

Flat products640

Long products615

Tube products118

World1373

Figure are indicative finished steel consumption estimates for 2011. Tube data includes welded and seamless tube. For chart, see below. Source: MCI assessments.

Demand estimates by shape indicate estimated world steel consumption analysed by flat products [including plate, hot rolled coil and sheet, cold rolled and coated sheet], long products [including rail, heavy sections, bar and wire rod] and tube [welded pipe and seamless tube]. Figures are estimates supplied by Metals Consulting International for year 2011.2.2.3. Demand by Consuming End-Use Industry

World steel demand by end-use market

Demand estimates by sector are indicative of global 2011 finished steel demand. Transport includes light passenger vehicles and trucks. Oil and gas sector estimate includes steel for large diameter pipe. Steel fabrication includes furniture and components. 'Other' includes packaging, wire, wire rope. Figures are MCI estimates for year 2011 world steel consumption.2.2.4. Demand by QualitySteel qualitySteel Demand, mt

Carbon steel1303

Engineering steel41

Stainless steel28

Tool steel~1

World1373

Figures are MCI estimates of finished steel consumption by grade for 2011. Engineering steels are often also referred to as SBQ steels (special bar quality steel); these are steels that typically move or rotate whilst in use. 2.2.5. Demand ForecastYear200920102011201220132014

World steel demand, mt114013011373142214861538

Figures to 2013 are consistent with World Steel Association [worldsteel] assessments of April 2012. 2014 figure is MCI estimate. All figures are millions of metric tonnes of finished steel. 2.3 World Steel in Figures 2012 The World Steel Association has published the 2012 edition of World Steel in Figures.Table 1: Major steel-producing countries20112010

1.China683.9 MtChina637.4 Mt

2.Japan107.6 MtJapan109.6 Mt

3.United States86.4 MtUnited States80.5 Mt

4.India71.3 MtIndia68.3 Mt

5.Russia68.9 MtRussia66.9 Mt

Table 2: Top steel-producing companies2011

1.ArcelorMittal97.2 Mt6Nippon Steel33.4 Mt

2.Hebei Group44.4 Mt7Shagang Group31.9 Mt

3.Baosteel Group43.3 Mt8Shougang Group30.0 Mt

4.POSCO39.1 Mt9JFE29.9 Mt

5.Wuhan Group37.7 Mt10Ansteel Group29.8 Mt

Table 3: Countries with the highest apparent steel use per capita2011

1.South Korea1,156.6 kg6Austria473.1 kg

2.Taiwan, China784.4 kg7China459.8 kg

3.Czech Republic595.7 kg8Italy459.5 kg

4.Japan506.7 kg9Sweden424.5 kg

5.Germany479.6 kg10Belgium-Luxembourg422.5 kg

Major exporter and importer of steel in 2011 2.4 Analysis and forecastThe global steel output is expected to hit 1625 mn tons in 2012 , which is up by 5.4% compared to 2011, according to MEPS, leading supplier of steel market information. It predicts that the BRIC countries, together with Turkey and USA, will account for 85 % of the growth in steel. It is believed that market sentiments are picking up in India and raw materials are becoming easier to source which will push up the annual steel production this year.

Asian steel making industry will expand over 60 mn tonnes this year to reach 1064 mn tonnes, in which China will hold a significant position. Chinese steel output is forecasted to grow by 7.9% year on year.

MEPS predicts that Turkish steel production will be at an all-time high figure this year. However, the rate of growth will be slower than last year due to a moderation in domestic consumption and lower exports.

North American raw steel production in 2012 is expected to rise by 4.7 percent to a figure in excess of 124 million tonnes, while South American steel manufacturing is likely to surpass the 50 mn tonne mark in 2012.

It is believed that steelmakers in Africa should be able to recover approximately half the lost tonnage from last year in 2012.

In the Middle East, the steel output figure will be the fourteenth consecutive rise in production, which will hit 25 mn tonnes

3. INDIAN STEEL INDUSTRY SCENARIOIndian steel industry plays a significant role in the countrys economic growth. The major contribution directs the attention that steel is having a stronghold in the traditional sectors, such as infrastructure & constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainless steel is finding innovative applications due to its corrosion resistive property. India has emerged as the fourth largest steel producing nation in the world, as per the recent figures release by World Steel Association in April 2011. In 2010, India was the 5th largest producer, after China, Japan, USA and Russia had recorded a growth of 11.3% in steel production as compared to 2009. Overall domestic crude steel production grew at a compounded annual growth rate of 8.4% during 2005-06 to 2009-10. The Indian steel industry accounted for around 5% of the worlds total productionTotal crude steel production in India for 2010-11 was around 69 million tonnes and its expected that the crude steel production in capacity in the country will increase to nearly 110 million tonne by 2012-13. Further, if the proposed expansion plans are implemented as per schedule, India may become the second largest crude steel producer in the world by 2015-16.

The demand for steel in the country is currently growing at the rate of over 8% and it is expected that the demand would grow over by 10% in the next five years. However, the steel intensity in the country remains well below the world levels. Our per capita consumption of steel is around 110 pounds as compared to 330 Pounds for the global average. This indicates that there is a lot of potential for increasing the steel consumption in India.

POSITION OF INDIA IN WORLD STEEL PRODUCTION IN 2010-11YEAR20102011

RANKCOUNTRYPRODUCTION*COUNTRYPRODUCTION*

1 China627.7China695.5

2Japan109.6Japan107.5

3U.S.A.80.6U.S.A.86.2

4Russia67India72.2

5India66.8Russia68.7

6South Korea58.5South Korea68.5

7Germany43.8Germany44.3

8Ukraine33.6Ukraine35.3

9Brazil32.8Brazil35.2

10Turkey29Turkey34.1

Note * production in million tonnesANALYSIS The India has occupied 4th position in the world steel production in year 2011 from 5th in 2010. It is believed that the it will occupy the second position in world steel production very soon. In 2011 India has not only increased the production but also defeated Russia though Russia too has increased its production. The increased production of steel is mainly compounded by the increased capacity of plants derived by the technological upgradations and higher labour productivity 3.1 PRODUCTION OF CARBON STEEL The growth was driven by capacity expansion from 47.99 million tonnes per annum (MTPA) in 2004-05 to 72.2 MTPA in 2011-12. The crude steel production grew at CAFR of 8.4% during the past five years that is 2005-2010, in further year growth is expected to grow at the rate of 10%. The total production of finished carbon steel in country has been 2010-11 as compared to 42.64 million tonnes in 2005-06. Indias steel production trends

The high share of the secondary sector in finished steel production is largely due to substantial supplies of semis, the basic feed material from the main producer for conversion to needed shape by rolling

3.2 PRODUCTION, CONSUMPTION AND GROWTH OF STEEL INDUSTRY IN INDIAThe rapid pace of growth of the industry and the observed market trends called for certain guidelines and framework. Thus was born the concept of National steel policywith the aim to provide the roadmap of growth and development for the Indian steel industry. India is one of the few countries where the steel industry is poised for rapid growth. Indias share in world production of crude steel increased from 1.5% in 1981 to around 3.5% in 2004, presently our share in world steel market is 4.7%. While plant closure and privatisation are rare in India, the private sector is considered to be engine of growth in steel industry and technological changes and modernisation are taking place in both the public and private sector integrated steel plants in India.

3.3 TRENDS IN PRODUCTION OF CRUDE STEEL IN PRIVATE AND PUBLIC SECTORTraditionally, Indian steel industry has been classified into main producers (SAIL plants, Tata steel and Vizag steel/RINL), major producers (plants with crude steel making capacity above 0.5 million tonnes-Essar steel, JSW steel, Jindal steel and power and Ispat industries) and other producers. The latter comprises of numerous steel making plants producing crude steel/finished steel (long products/flat products), pig iron, sponge iron are spread across the different states of the country. The following table highlights the total as also the contribution of private and public sector in crude steel production in the country. 3.4 PROCESS WISE PRODUCTION The process route-wise production of crude steel in the country during 2005-06, 2009-10 and April-December 2010-11 are shown in the table below and indicate the emergence of the electric route of production compared to the oxygen route:Crude steel production by Process Route Percentage share (%)

2005-06 2009-10 2010-11

Basic Oxygen Furnace (BOF) 52 45 47

Electric Arc Furnace (EAF) 18 24 26

Induction Furnace (IF) 30 31 27

Total 100 100 100

Indias current steel production capacity is 72.2 million tonnes per year including both public and private producers. According to the ministry of steel by 2011-12,the capacity is expected to increased to 124 million tonnes per annum on the back of major expansion plans announced by steel producer. According to the steel ministry, around 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes. Majorly investment plans are in states of Orissa, Jharkhand, Chhattisgarh, West Bengal, Karnataka, Gujarat and Maharashtra 3.5 CAPACITY EXPANSION PLANS ANNOUNCED BY STATES 3.6 IMMENSE GROWTH POTENTIAL IN INDIAN STEEL SECTOR Domestic crude steel production grew at a compounded annual growth rate of 8.4% in the last few years. Crude steel production capacity of the country is projected to be around 110 million tonne by 2012-13. 222 Memorandum of Understandings (MOU) have been signed with various states for planned capacity of around 276 million tonnes by 2019-20. Investments at stake are to the tune of $187 billion in the Steel sector. Increase in the demand of steel in India is expected to be 14% against the global average of 5-6% due to its strong domestic economy, massive infrastructure needs and expansion of industrial production. Demand of steel in the major industries like infrastructure, construction, housing, automotive, steel tubes and pipes, consumer durables, packaging and ground transportation. Target for $ 1 trillion of investments in infrastructure during the 12th Five Year Plan. Infrastructure projects (like Golden Quadrilateral and Dedicated Freight Corridor) will give boost to the demand in the steel sector in near future. Projected New Greenfield & up-gradation of existing Airport shall keep the momentum up. Increased demand of specialized steel in hi-tech engineering industries such as power generation, automotive petrochemicals, fertilizers etc. 4. Steel Authority of India Limited- A MAHARATNASteel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the five Maharatnas of the country's Central Public Sector Enterprises.SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias second largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making.SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions,25 DepartmentalWarehouses, 42 Consignment Agentsand 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealersover 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country.With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified. SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialisation of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954.VISIONTo be a respected world Class Corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction.CREDO We build lasting relationships with customers based on trust and mutual benefit. We uphold highest ethical standards in conduct of our business. We create and nurture a culture that supports flexibility, learning and is proactive to change. We chart a challenging career for employees with opportunities for advancement and rewards. We value the opportunity and responsibility to make a meaningful difference in people's lives.4.2 PRODUCTS OF SAILLONG PRODUCTS FLAT PRODUCTS

RAILWAY PRODUCTS

SEMIS

OTHER PRODUCTS

1.Structurals 2.Crane Rails 3. Z-Section Centre Sill 4. Z-Type Sheet-piling Section 5. M S Arch 6. Bars, Rods HYPERLINK "http://www.sail.co.in/sail%20product/Bars.html"&HYPERLINK "http://www.sail.co.in/sail%20product/Bars.html" HYPERLINK "http://www.sail.co.in/sail%20product/Bars.html"RebarsHYPERLINK "http://www.sail.co.in/sail%20product/Bars.html": SAIL TMT 7. Wire Rods

1. HR Coils, Sheets HYPERLINK "http://www.sail.co.in/sail%20product/Hotrolled.html"&HYPERLINK "http://www.sail.co.in/sail%20product/Hotrolled.html" HYPERLINK "http://www.sail.co.in/sail%20product/Hotrolled.html"Skelp 2. Plates 3. CR Coils HYPERLINK "http://www.sail.co.in/sail%20product/ColdRolled.html"&HYPERLINK "http://www.sail.co.in/sail%20product/ColdRolled.html" Sheets 4. GP Sheets HYPERLINK "http://www.sail.co.in/sail%20product/Galvanisedplainsheets.html"&HYPERLINK "http://www.sail.co.in/sail%20product/Galvanisedplainsheets.html" Coils, GC Sheets:SAIL JYOTI Tin Plates Electrical Steel 5. PIPES

1. Rails 2. Wheels, Axles HYPERLINK "http://www.sail.co.in/sail%20product/Wheels.html"&HYPERLINK "http://www.sail.co.in/sail%20product/Wheels.html" Wheel Sets 1.Blooms 2.Billets 3.Slabs

Pig Iron

4.3 PLANTS OF SAIL SAIL Integrated Steel Plants Rourkela Steel Plant(RSP) inOrissaset up with German collaboration (The first integrated steel plant in the Public Sector in India, 1959) BhilaiHYPERLINK "http://en.wikipedia.org/wiki/Bhilai_Steel_Plant" Steel Plant(BSP) inChhattisgarhset up with Soviet collaboration (1959) Durgapur Steel Plant(DSP) atDurgapur, West Bengalset up with British collaboration (1965) BokaroHYPERLINK "http://en.wikipedia.org/wiki/Bokaro_Steel_Plant" Steel Plant(BSL) inJharkhand(1965) set up with Soviet collaboration (The Plant is hailed as the countrys first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how) IISCOSteel Plant (ISP) atBurnpur,West Bengal

Special Steel Plants Steel Authority of India Limited (SAIL),Kanpur, Uttar Pradesh Alloy Steels Plants (ASP),Durgapur, West Bengal Salem Steel Plant (SSP),Tamil Nadu VisvesvarayaHYPERLINK "http://en.wikipedia.org/wiki/Visvesvaraya_Iron_and_Steel_Limited" Iron and Steel Limited(VISL), atBhadravathi,Karnataka

Subsidiaries Maharashtra Elektro-smelt Limited (MEL) inMaharashtra

4.4 MAIN ACTIVITIESA. It produces both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets.B. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steelsC. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines.D. SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business thorough International trade Division.E. SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants.F. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.G. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. 4.5 OWNERSHIP AND MANAGEMENT Steel Authority of India Limited is a public sector Undertaking. The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its Maharatna status, enjoys significant operational and financial autonomy.

4.6 INTERNATIONAL TRADE DIVISIONInternational Trade Division (ITD) of SAIL at New Delhi an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants. Ever ready to meet the exacting demands of its global customers, ITD maintains a close liaison with customers and the production units to cater to the customized requirements of its customers both in terms of quality and sizes. Its major products are also covered by stringent certifications such as CE marking, TUV and U mark required by sophisticated end uses in European markets.ITD has. The critical function of ensuring efficient shipment of export materials is performed by Transport & Shipping Division (T&S) Headquartered at Kolkata. T&S has branch offices at Haldia, Paradip and Vizag ports.ITD exports steel products mentioned below via its joint venture service centre Rails, Structurals, Merchant Products, Wire Rods, Re-bars, Plate Mill Plates, Hot Rolled Coils, Hot Rolled Plates / Sheets, Cold Rolled steels, Cold Rolled Non Oriented (CRNO) coils, Chequered Plates, Slabs, Billets and Pig Iron. Steel Authority of India Limited has successfully implemented its Export potential in the following markets: Japan, P.R. of China, Korea, Taiwan, Vietnam, Philippines, Singapore, Malaysia, Nepal, Bangladesh Thailand, Sri Lanka Indonesia, Australia, Europe

4.7 SAIL CORPORATE PLAN 2012SAILs newly announced Corporate Plan 2012 sets out the blueprint for this growth plan. According to an official of the company, a major factor that prompted formulation of Corporate Plan 2012 was the continual improvement in operating efficiency achieved by the company. As pointed out by the Chairman in many forums, exceeding rated shop capacity has become more of a norm rather than exception in the SAIL plants, he says. Also, the culture of cost reduction and improvement in business processes has helped the company build up its internal resources which will contribute to achievement of the growth plan. For realistic accomplishment of targets set, the plan has been split into two stages Stage 1 pertaining to the period up to 2006-07 and Stage 2 up to 2011-12.The plan defines the following key strategic goals for SAIL: To continue in the business of steel and steel-related activities To enhance market share in growth segments To improve profits by cost reduction and high value added products To achieve excellence in quality across the value chain To secure availability of key raw materials, and alleviate infrastructure bottlenecks which may constrain long-term growth To build customer-centric processes, systems, structure and procedures A significant feature of the plan is that it covers the 11th Five-year Plan period.4.7.1 PRODUCTIONCorporate Plan 2012 envisages production of hot metal from the integrated steel plants of SAIL reaching an aggregate level of about 20 MT per annum by 2011-12 against the current level of 13 MT. This would be achieved through optimal utilization of assets coupled with marginal capacity expansion. Plant-wise break-up of hot metal production would be as follows: The envisaged growth in volumes is to be achieved by: Realisation of full potential of existing assets Do-bottlenecking Linked facilities for value addition Capacity enhancement in growth segmentsBased on the above, crude steel production by SAIL is planned to reach a level of 18.7 million tonnes per annum (MTPA) by 2012 from the current level of 11.83 MT, leading to saleable steel production of 17.38 MTPA against the level of 10.73 MT achieved in 2003-04. In view of emerging market requirements, SAIL has also planned to raise its output of finished steel to 16.6 MTPA by 2011-12 from the current level of 8.6 MT, and reduce generation of semi-finished steel from 20% of saleable steel to 5%. This will enable inclusion of more value-added products in the companys product basket. Broadly, this would enable SAIL to achieve 30% market share in flat products and 23% in longs by 2011-12. 4.7.2 INVESTMENTSAIL has estimated that the measures to be taken to achieve the targeted levels of growth and sustain higher levels of cost and quality competitiveness will require investment in the region of Rs.25, 000 crore by 2011-12. The immediate priority schemes, to be taken/completed by 2006-07, have been estimated to be around Rs.4, 300 crore. The capital expenditure envisaged will be financed mainly through internal accruals, and will be supplemented by market borrowing if the need arises. Care will be taken to ensure that the companys debt-equity ratio attains, and is maintained at, a level of 1:1. The plan for capital expenditure covers up gradation/modernization of some existing assets as well as installation of some new facilities. The areas broadly identified for investment pertain to: Development of iron ore mines Rebuilding Coke Oven Batteries as BSP, DSP and RSP Revamping of iron & steel making facilities at BSP, DSP and BSL Installation of one blast furnace at RSP Installation of auxiliary fuel injection systems in all blast furnaces in a phased manner Installation of new finished mills Among new finished mills planned to be set up are: BSP: Thin slab casting/inline Hot Strip Mill (1.1 MT), Bar & Rod Mill (1MT), Pipe Plant (0.2 MT) DSP: Bar & Rod Mill (1.4 MT), Structural Mill (0.4 MT) RSP: Plate Mill (0.7 MT), CRNO Mill (0.075 MT) BSL: Hot Strip Mill (2.5 MT), CRM Line (0.6 MT) 4.7.3 RAW MATERIALSThe growth plan and achievement of quality/cost competitiveness of SAIL to a significant extent will hinge on the availability, quality and cost of key inputs like coal and iron ore.SAIL has the largest iron ore mining operations in India. To enable production of around 20 MT of hot metal by 2012, substantial development of mines to increase the iron ore production to a level of around 33 MT, including 6-7 MT of lump ore, will have to be taken up, sources said. To meet the requirement, SAIL has planned to adopt following strategies: Development new blocks/mines Increased production from existing mines to their potential Improving the quality of iron ore by suitable beneficiation Achieving operating efficiencies by economic scale of operations 4.7.4 IMPLEMENTATIONCorporate Plan 2012 has considered the following major risk factors in achievement of the targeted growth have been identified as Declining global steel demand and prices Constraints in availability, and cost of critical raw material like coking coal, iron ore, etc. Infrastructure constraints, viz. ports, railways, etc.These factors will be reviewed proactively and timely interventions will be ensured. Steel being a universal intermediary, its demand is driven by economic growth and the expansion trajectory of the industrial sector. The growth trajectory (reflected in terms of percentage of GDP growth) is essentially a range based on macro-economic parameters, government policies and global economic trends. While drawing up Corporate Plan 2012, conservative market growth projections have been considered. However, while the growth trends and macro indicator present opportunities for the companys higher growth potential; major risk factors have also been taken into consideration like decline in global steel demand and prices, non-availability/cost of major input materials like coal, etc. Therefore, in any case, SAILs plans may have to be revised from time to time, depending on the market growth, competition, international situation, change in countrys policies, resources availability, etc.

4.8 JOINT VENTURES AND MOUSAIL has promoted joint ventures in different areas ranging from power plants to e-commerce:A. NTPC SAIL Power Company Pvt. Ltd (NSPCL)A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.); manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 megawatts (MW). It has installed additional capacity by implementation of 500 MW (2 x 250 MW Units) power plant at Bhilai. The commercial generation of 1st Unit has commenced in April2009 and the 2nd Unit in October 2009 B. Bokaro Power Supply Company Pvt. Limited (BPSCL)This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power generating station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant. BPSCL has proposed to expand its capacity by installing 2x250 MW coal based thermal unit at Bokaro. In addition, construction activities are underway for installation of 9th Boiler (300T/Hr) & 36 MW Back Pressure Turbo Generator (BPTG) project at Bokaro. C. Mjunction Services LimitedA 50:50 joint venture between SAIL and Tata Steel formed in 2001. This company promotes e-commerce activities in steel and related areas. Newly added services include e-Assets sales, Events & Conferences, Coal Sales & Logistics, Publications etc... D. SAIL-Bansal Service Centre Ltd.SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel. E. SAIL&MOIL Ferro Alloys (Pvt.) LimitedSAIL has incorporated a joint venture company with M/s Manganese Ore (India) Ltd on 50:50 basis to produce Ferro-manganese and silico-manganese required for production of steel: MOU POSCO to establish strategic alliance for cooperation in a wide range of business & commercial interest areas. Pursuant to this, another MoU has been signed for joint venture initiative in the area of (a) manufacture & commercialization of CRNO; & (b) Exploration of upstream & downstream opportunities in utilizing FINEX technology by both the companies. Rashtriya Ispat Nigam Ltd. (RINL) - To jointly explore and develop low silica Limestone mines in the Sultanate of Oman. . Shipping Corporation of India Ltd (SCI) To set up a joint venture which will provide shipping-related services to SAIL for imported coking coal and also participate in worldwide dry bulk shipping trade. Government of Kerala (GOK) To revive the existing facilities at Steel Complex Ltd in Calicut owned by the state government, and also set up, develop and manage a TMT rolling mill of 65000 MT capacity along with balancing facilities and auxiliaries. Larsen & Toubro Ltd (L&T) To jointly set up, develop, manage and own captive/independent power plant(s) at suitable location/s to meet future power requirements of SAIL including opportunities to own captive thermal coal blocks to cater to the power plants requirements.. 4.9 SAILs FINANCIAL PERFORMANCE FY 2010-11

4.9.1. NET SALES (Rs. Crore) The net sales have been fell down in year 09-10 after a fair growth in year 08-09, but as per the recent scenario is concerned, the net sales 4.9.2 EARNING BEFORE INTEREST, DEPRECIATION AND TAX (in Rs. Crore) The earnings before interest, tax and depreciation is showing the declining trends in the recent years, after a good uprising in year 08-09 4.9.3 EARNING AFTER TAX

Earnings after tax is declining is well like earnings before tax, after an uprising in the year 09-104.9.4 EARNING PER SHARE The earnings per share is declining as far as recent financial years are concerned, FY 04-05 showing the best growth rate whereas FY 08 showing moderate growth rate. 4.10 PLANT AND PRODUCTION WISE PRODUCT MIX The following figure is showing the plant and production wise product mix, showing the capacity of each plant to produce each product

IISCO is having the largest capacity to produce the long products, followed by Bhillai steel plant Rourkela steel plants and Bokaro steel plant are the largest producer flat products followed by Bhillai steel plant Durgapur steel plant have the largest capacity to produce semis followed by IISCO steel plant. 4.11. CATEGORY WISE SALE VOLUME (%) ANALYSIS The largest share of sale volumes is taken by the HR coil, HR plates/sheets, Skelps which has been increased in year 2011 to 37% from 34% in 2010, Followed by PM plate whose share is remained same that is 14% for both the year 2010 and 2011. The share of semis has been fallen down from 11% in 2010 to 9% in 2011, whereas share of Round and TMT as well as railways products is static at 11% and 8% respectively in both the years. 4.12 SAIL EXPANSION PLAN 4.13 SAIL CORPORATE SOCIAL RESPONSIBILITY Health care Education 5. EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENA AND SOUTH EAST ASIA MENA (MIDDLE EAST AND NORTH AFRICA)The termMENA, for "Middle EastandNorth Africa", is anacronym often used inacademicand business writing. The term generally covers an extensive region, extending fromMoroccoin northwest AfricatoIranin southwestAsia. It generally includes all theArab Middle EastandNorth Africacountries.Gulf Cooperation Council(GCC), officially Cooperation Council for the Arab States of the Gulf, organization (est. 1981) promoting stability and economic cooperation among Persian Gulf nations. Its members are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In 1991 the GCC countries joined with Egypt and Syria to create a regional peacekeeping force. An aid fund was also established to promote development in Arab states; it was used to help liberate Kuwait in 1991. In 2003 GCC members eliminated tariffs on trade between member nations and established common external tariffs. They have agreed to establish a broader economic union (including a single market and currency; Oman and United Arab Emirates have opted out); a common market was established in 2008. Middle East & North Africa Steel Market at a glanceThe Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented.Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries. These positions reflect the substantial improvements that both countries underwent over the years to enhance their steel making capabilities. Steel production in the MENA region has been steadily increasing over the past two decades to meet the Arab countries ever growing demand for steel. In 1990, total steel production in the Arab countries amounted to approximately 4mn tons. In 2008, steel produced by Arab countries in the Middle East and North Africa amounted to 15.5mn tons.Steel manufacturers in Arab countries are exerting efforts to integrate and consolidate their position in the face of a growing worldwide industry trend of mergers and acquisitions. There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year. It is predicted that half of the world's steel production will be done in Arab countries by 2012 and Arab countries succeed in keep up with worldwide development in the steel industry.The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favorable environment and relatively cheap energy prices.5.2 STEEL SCENARIO IN MENA World Steel Association data shows that Global Crude Steel Production fell by 7% in 2009, or by 21% with Chinese growth excluded. Production in the Middle East increased by 6% in 2009, driven by a 9% increase in Iranian output while production in North Africa fell 12% leading to production across the region as a whole remaining unchanged. 2010 saw output in the Middle East increase by 11% while that in North Africa rose by 18% with 2011 seeing Middle Eastern production rise a further 7% with North African output falling by 15% following extensive unrest.

5.2.1 MENA crude steel production ANALYSIS The annual production of the crude steel in MENA is rising at the faster rate, showing the increased demand of the steel 5.2.2 Export of steel to MENA Combined exports of Steel Mill Products (semis, long & flat products, tubes) to the MENA region reached a record 48 million tonnes in 2008. While exports to the countries of the Middle East fell 22% in 2009 those to North African countries rose by 35% leading to only a 9% fall in the total shipped to the region as a whole. 2010 saw exports to the MIddle East rise just 7% on 2009 levels while exports to North Africa fell back 30% meaning that total exports to the region decreased a further 6%. 2011 saw exports to the region fall a further 6% to 40 Mt, including those to North Africa down by 13%.

ANALYSISThe year wise analysis shows that the export of the steel mills to Middle East has been declined as compared to year 2008Similarly the year wise analysis shows that the export of steel mills has been declined as compared 2009 in north African region.The quaterly analysis of the year 2011 shows that the export of the steel mills products is increasing gradually in both in middle east and north African region.The growth of the export potential in middle east is growing at more faster rate than north africa

5. PRODUCT INFORMATION Before going into the export potential we should be clear about the product, its manufacturing process, its types, and its performance in the world steel industry5.1 BILLETS Raw steel cannot be of use while in its pure form, thus it has to be cast into shape. The freshly made steel, which is still in the form of a metal bar or rectangle, is called steel billet. Steel billets became popular in the early 1800s, just after the British colonization of the United States ended and American entrepreneurs began to manufacture brass and bronze billet, which later became one of the fast-rising industries in the new country. Copper and iron were almost not to be found in the United States back then, as the British transported all American copper to Britain for further molding and processing.Steel billets have distinct characteristics as compared with already furnished steel bars and products. Billets have a specific grain structure, which enables the metal to be processed more intricately. Steel billets are also known for their malleability and ductility, especially when exposed to varying temperatures during shaping and molding. Billets or ingots are not of practical use until they have been formed into more functional shapes and sizes. While they have already been put in the furnace, they still require a series of shaping and molding procedures such as hot and cold working, milling and cutting before they are sold in hardware stores, or used for different applications. The unformed billets, however, can be used in striking currency such as coins and as reserves, similar to gold bars. Steel billets are considered fresh and raw, and they must undergo a series of manufacturing processes before they can be used for various purposes. Billets are made by means of freezing molten liquid, and are later exposed to extremely low temperatures in order to allow the metal to take shape and solidify in chemical structure. The temperature manipulates the metal's physical properties, and tones its strength and durability. The subsequent processes provide the metal's curved mold design so that it can fit the allotted space provided by other machines, which complete the finishing proceduresSteel billets result from the second stage of the steel production process. They are hot-rolled or forged from an ingot or strand cast. Smaller and longer than a bloom, billets are usually a square cross section less than 36 square inches. They are used for the manufacture of all 'long' steel products such as bars, rods, pipes, tubes, wire and wire products. 5.1.1 MANUFACTURING PROCESS

1. Ladle 2. Stopper 3. Tundish 4. Shroud 5. Mold 6. Roll support 7. Turning zone 8. Shroud 9. Bath level 10. Meniscus 11. Withdrawal unit 12. Slab

0. Liquid metal 0. Solidified metal0. Slag0. Water-cooled copper plates0. Refractory material

Molten metal (known ashot metalin industry) is tapped into the ladle from furnaces. After undergoing any ladle treatments, such as alloying and degassing, and arriving at the correct temperature, the ladle is transported to the top of the casting machine. Usually, the ladle sits in a slot on a rotating turret at the casting machine; one ladle is 'on cast' (feeding the casting machine) while the other is made ready, and is switched to the casting position once the first ladle is empty.From the ladle, the hot metal is transferred via arefractoryshroud (pipe) to a holding bath called atundish. The tundish allows a reservoir of metal to feed the casting machine while ladles are switched, thus acting as a buffer of hot metal, as well as smoothing out flow, regulating metal feed to the molds and cleaning the metal.Metal is drained from the tundish through another shroud into the top of an open-base coppermold. The depth of the mold can range from 0.5 to 2 metres (20 to 79 in), depending on the casting speed and section size. The mold is water-cooled to solidify the hot metal directly in contact with it; this is theprimary coolingprocess. It also oscillates vertically (or in a near vertical curved path) to prevent the metal sticking to the mold walls. A lubricant can also be added to the metal in the mold to prevent sticking, and to trap any slag particlesincluding oxide particles or scalethat may still be present in the metal and bring them to the top of the pool to form a floating layer of slag. Often, the shroud is set so the hot metal exits it below the surface of the slag layer in the mold and is thus called a submerged entry nozzle (SEN). In some cases, shrouds may not be used between tundish and mold; in this case, interchangeable metering nozzles in the base of the tundish direct the metal into the moulds. Some continuous casting layouts feed several molds from the same tundish.In the mold, a thin shell of metal next to the mold walls solidifies before the middle section, now called a strand, exits the base of the mold into a spray-chamber; the bulk of metal within the walls of the strand is still molten. The strand is immediately supported by closely spaced, water cooled rollers; these act to support the walls of the strand against the ferrostatic pressure (comparehydrostatic pressure) of the still-solidifying liquid within the strand. To increase the rate of solidification, the strand is also sprayed with large amounts of water as it passes through the spray-chamber; this is thesecondary coolingprocess. Final solidification of the strand may take place after the strand has exited the spray-chamber.It is here that the design of continuous casting machines may vary. This describes a 'curved apron' casting machine; vertical configurations are also used. In a curved apron casting machine, the strand exits the mold vertically (or on a near vertical curved path) and as it travels through the spray-chamber, the rollers gradually curve the strand towards the horizontal. In a vertical casting machine, the strand stays vertical as it passes through the spray-chamber. Molds in a curved apron casting machine can be straight or curved, depending on the basic design of the machine.In a true "Horizontal Casting Machine", the mold axis is horizontal and the flow of steel is horizontal from liquid to thin shell to solid (no bending). In this type of machine, either strand oscillation or mold oscillation is used to prevent sticking in the mold.After exiting the spray-chamber, the strand passes through straightening rolls (if cast on other than a vertical machine) and withdrawal rolls. There may be ahot rollingstand after withdrawal, in order to take advantage of the metal's hot condition to pre-shape the final strand. Finally, the strand is cut into predetermined lengths by mechanical shears or by travelling oxyacetylene torches, is marked for identification and either taken to a stockpile or the next forming process.In many cases the strand may continue through additional rollers and other mechanisms which might flatten roll or extrude the metal into its final shape. 5.1.2 WORLD BILLETS SCENARIOThe world steel asscociation have collected the data for the billets production export and import from all over the world on the regional basis. The following graphs are revealing the billet trade trends

A. World production of billets ANALYSIS Asia is holding the leading position in billet production followed by CIS and Europe The annual production of billet in CIS has been declined in year 2008-10 followed by slight increase in production in year 2010-11 The world production of billets was showing declining trends since year 2007-10, but increased fairly in year 2010-11 B. IMPORT OF BILLETS AND SEMIS ANALYSIS Asia is leading importer of billets followed by Europe and Middle East. But the annual import of billets in Asia have been declined in year 2010-11 Though Europe is the second largest importer of billets after Asia, the annual import of billets is showing a fair growth, making the region attractive for the billets export The world imports of billets though have declined sharply in year 2009-10 but have increased slightly in year 2010-11. C.EXPORTS OF BILLETS AND SEMIS

ANALYSIS The CIS countries are the leading exporter of the billets followed by Europe and Asia. The net export of the billets has been increased in CIS and Europe but declining in Asia in year 2010-11 The world export of the billets has declined in year 2009-10, but has recovered fairly in year 2010-11 5.2 HOT ROLLED COILHot rolled coils are a kind of FLAT steel product produced by the hot rolling process. Generally hot rolled flat product are categorised in three forms Hot rolled sheets Hot rolled plates Hot rolled coils 5.2.1 MANUFACTURING PROCESS Hot rolling is a metalworking process that occurs above the recrystallization temperature of the material. After the grains deform during processing, they recrystallize, which maintains an equiaxed microstructure and prevents the metal from work hardening. The starting material is usually large pieces of metal, like semi-finished casting products, such as slabs, blooms, and billets. If these products came from a continuous casting operation the products are usually fed directly into the rolling mills at the proper temperature. In smaller operations the material starts at room temperature and must be heated. This is done in a gas- or oil-fired soaking pit for larger workpieces and for smaller workpieces induction heating is used. As the material is worked the temperature must be monitored to make sure it remains above the recrystallization temperature. To maintain a safety factor a finishing temperature is defined above the recrystallization temperature; this is usually 50 to 100 C (90 to 180 F) above the recrystallization temperature. If the temperature does drop below this temperature the material must be re-heated before more hot rolling. Hot rolled metals generally have little directionality in their mechanical properties and deformation induced residual stresses. However, in certain instances non-metallic inclusions will impart some directionality and workpieces less than 20 mm (0.79 in) thick often have some directional properties. Also, non-uniformed cooling will induce a lot of residual stresses, which usually occurs in shapes that have a non-uniform cross-section, such as I-beams and H-beams. While the finished product is of good quality, the surface is covered in mill scale, which is an oxide that forms at high-temperatures. It is usually removed via pickling or the smooth clean surface process, which reveals a smooth surface. Dimensional tolerances are usually 2 to 5% of the overall dimension. Hot rolled mild steel seems to have a wider tolerance for amount of included carbon than cold rolled, making it a bit more problematic to use as a blacksmith. Also for similar metals, hot rolled seems to typically be more costly. TYPES OF HOT ROLLED COILSHot Rolled Oiled Coils:Hot Rolled Coils are provided with a special oil treatment to avoid scaling and rusting.Hot Rolled Oiled Coils having a high coating ability, weld-ability and a glossier finish. Hot Rolled Skin Pass Coils:Skin-passed rolling process is done after the steel coils are hot rolled. The skin passed process produces a smooth surface, and makes the thickness of the coil uniform, reducing the yield-point phenomenon. Hot Rolled Black coil: These coils are made from quality mild steel and having black texture Hot Rolled Heavy Thickness Coils:Hot rolled heavy thickness coils are the coils having the thicker dimension ranging from 6mm to 20 mm.Hot Rolled Pickled Coils:The pickling process of HR coils involves a 4 stage acid bath to remove the oxidized scratches and improve the surface quality of steel. HR Pickled Coils have increased formability, coating ability and weldability than regular HR Coils. 5.2.2 WORLD HOT ROLLED COIL SCENARIOThe given graph, as per the data collected by the world steel association, is showing the production scenario of the hot rolled flat products, including hot rolled coils, hot rolled sheets and hot rolled strips. The approximate production of the hot rolled coil can be estimated by looking at the overall production of hot rolled flat products

A.production of hot rolled flat product ANALYSIS Asia is the leading producer of the hot rolled flat products, followed by Europe and North America. Asia is showing remarkable growth in hot rolled flat production in year 2010-11, where as North America is showing fair and Europe is showing slight growth in the same. World production of hot rolled flat products have been increased in 2010-11 after deline in the year 2009-10 B. EXPORT OF HOT ROLLED COILS AND SHEET The world export of the hot rolled coils and sheets is shown in the given graph. The approximate share of the hot rolled coils can be estimated by looking at the total export of the hot rolled coils and sheets

ANALYSIS Since year 2006, the export of the hot rolled coil and sheet showing the declining trends till year 2009-10, but has increased in year 2010-11. From the above graph, we can conclude that the overall export of the export of the hot rolled coil has been increased in year 2010-11

6. EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENAMENA (MIDDLE EAST AND NORTH AFRICA)The termMENA, for "Middle EastandNorth Africa", is anacronym often used inacademicand business writing. The term generally covers an extensive region, extending fromMoroccoin northwest AfricatoIranin southwestAsia. It generally includes all theArab Middle EastandNorth Africacountries.Gulf Cooperation Council(GCC), officially Cooperation Council for the Arab States of the Gulf, organization (est. 1981) promoting stability and economic cooperation among Persian Gulf nations. Its members are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In 1991 the GCC countries joined with Egypt and Syria to create a regional peacekeeping force. An aid fund was also established to promote development in Arab states; it was used to help liberate Kuwait in 1991. In 2003 GCC members eliminated tariffs on trade between member nations and established common external tariffs. They have agreed to establish a broader economic union (including a single market and currency; Oman and United Arab Emirates have opted out); a common market was established in 2008. Middle East & North Africa Steel Market at a glanceThe Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented.Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries. These positions reflect the substantial improvements that both countries underwent over the years to enhance their steel making capabilities. Steel production in the MENA region has been steadily increasing over the past two decades to meet the Arab countries ever growing demand for steel. In 1990, total steel production in the Arab countries amounted to approximately 4mn tons. In 2008, steel produced by Arab countries in the Middle East and North Africa amounted to 15.5mn tons.Steel manufacturers in Arab countries are exerting efforts to integrate and consolidate their position in the face of a growing worldwide industry trend of mergers and acquisitions. There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year. It is predicted that half of the world's steel production will be done in Arab countries by 2012 and Arab countries succeed in keep up with worldwide development in the steel industry.The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favorable environment and relatively cheap energy prices. 6.2 STEEL SCENARIO IN MENA World Steel Association data shows that Global Crude Steel Production fell by 7% in 2009, or by 21% with Chinese growth excluded. Production in the Middle East increased by 6% in 2009, driven by a 9% increase in Iranian output while production in North Africa fell 12% leading to production across the region as a whole remaining unchanged. 2010 saw output in the Middle East increase by 11% while that in North Africa rose by 18% with 2011 seeing Middle Eastern production rise a further 7% with North African output falling by 15% following extensive unrest.

6.2.1 MENA crude steel production ANALYSIS The annual production of the crude steel in MENA is rising at the faster rate, showing the increased demand of the steel 6.2.2 Export of steel to MENA Combined exports of Steel Mill Products (semis, long & flat products, tubes) to the MENA region reached a record 48 million tonnes in 2008. While exports to the countries of the Middle East fell 22% in 2009 those to North African countries rose by 35% leading to only a 9% fall in the total shipped to the region as a whole. 2010 saw exports to the MIddle East rise just 7% on 2009 levels while exports to North Africa fell back 30% meaning that total exports to the region decreased a further 6%. 2011 saw exports to the region fall a further 6% to 40 Mt, including those to North Africa down by 13%.

ANALYSISThe year wise analysis shows that the export of the steel mills to Middle East has been declined as compared to year 2008Similarly the year wise analysis shows that the export of steel mills has been declined as compared 2009 in north African region.The quaterly analysis of the year 2011 shows that the export of the steel mills products is increasing gradually in both in middle east and north African region.The growth of the export potential in middle east is growing at more faster rate than north africa 6.3 EXPORT POTENTIAL IN MENAThe supply-demand imbalance between finished steel output and apparent consumption in the Middle East & North Africa (MENA) region is expected to widen in the next few years. MENAs apparent steel consumption was stagnant in 2011 due to political unrest in North Africa but should grow 8% in 2012, according to Abu Dhabi based galvanised sheet producer Al Ghurair Iron & Steel (AGIS).The Middle East has become a highly diversified market, with 74% of the UAE and 89% of Bahrains GDP being generated by non-oil sectors. The shortage of finished steel output against apparent steel consumption is even greater and this is expected to grow. In 2013, the regional shortage of crude steel and finished steel will be 7mt and 14.2mt respectively; this shows that there is room for expansion in these areas.Facts and Opportunities:-By 2013, the regional finished product demand is forecast to grow to 85.5mn tons with raw steel production projected at over 50mntons. This massive imbalance between supply and demand therefore means that the business opportunities for those involved in the region's steel sector is immense.-Middle Eastand Africa Oil and Gas Pipeline Industry outlook to reach $15bn by 2012.-New investments in the Arab's pipes, tubes and steel industries are expected to exceed by $20 billion between now and 2015.-The Middle East's construction sector is expected to grow at an annual rate of 3.5% through 2015, surpassing growth rates in the European and North American markets, , As more and more investment is poured into buildings, real estate and infrastructure developments

6.4 A FOCUS ON BILLET AND HOT ROLLED COIL Before going into the details of the billet and HR coil export let us first have a look over the respective products market. As we know that the billet belong to the semi finished steel product and HR coil belongs to long product, the graph here is showing the export trends of overall long, semis, flat and tubes product

ANALYSIS The year wise analysis shows that the overall export of the long product since 2008 has been declined in MENA, but quarterly analysis is showing the growing trends in export of the long products in 2011. The exports of the flat products showing the fluctuating trends throughout the period of 2008-11 but quarterly analysis shows the increasing trends. Similarly the overall demand of the semis has been declined as compared to the year 2008 quarterly analysis reveals that the export of semis is growing as well.6.4.1 BILLETS Billets are the key export product to both Middle East and North Africa due to its potential to be re-casted into various other finished steel products like rebar and others. Hence billets along with other semi finished steel shows a great export potential, particularly in MENA where infrastructure is on the boom. The given graph is showing the annual billets and semis imports to MENA. ANALYSIS The import of billets and semis has been increased in year 2010-11 in Middle East, where as imports of billets and semis has been declined sharply in North Africa Hence Middle East could be a potential destination for the exports of billets and semis in MENA. MAJOR BILLET AND SEMIS IMPORTING NATIONS IN MIDDLE EAST Though most of the countries in the Middle East are the billet importer but some of the them are showing the relatively higher share, similarly in North Africa major importing nations are few, though others are showing smaller share. 6.4.2 HOT ROLLED COILSHot rolled coil are the one of the major element in the construction, machinery, technical equipments, automobiles and other infrastructural developmentsThe demand of HRC is increasing in the MENA region which is getting fulfilled by their own production and imports. The production trends of the flat steel products can be used as the indicator to judge the production of the hot rolled coils PRODUCTION OF HOT ROLLED FLAT PRODUCTS (in metric tonnes) Region/year2009-102010-11

Middle East31853820

North Africa11521637

ANALYSIS The production of the hot rolled flat products has been increased in MENA region as compared to the year 2009-10 In north Africa also, the production of the hot rolled flat products has been increased. The data shows that the overall production is increased in MENA region, satisfying the increased demand of the hot rolled flat products including hot rolled coils. 6.4.2. (A) IMPORT OF HOT ROLLED COILS The import of the hot rolled coils can be guessed by the data given below, which shows the total import of the flat products in MENA ANALYSIS year 2010 shows a fair growth in the imports of the flat products, showing that the imports of the coils are growing as well. But just in 2011, the import of the flat product declined, probably due to the expansion of their plant capacity The overall import of the coils has been declined last year but grew as compared to the year 2008 6.4.2. (B) MAJOR IMPORTER OF COILS IN MENA The region which are the largest importer of the coils shown in the graph, which represent the import of the