KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

seaports. The government’s initial funding for these new projects will be about USD.5bn per year. The Government
has also chosen to continue with the tax sops available to the housing sector. This is a positive step for steel too, as
housing sector development creates demand for steel. The demand for long products is expected to grow at 6- 8%
as per Cris Infac report on steel.
The rising steel prices have been absorbed well due to the overall growth in the economy. Although there are
concerns about the rising input costs for the steel industry, an integrated approach and control over cost of raw
materials and power will help steel manufacturing units perform better. Closer home, infrastructural spending by the
state and private sector is driving demand for steel. This trend is expected to continue for some time with a positive
impact on integrated steel players.
Further, according to the International Monetary Fund (IMF), the global economy is expected to grow by over 4% in
the calender year 2005. As per the International Iron and Steel Institute (IISI), the demand for finished steel products
in 2005 will exceed 1 billion ton for the first time, an increase of 36 million tons compared to 2004. Steel consumption
in China is expected to grow by over 10%, an increase of 28 million tons during 2005 and the Steel consumption in
Asia Pacific region is expected to grow by 6.5% in 2005. The Indian economy is also expected to grow by 7% and
domestic steel demand growth is likely to be around 8% during 2005-2006.
The global economy has shown strong growth during the past three years and it is possible that the demand would
stabilize at the current levels. However, the phenomenon which has clearly emerged, is a shift in the demand pull
towards Asia. Therefore, this region will have significant influence in the future growth of the steel industry.
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