Tough Days

In the last couple of years, India's top private sector steelmakers, Tata Steel and JSW Steel, have been aggressively adding capacity and buying sick steel assets under the Insolvency and Bankruptcy Code (IBC). The aim becoming the largest player in the world's fastest growing steel market to make most of the expected demand pick up in 2020/21.

While demand for steel is expected to grow at 7 per cent, and prices are high, there are obstacles in the mid term outlook which could make things tough. The companies have been betting big on the fast growing automobile market for selling their high grade, high margin products, but the slump in automobile sales in 2018/19 hit margins during the year. Consumption of automotive steel has dipped by 4 per cent in the fourth quarter of 2018/19. Automobile sales outlook for 2019/20 is not