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Essay: The Indian steel industry

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  • Published: 9 September 2015*
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INTRODUCTION – STEEL INDUSTRY – Contribution in the development of India’s economic growth : The Indian steel industry is more than 100 years old now. The first steel ingot was rolled on 16th February 1912 – a momentous day in the history of industrial India. Steel is crucial to the development of any modern economy and is considered to be the backbone of the human civilization. The level of per capita consumption of steel is treated as one of the important indicators of socio-economic development and living standard of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development .India is the seventh largest steel producer in the world, employing over half a million people directly with a cumulative capital investment of around Rs. one lakh crore. It is a core sector essential for economic and social development of the country and crucial for its defense. The Indian iron and steel industry contributes about Rs.8,000 crore to the national exchequer in the form of excise and custom duties, apart from earning foreign exchange of approximately Rs. 3,000 crore through exports. Consumption of finished steel grew by 5.9 %and increased to 24.9 million tones.
Since, the Indian steel industry has emerged as one of the core sectors in the Indian economy with a very significant impact on economic growth. India with its abundant availability of high grade iron ore, the requisite technical base and cheap skilled labor is thus well placed for the development of steel industry and to provide a strong manufacturing base for the metallurgical industries. The deregulated Indian steel industry is performing at its peak level in almost all spheres. The total production of finished steel from April 2004 to March 2005 has been estimated to be about 383.25 lakhs tones as against the production of 369.57 lakh tones during the same period last year showing an increase of 3.7 %. The most spectacular achievement has, however, been recorded in export performance. Steel has so far proved to be the single key factor responsible for industrial production and thereby, for economic growth. And it is growing from strength to strength with newer developments–both within steel making practice as well as engineering developments, which ask for more usage of steel. So much so, that economic development has become almost synonymous with steel consumption
PEST ANALYSIS OF TATA STEEL
POLITICAL:-
In the 1920s and 1930s, when it was still called Tata Iron and Steel Company, TISCO’s largely tribal workers fought pitched battles with the European or Parsimanagement. Work conditions and the right to organize were important rallying issues, and over the years, the company developed a reputation for union-busting, often by violent means The value of Dorabji ‘s Expansion Programme came to be appreciated only during the phase when world was reeling under the pressure of the Great Depression. The Tata’s survived the depression and supplied nearly three-fourths of the country’s steel requirements .By the Second World War, Tatas’ production capacities had expanded enough to make their prices lower than those of steel produced in England raising them to an authoritarian position .By the 1980s, the government was clearly in control of what had come to be called the commanding heights of economy. More than 45% of output in organized industry came from the public sector as well as bank and other long-lending institution .In 1981-82, eight of the largest firms in India were in the public sector, as were 24 out of the top 30 in terms of total capital employee. In this sense it could be said that Nehru’s goes when he had began the planning process had been achieved. But this success has to be seen in the context of the fact that industrial growth rates had lagged at about 4%/annum between 1964 -65 and 1975-76.This rate was in sharp contrast to what was happening in the Asian economies and in Southeast Asia. These countries had achieved consistent high growth by opening up their markets and by abandoning policies of import substitution .Indira Gandhi in her second stint as prime minister was not willing two inaugurate a new industrial policy that departed from the socialist pattern put in place by her father. Yet she was far too astute not to recognize the signs of crises that were waiting in the wings. She made the gesture that her government supports the expansion and modernization of the private sector. The basic elements of the new policy began to emerge against the background of the India Special Drawing Rights billion-dollar loan agreement with the International Monetary Fund to cope with the balance of payment deficits .Rajiv Gandhi- Both internal & external finance shortages were worsening. Trade deficit increased from 10 billion in 1983-84 to Rs. 34 billion in 1985-86 so it became difficult to repay loan.
ECONOMIC :-
TATA Steel, formerly Tata Iron and Steel Company Ltd (Tisco), the company around which the entire township of Jamshedpur was built, was registered in Bombay (now Mumbai)on August 26, 1907. It had an initial capacity of 160,000 tones of pig iron, 70,000 tones of rails, beams and shapes and 20,000 tones of bars, hoops and rods.It also had a powerhouse, auxiliary facilities and a laboratory. It was in 1955 that Tata Steel began its two million-tone expansion programme, the largest project in the private sector atthat time. The project was completed in December 1958. Beginning in the 1980s, thecompany undertook in various phases an ambitious modernization programme. The first phase, between 1981 and 1985, involved a total project cost of Rs.223 crore. This phase, among other things, saw the installation of two 130 tone LD converters, two 250 tone a day oxygen plants, a bar forging machine, two vertical twin-shaft lime kilns and a tar-dolo brick plant. Significantly, a six-strand billet caster and a 130-tone vacuum arc refining unit were installed, that too in the integrated steel plant.The second phase (1985-1992), involving a project cost of Rs.780 crores, saw for thefirst time in India coal injection in blast furnaces and coke oven battery with 54 ovens usingstamp-charging technology. Apart from this, a 0.3 mtpa (million tone per annum) wire rodmill, a 2.5 mtpa sinter plant, a bedding and blending plant and a waste recycling plant of 1mtpa were installed.
The cost of the third phase (1992-1996) of the project was a whopping Rs.3,600 crores, and that of the fourth phase (1996-2000) Rs.1,300 crores. The company recently commissioned its 1.2 mt (million tone) capacity Cold Rolling Mill Complex at a project cost of Rs.1,600 crores. This four-phase modernization programme has enabled Tata Steel to be equipped with the most modern steel-making facilities in the world. As of today, the Tata Steel facility has a hot metal capacity of 3.8 mtpa and a crude steel capacity of 3.5 mtpa,corresponding to a salable steel capacity of 3.4 mtpa. Tata Steel has been in the forefront of India’s industrialization and an engine of growth. It is part of Tata Group, a prestigious,family-owned Indian multinational with 2005 revenues of $17.8 billion, the equivalent of about 2.8 % of India’s GDP. Tata Steel’s acquisition of Corus was a marriage made in heaven.
Social:-
Social responsiveness became integral to organizational objectives of Tata Steel, even before the company was established in 1907. In 1970, however, Tata Steel formallyincorporated its commitment to the stakeholder concerns, including those of the nation, and environment, in its Articles of Association. ‘The Company shall have among its objectives the promotion and growth of the national economy through increased productivity, effectiveutilization of materials and manpower resources and continued application of modernscientific and managerial techniques in keeping with the national aspirations, and theCompany shall be mindful of its social and moral responsibilities to the consumers,employees, shareholders, society and the local community.
Technology:-
Tata Steel has been fortunate to have leaders and a rich reservoir of committed peoplewho could see clearly through the future and transformed the plant into a modern technological giant with the power of their meticulous envisioning, strategy and planning, through several modernization programmes having spent more than Rs. 70000 millions one nvironment-friendly technologies since 1980. Installation of a modern Cold Rolling Mill Complex, built at global speed and cost, is not only the epitome of Tata Steel’s modernization programme, but also remains a global benchmark in project management of its kind. It is also worthwhile to mention that the Company lost dearly for their decision on the installation of EOF (Energy Optimizing Furnace) at Jamshedpur Works, and CRM (Cold Rolling Mill) at Gopalpur in Orrisa. The Tatas made a great contribution in manpower development field too. From the very beginning the Tata’s invested substantial time, money and resources in training schemes. In 1921, the Jamshedpur Technical Institute was set up with a purpose to replace foreigntechnical experts with their Indian counterparts. Furnished with super-sophisticated labs, advanced training aids and other infrastructural facilities, the Technical Training Institutes inJamshedpur is today one of the best in the country. Recently, a new ManagementDevelopment Centre has been built at Dimna to impart advanced management training to middle and senior level managers in the Company.

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