The client was involved in the manufacturing of steel billets, reinforced bars and welded mesh which was mostly used by the construction industry. They were facing scarcity of raw material (scrap) due to increased global demand for the same, thereby impacting their production. With the revival of the steel industry and soaring prices there was a boom in steel demand. This mainly occurred due to the growth in construction activities. In this context the client requested UC to define a growth strategy for its steel.
To develop the growth strategy, UC adopted the following approach:
- Evaluated the option to backward integrate and produce sponge iron by scanning the market
- Analysed the current market scenario and determined the future market demand
- Conducted in-depth primary research and secondary research and profiled competitors based on their potential investments and future strategies, etc.
- Conducted analysis of the historic prices of the last 67 years and determined the co-relation between the phases in the steel industry over the past century, along with the demand for steel
- Determined the best suited process to produce sponge iron
- Identified 25 different processes to produce sponge iron
- Evaluated each process operating cost , iron responsive regulator (IRR) and other factors and finalised the same
- Identified various product segments to focus upon the following -
- Identified target regions and countries based on certain predefined parameters
- Analysed market size, growth rate, size of investments, consumption, trade and application segments of various products
- Identified markets for setting up manufacturing facilities
- Studied availability of iron ore, demand-supply gap, labor cost advantage, foreign direct investment climate, competition intensity etc.
A clearly articulated strategy to grow the steel business along with insights on backward integration opportunities was developed.