Tata Steel SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Increasing demand for steel: By 2030, the Indian economy is predicted to overtake China as the third-largest economy, and the steel sector will be crucial to this growth. India has clear structural advantages for a successful steel industry thanks to its substantial raw material reserves, strong base of technically skilled labour, and one of the world's fastest growing markets. By FY 2030–31, the National Steel Policy 2017 aims to establish a steel industry in India that is globally competitive, with a capacity of 300 million tonnes of steel production and 158 kg of steel consumption per person. The traditional and emerging consumer sectors, which are focusing on the shifting needs of consumers, will drive the growth in demand. Steel demand in India is anticipated to be stimulated by government-led infrastructure investment, rapid urbanisation, rising preference for personal mobility, growth in the capital goods sector, and government focus on making India "Aatmanirbhar." Another factor that is beginning to emerge as a potential driver of steel demand is the growth of the rural economy. By FY 2030–31, the government plans to increase per capita steel consumption in rural areas from the current 19.6 kg to 38 kg. Tata Steel is well positioned to take advantage of this significant opportunity thanks to its leadership in important market segments, world-class production capabilities, and cost leadership position.

2. Increasing digitalization to increase revenues: As per a PWC report on the Steel industry 4.0, digitalization is going to increase the revenues of the steel industry, manifold. In fact, they have stated a cost reduction of 3.2% per annum and additional revenue of 2.7% per annum that can be derived from the digitization initiatives. In fact, while the importance of digitization in the steel industry is only 49% now, it will rise to about 83% in the next five years making it imperative for most companies to join the bandwagon. Additionally given the estimates that most companies, will obtain payback on the industrialization 4.0 investment within 1 to 2 years it indicates the high level of profitability associated with this enhancement. Tata Steel has touched upon venturing towards this particular initiative in their annual report. Additionally given that higher levels of data analytics capabilities have been utilized by only 11% of the entire number of companies in the metals industry it would be a differentiating factor in the competition. Tata Steel is also implementing Industry 4.0 technologies in its operations. During fiscal 2020-21, Tata Steel Jamshedpur became the World Economic Forum's second plant in India to be designated as an Industry 4.0 Lighthouse.

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Regulations related to greenhouse emissions: India based on its high ranking as a greenhouse emitter, has national action plans to reduce the green house emission to a desirable limit. As per the Kyoto Protocol, the government has been increasingly trying to encourage technological improvements and introduction of state of art equipment to make sure that steel production isn’t accompanied by an excess amount of greenhouse gas emission. Moreover, as per the Renewable Purchase Obligations the steel industries that have fossil fuel-based production have to comply under the Electricity Act of 2003 and if the compliance is not there, heavy penalties are bound to be imposed. At the same time, given the challenges imposed by climate change, India has chances of having limits imposed for emissions as per worldwide conventions and protocols. Additionally given the law framework, and increasing legislation against deforestation, even mining of minerals, raw materials that facilitate steel production would become a major challenge.

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