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PEST Analysis

The document discusses a PEST analysis of the steel industry in India. It identifies several political challenges facing the industry, including availability of raw materials due to mining bans, delays in policies and regulations, and a complex regulatory process. Economic factors that impact the steel industry are discussed, such as demand being tied to economic growth and infrastructure investment. Social factors like urbanization, disposable income growth, but also issues around land acquisition, environment, and workforce preferences are outlined. Finally, the document covers technological factors like the need for self-reliance, R&D funding, and investments in new technologies to reduce emissions and improve operations.

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Abinash Biswal
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414 views15 pages

PEST Analysis

The document discusses a PEST analysis of the steel industry in India. It identifies several political challenges facing the industry, including availability of raw materials due to mining bans, delays in policies and regulations, and a complex regulatory process. Economic factors that impact the steel industry are discussed, such as demand being tied to economic growth and infrastructure investment. Social factors like urbanization, disposable income growth, but also issues around land acquisition, environment, and workforce preferences are outlined. Finally, the document covers technological factors like the need for self-reliance, R&D funding, and investments in new technologies to reduce emissions and improve operations.

Uploaded by

Abinash Biswal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Agenda

Introduction to PEST analysis


Impact on steel industry
Conclusion

Introduction
PEST analysis stands for

Political analysis

Economical analysis

Social analysis

Technological analysis

Political Factors - Challenges

The 5 major challenges (listed below) facing the


iron and steel industry have their genesis in the
political environment in the country.

Availability of raw materials Ban imposed by the


Supreme Court on mining in Goa, partial ban in
Karnataka, and Odisha constrain resource
availability. Iron ore production had declined from
218 MT in 2009-10 to 140 MT in 2012-13

Impending policies Draft Steel Policy 2012 not


yet finalised. Delay in consolidating the mining
laws.

Political Factors - Challenges

Long and complex regulatory clearances - 3-7


years to set up a greenfield project including land
acquisition, rehabilitation, environmental
clearances and tying up mineral supplies. Industry
experts believe that this time period could be
easily reduced to half if the procedures were to be
streamlined

Land Acquisition Passing of land acquisition bill


has made acquisition of land difficult and
expensive. Consent of 70% for PPP and 80% for
private acquisitions.

Slowdown in demand growth Caused by delay in


awarding infrastructure projects and falling
significantly short of set targets

Political Factors- Favorable

Resource Security and Development Plan as


envisaged in the National Steel Policy 2012 is
likely to resolve availability of raw materials

The Mines and Minerals (Development) Bill 2011 is


set to consolidate mining related laws in a single
place in the Parliament

Increase in export duties on iron ore will make


larger share available to domestic steel
manufacturers

Creation of Cabinet Committee on Investment to


expedite clearances to large infrastructure
projects

Economic Factors

Steel is the back bone of human civilization, it is


very crucial in development of a modern economy.
The per capita consumption of steel shows the
living standard of people in any country.

Steel consumption increases when economies are


growing, as governments invest in infrastructure
and transport, and build new factories and houses.
Economic recession meets with a dip in steel
production as such investments falter.

The steel industry of India has capital investments


Of more than Rs 100, 000 crores. The total
employment in the industry is more than two
million.

Global Scenario

In 2012 the World Crude Steel output reached


1547.8 thousand metric tons and showed a
growth of 4% over the previous year. It is the third
consecutive year that world crude steel production
grew by more than 4%.

China remained the worlds largest Crude Steel


producer in 2012 also (716.5 thousand metric
tons) followed by European Nations (169.4
thousand metric tons).India occupied the 4 th
position (76.7 thousand metric tons).

it is forecast that world steel demand will grow


further by 4% and will reach 1,600 Mt.The National
Steel Policy has estimated steel production to
reach 110 million tonnes by 2019-20.

Economic Factors-Demand &


Supply

The demand is derived from sectors that include


infrastructure, consumer durables and
automobiles.

With trade barriers having been lowered over the


years, imports play an important role in the
domestic markets.

Steel industry shows oligopoly Market

FDI in steel industry

Economic Factors

In the current scenario there is RBI is Increasing


repo rates so capital would be available at higher
cost and decrease their production.

The exchange rates play a major role in EXIM


trade.

Inflation: the inflation has grown to about 9.84


percent so there is rise in price of all the goods,
and also production efficiency has decreased.

Price sensitivity &Demand volatility: The demand


for steel is derived demand and thepurchase
quantity depends on end-use requirements. The
traders are price sensitive andbuy when there are
discounts

Social Factors

Increase in
Urbanization
27.81% in 2001 Census
to 31.16% in 2011
Census

Increase in disposable
income results into
increase in
consumerism. PCI has
grown by 6.7% during
2006 to 2012

Social Factors

Land acquisition
difficulties eg POSCO

Environmental issuesair (1 ton primary steel


results into 2 tons of
CO2), water and noise
pollution. Health issues
like -Asthma

Social Factors

Rehabilitation and
resettlement issues,
eg- Bokaro steel city

Change in workforce
preferences from core
sectors to services
sectors.

Technology Factors

With globalization and an


ofoperations,
technological
become a necessity.

increasing scale
self-reliance
has

Research & Development Funding in the industry


by government.

Focus on technology aimed at emission reduction


and compliance to changing environment norms

Technology Factors

Investment in Breakthrough technologies for long


term solutions . For ex Tata Steel multi million
dollar investment in a project aimed at reduction
of ash content in Indian coal from present 35 % to
around 7-8%

Easy of technology transfer and entry of foreign


players . For ex. JSW getting into a technology
agreement
with
Japanese
firm
JFE
for
manufacturing of electrical grade steel.

Thank You

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