Are We Moving Towards Steel Cartels?

So much has happened within such a short span of time! The National Company Law Tribunal-initiated insolvency proceedings have led a few of India’s largest steel companies to bid for the debtriddled assets put on the block. Does it mean a morphing is on the anvil in the steel landscape? Dr Susmita Dasgupta, Joint Chief Economist, Joint Plant Committee, Ministry of Steel, tells Madhumita Mookerji, that apart, logistics and information technology appear to be the next business opportunity areas in steel. How? These areas can be used to negotiate capacity rationalisation, increase specialisation and improve margins. Moreover, with the market for graphite expanding hugely, no one seems to be interested in producing for the steel furnaces. Here is the time then to shift towards the induction furnaces, she says. Excerpts from an interview:

What were the key developments in the steel sector in the year that was?

I am not too good at tracking the steel industry over a short term! The movement of prices, the increase or decrease of production do not interest me though these are important things to be interested in! For me, the structural movements of the steel industry become very significant. In other words, I look out for larger movements. For this, the year that has been has gone off in the following manner.

To my mind, the most important element of the steel business in India has been the national Company Law Tribunal (NCLT), which has decided to sell the bad loans of the steel companies like Essar and Bhushan. There is clearly a scramble to obtain these bad loans because that means a sure way of consolidation and expansion of business. So Tata Steel is after Bhushan Steels, ArcelorMittal and Liberty House, both England-based companies are bidding for Essar Steel and Essar Steel itself, under a changed name from Mauritius, is bidding for its bust assets in India.

What are the implications from the response to the NCLT insolvency proceedings?

The meaning can only be that the Indian steel industry is going towards mega steel giants with the possibility of large steel conglomerates and cartels. I am not too comfortable with this because cartels are the most certain ways of death for any industry.

What trends do you see emerging in the steel industry, going forward?