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Indian Steel Markets – 2011 Conference Downstream Steel Markets: Automobiles & White Goods

Indian Steel Markets – 2011 Conference Downstream Steel Markets: Automobiles & White Goods Dilip Oommen CEO, ESSAR Steel Ltd - India Operations. Automobile Segment. Steel demand in India. India’s crude steel production was 56 MTPA in FY’10

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Indian Steel Markets – 2011 Conference Downstream Steel Markets: Automobiles & White Goods

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  1. Indian Steel Markets – 2011 Conference Downstream Steel Markets: Automobiles & White Goods Dilip Oommen CEO, ESSAR Steel Ltd - India Operations

  2. Automobile Segment

  3. Steel demand in India • India’s crude steel production was 56 MTPA in FY’10 • The projected steel demand is likely to touch 165 • MTPA in 2020 at a growth rate of 10 % and 135 • MTPA at a growth rate of 8.5% • Approximately 6 % of the total steel • demand in India is from automotive sector Source: Worldsteel, JPC

  4. Automotive growth in India - facts • Largest Three Wheeler Market in the World • 2nd Largest Two Wheeler Market in the World • 4th Largest Passenger Vehicle Market in Asia • 4th Largest Tractor Market in the World • 5th Largest Commercial Vehicle Market in the World • April_Feb11: Domestic sale up by 26.92% and exports 30.62% FACTS Source: SIAM, CRISIL

  5. Geographical mapping of key manufacturers... East Region … No major activities Source: ACMA

  6. Medium Strength, Martensite, 12% 33% Medium Strength, Martensite, 8% HSLA, 34% Mild 46% Steel, 62% Dual Phase, 45% Dual Phase, 35% Mild Steel, 10% Martensite, 4% Mild Steel, 11% Product transition trend in international auto market ……..The Past The Near Future… and Beyond ……… Market Survey reports

  7. Product Transition – use in Auto parts The shift is slated to be from predominantly mild steel to High Strength Steels

  8. Snap Shot Summary of High strength steel production 2009-10 2013-14 CA – Grades that could be made only through the Continuous Annealing Route Industry Estimates

  9. Challenges and path forward for meeting the steel demand of auto sector KEY ENABLERS KEY CHALLENGES • Favorable Demographics • Improving income curve • Moderate interest rates • Cost Pressure • High Expectations • Inadequate Infrastructure Development • Key Focus Areas • Product development • Rationalization of vendor base • Manufacturing capability • Service levels • Supply chain – Shift towards JIT • Leverage IT - Better material management practices in place. Source : CRISIL

  10. White good Segment

  11. Key Growth Driver of the White Goods Industry

  12. Consumer Durables and Steel Products Steel Products for WG Source: Market discussion

  13. Value Chain for White good Service to Customer - Just in Time- JIT Meeting the requirements ISPs with value chain extending right upto retail hold the key

  14. Trend of Product transition / migration in coated WG segment from current Migration slated to drift from conventional coatings to PPGI Present forecasts and market discussions talk of the entire WG business based on coated product from the 15% CRCA component today Source: Market discussion

  15. Market Size & Key Challenges • Stringent quality requirements. • One Stop Solution- a full product basket. • Meeting critical quality attributes. • Integral part of the value Chain. • JIT delivery. Key Challenges Source: Frost & Sullivan report

  16. Opportunity & Way forward

  17. Lucrative Opportunity Million MT • HR coil/ strip/ sheet exports have declined by 80% from 2007-08 levels • CR coil/ strip/ sheet by 53% and GP/GC by 59% from 2007-08 levels • Till 2006-07, India was a net exporter of finished steel. Since 2007-08 it has become net importer Source : FICCI August 2010

  18. The immediate future • India is the 5th largest producer of crude steel today as against 8th in 2003 and poised to be the 2nd or 3rd largest by 2015 • Per capita consumption (ASU) of steel stood at 48 Kg in 2009 as against world average of 180 Kg and China’s 405 Kg. As per National Steel Policy, Indian per capita consumption is slated to reach 165 Kg by 2019-20 • Steel will continue to occupy bulk of the raw material usage • High strength steels usage for meeting the crash norms and fuel saving promise to be the main focus • Continuous R&D efforts and early vendor involvement are the key to stay ahead in this market • India will be a prime destination of manufacturing of WG in the world

  19. Customer focus – the key THE JOURNEY THE PATH

  20. Conclusions Considering the fact that economy has grown at 8.5% in the current fiscal and expected to grow at 9% in FY 12 coupled with the government declaration of investments in infrastructure and automotive, the time is right to focus on the downstream niche product, namely CAL, Gal (GI/GP), Galvalume (GL) and Galvanneal (GA). This is the requirement of the auto and white goods sector immediately and also ‘the’ opportunity to displace imports Between the market and the industry, it has been a chicken and egg story. Production of high strength and UHSS steels for auto industry requires investment. Clear forecasts required. R&D also to be stepped up.

  21. Thank You 21

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