India's athletes probably haven't started worrying about the 2008 Beijing Olympics. But India's steelmakers have been thinking about nothing else for the last one year.
In preparation for the Olympics, the Chinese have begun a construction binge that has pushed up the global demand for steel.
The result: India's steelmakers are, after a gap of 10 years, drawing up ambitious expansion plans. What's more, with prices on the upswing for the last one year, they also have the cash to take expansion plans from the drawing board to reality.
Thus, senior Tata Steel executives in Kolkata talk excitedly about upping the company's production capacity by a million tonnes.
They tell you that the existing overcapacity in the sector will run out by 2005-06 and that demand in the domestic market will exceed supply by 2006-07.
In other words, the buyer's market that currently exists, will soon become a seller's market.
The executives also believe that the company is likely to improve upon its last year's performance and post all-time high record profits.
In Delhi, Ratan Jindal, the 42-year-old vice-chairman and managing director of Jindal Stainless Ltd, has set the ball rolling for a greenfield integrated stainless steel project -- from mining of iron and chrome ore to production of liquid ferrochrome, melt shop, slab caster and possibly co-generation of power -- in the state of Orissa, which will eventually have a capacity of 1.2 million tonnes per annum and catapult him to the premier league of the world's stainless steel producers.
Work has begun on the first phase of the project -- 600,000 tonnes -- which is expected to cost Jindal Stainless close to Rs 600 crore (Rs 6 billion).
Then, there's Stemcor of UK which is putting up a cold rolling mill with a capacity of 400,000-500,000 tonnes right next to the Essar Steel plant at Hazira at a cost of approximately Rs 250 crore (Rs 2.5 billion). The Stemcor unit will use hot-rolled coils produced by Essar Steel. The plant will be ready in 12 months' time.
There are others planning to put money into greenfield projects. Bhushan Strips, the country's largest producer of cold-rolled coils, thinks that soon its internal demand for hot-rolled coils is going to touch one million tonnes.
"We have no option but to set up our own facility for hot-rolled coils," a Bhushan official says adding: "We are yet to do our final numbers."
Maharashtra Seamless, a D P Jindal group company, too is toying with the idea of a similar backward integration.
The country's largest producer of ERW and seamless pipes used in the energy sector, is upping its capacity from the existing 200,000 tpa to 500,000 tpa.
"This raises our requirements for billets (these are blown into pipes) to around 700,000 tpa. It makes sense to have our own facility for billets," D P Jindal says. He is prepared to invest upto Rs 1,000 crore (Rs 10 billion) in the venture.
Not so long ago, state-owned Steel Authority of India Ltd (Sail), the country's largest steel producer, was on the verge of becoming a BIFR case.
In fact, the company was forced to inform BIFR that its net worth had been eroded by 50 per cent. Things are different today.
Sitting in his spacious office overlooking the rain-washed Delhi Golf Course, V S Jain, the chairman of Sail, now hints at a profit in excess of Rs 1,000 crore at the end of the current financial year and talks of raising production by 7 per cent to 8 per cent during the year by investing over Rs 500 crore (Rs 5 billion) in the company's existing facilities.
What makes the country's steel barons so bullish? It is the unstoppable Chinese economy which has emerged as the main driver of steel prices in the world market.
In 2002-3, 81 per cent of the incremental global steel demand of 46 million tonnes came from China. Last year, China produced 180 million tonnes of steel and imported some 30 million tonnes.
(Compare this with the total installed steel production capacity of 31 million tonnes in India.) This year, China will produce 200 million tonnes of steel, but it will still import 20 million tonnes.
As a result, the International Iron & Steel Institute is cautiously optimistic that the world consumption of steel will grow by 4.6 per cent in 2003.
The good news for Indian steel producers is that though China is importing less steel this year compared to last year, the quota for India has been kept at the same level as last year's 1.2 million tonnes.
(For some steel products, there is no quota at all.) Already, China has emerged as a big maket for Indian companies: it accounts for 29 per cent of Tata Steel's exports and 35-40 per cent of Sail's exports.
Says Essar Steel director Jatinder Mehra: "The entire increase in price and demand is due to China."
Adds Ajay Nima, head of research at UTI Securities: "As long as this demand is sustained, and the country is preparing for the Olympics, we see no reason why prices should fall."
Mind you, there have been anxious moments for the industry. In late March, international prices started declining primarily because Chinese prices were falling.
The reason: during January-March, there was a large inventory build up in China ahead of the declaration of new quotas in May.
However, things have looked up since then. China's imports in the four months to July have gone up three-fold as compared to the same period of the previous year.
At the same time, the huge inventories piled up in Russia and a few other countries in Eastern Europe have been depleted following a global economic pick up.
Cheap imports from these countries had held global steel prices under check. Russia, in fact, has shown a strong growth in demand and is now importing steel.
Little wonder, India's first quarter steel exports are up by 40 per cent this year as compared to the previous year. All the steel producers are now confident of exceeding their export targets for the year.
Sail, for instance, had projected exports of one million tonne during the year. It has already done a third of that in the first quarter.
"We expect the performance to be still better in the coming quarters. You see the first quarter is traditionally not so good," says Jain.
What's more, the uptrend in global steel demand and prices is expected to continue for a few more years and the OECD is seriously debating a proposal to shut unviable steel mills that produce around 100 million tonnes amongst the member nations.
"Though it is likely to be done gradually, steel prices can be expected to rule firm because of it," a steel ministry official says.
The strong export performance brings to light the fact that not just Tata Steel, which is the lowest cost steel producer in the world, but others too can produce steel at internationally competitive prices.
Says Ratan Jindal: "At the moment, we are exporting from our plant at Hissar in Haryana (Jindal Stainless did exports of Rs 750 crore in the previous financial year) which includes huge logistics cost. Still, we are very competitive. With our new plant located just 80 km from Paradip port, we can export to anywhere in the world."
Thus, Jindal plans to export 50 per cent of the new unit's production of stainless steel slabs, keeping the remaining 50 per cent for in-house consumption.
Apart from the booming markets abroad, steel producers are hoping the domestic market will pick up. But Mehra points out that is hasn't actually happened yet.
Nevertheless, according to the estimates of the Joint Plant Committee in the ministry of steel, the consumption of steel will grow by 7 per cent in 2003-04 to 29 million tonne.
The major drivers for growth will be the construction sector (housing, infrastructure etc) and the automobile industry.
So far as production is concerned, long products is expected to grow from 14 million tonne to 15 million tonne led by the growth in the construction sector, while flat products will grow from 15 million tonne to 16 million tonne riding the automobile boom.
With monsoons spread evenly across the country, steel producers also expect demand from the rural markets to pick up shortly.
"With favourable monsoons, we think that economic activity will pick up in the winter months. The second half of the current financial year will be much better than the first half. Prices, therefore, should remain firm," Sail's Jain adds.
Clearly, happy days are here again and -- no matter what happens on the sporting arena -- the steel industry is hoping that, for some time to come, it will be in winning form.
Almost a decade ago, sitting in his Spartan but spacious office in downtown Delhi, the late Raunaq Singh would talk about his dream of building a steel mill in Karnataka.
"Loha banayenge," (we'll make iron) the septuagenarian industrialist would tell friends and journalists alike.
In those days, the glossy magazines selling on the pavements near Raunaq Singh's office frequently carried stories about Rita Singh of Mesco, who talked of putting up not one but two steel plants in Orissa.
The spectacular rise of her business from a handful of cows to steel, aviation, leather and retail was the talk of the town.
In those days, steel was fashionable and there were scores of other wannabe steel barons. The list included Ganapati Exports, the largest export house at the time and the state-owned MMTC, which had plans for a steel project in Neelanchal. The list was long with 10 projects planned in Orissa alone.
Many of these projects didn't take off from the drawing board, but those that did are in dire straits. Unless funds -- substantial funds -- are injected into these projects urgently, these ventures will never be able to move forward.
Bellary Steel, for instance, has sought an additional Rs 850 crore (Rs 8.5 million) in the form of both working capital and term loan. The lenders have asked the promoters to put in around Rs 105 crore (Rs 1.05 billion), banking sources say.
There was a glimmer of hope for these projects after the financial institutions put together a financial restructuring package for three large steel companies: Essar Steel, Jindal Vijaynagar and Ispat Industries in February.
Soon afterwards, the Union steel ministry suggested a similar bailout for nine steel companies: Mideast Integrated Steel, Bellary Steel, SJK Steel Corporation, Remi Metals, Southern Iron and Steel, Malvika Steel, Kumar Iron and Steel, Neelachal Ispat and Jayaswal Neco.
Apart from writing off a part of the debt and interest, the package prepared by the steel ministry discussed the possibility of concessional power tariff to these projects and conversion of a part of the debt into foreign-exchange debt at a concessional rate of interest for companies which undertook exports.
However, the proposal was rejected by the banks and financial institutions. So giant question marks still hang over all these ventures.