KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

A. Construction
As a part of the shelter component of the national agenda, the government has estimated a shortage of 13 lakh
houses in rural and 7 lakh in the urban areas in India.
Construction activity is also on an upswing due to a surge in retail development with shopping malls and multiplexes.
This is due to rising disposable incomes among the middle class Indians and availability of cheap finance. The
construction activities are also getting modernized and there is a steady departure from the traditional brick and
mortar format to steel intensive and composite structures. In India, the future for steel intensive construction is
promising. With steep rise in the land prices and the high population density, cities are growing vertically and new
generation steel multi-stories seem to be the future in congested metros. Composite flyovers and bridges at crowded
metros and busy highways can be cost-effective solutions – and the trend has already begun.
Steel-intensive/steel-concrete composite bridges became the preferred options since the mid eighties after the
publication of BS 5400 codes. In UK today, 35% of total bridges built are composite constructions. Even minor items
like steel rod reinforced dividers, crash barriers and wire meshes to prevent cattle and humans from venturing onto
high-speed modern highways are now used in a big way. Steel intensive multi-storied car parks can provide quick
solutions to congested metros. Cities of Mumbai, Delhi and Bangalore are building rail based mass rapid transit
systems (underground or on elevated steel reinforced concrete pillars) to take care of the urban traffic problem.
The experienced and developed western economies are taking maximum advantage of increased usage of steel in
construction. For example in the UK, more than 90% of single storey buildings are steel framed and about half of
these are portal frames. In 1991-92, steelwork construction in the UK had a market share of 59%, in Sweden of 50%
and in Netherlands 26% in commercial construction. In industrial buildings, the market share of steelwork construction
is reported to be between 77-92% in the UK, Sweden, Netherlands, Spain, Belgium and France. The situation in
USA and Japan is almost similar. [Source: www.steelworld.com]
Trends in India generally mirror global trends and the use of steel in construction is no exception. This phenomenon
is set to grow at an exponential rate in coming years as India witnesses its own construction boom. Even today, glass
and steel buildings in industrial and IT hubs of Gurgaon, Bangalore, Mumbai and Hyderabad are visible.
B. Infrastructure
There has been a tremendous need for total infrastructure revolution in the post liberalization era. The government’s
focus on the golden quadrilateral road project, the proposed modernization and expansion of the country’s ports and
the planned expansion of the railway network – are all potential demand generators for the industry. Like most of the
developed countries with a solid infrastructure base, we need to adopt the steel intensive or steel-concrete composite
construction route. The National Highway Development Project has increased allocation from Rs. 65.14 billion to
Rs. 93.20 billion and an additional Rs. 55 billion for the National Urban Renewal Mission.
The fillip given to modernizing India’s infrastructure will lead to an upsurge in demand of long products for use in
roads, bridges and highways and related steel requirements. The use of MRTS to solve urban traffic congestion
problems will also require huge amounts of steel, especially mild steel products.
CRIS INFAC has also forecast the industrial investment to increase by 70% over the next five years compared with
the past five years. The average annual investment is expected to increase from Rs.380bn over the past five years
(98-99 to 03-04) to Rs.630bn over the next five years (04- 05 to 08-09). These massive investments are expected to
result in construction demand of Rs.100bn from industrial projects.
Unlike flat products, long products do not mirror the economic conditions of a country. They are fairly independent of
whether the economy is in recession or is in a boom phase. Growth of long products is driven by certain policy
decisions and the progression of a nation’s development.
C. Demand Generators
Global Factors
· Global steel demand is rising on the back of accelerated infrastructure activity in China, CIS and India, housing
boom in the USA, and the resurgence of white goods in Europe. In the recent recessionary phase, the industry
has consolidated in terms of ownership and moth balling of inefficient capacities. Therefore, steel prices are
expected to firm up further.
· For the first time in last 20 years, there is worldwide demand growth for steel.
· In US, demand is led by the booming housing industry. Additionally the auto industry too is showing signs of
recovery.
· In Europe, there is demand from a buoyant housing and white goods industry.
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