Why Iron and Steel Industry?

Why Iron and Steel Industry?

Iron is the most widely used of all the metals, accounting for 95% of worldwide metal production. Its low cost and high strength make it indispensable in engineering applications such as the construction of machinery and machine tools, automobiles, the hulls of large ships, and structural components for buildings. Since pure iron is quite soft, it is most commonly used in the form of steel.

The iron and steel industry is an important basic industry of the national economy, a supporting industry for realizing the industrialization and an intensive industry in technologies, capital, resources and energy, and its development requires a comprehensive balancing of all kinds of external conditions.

Metal industries are the indispensable part of an economy; they form the backbone of industrial development of any country. In India the industrial development began with the setting up of Tata Iron and Steel Company (TISCO) at Jamshedpur in 1907. It started its production in 1912. Then came up Burnpur and Bhadrawati Steel Plants in 1919 and 1923 respectively. It was, however, only after the Independence that the steel industry gas been able to find its feet. Barring the Jamshedpur plant of the Tatas, all are in public sector and looked after by the Steel Authority of India Ltd. (SAIL).

Like in any economy, iron and steel do have major impact on Indian Economy too. It is one of the major component of nation building in modern time. Metals are precious and iron & steel is no exception. India is one of the major producers of steel in the World as well as a major consumer of this commodity. After a sluggish trend internationally , the iron & steel prices are firming up again. Watch for the companies involved and see for yourself the importance of this metal in Indian Economy.

Consolidated Statements of Financial Position

Arcelor Mittal Annual Report 2010

(In Millions of U.S. dollars, except share and per share data)

December 31, December 31,

2009 2010

Sales (including 6,411 and 3,170 of sales to related parties for 2008 and 2009, respectively) 124,936 65,110

Cost of sales(including depreciation and impairment of 6,104 and 5,458 and 2,391 and 1,945 of purchases from related parties for 2008 and 2009 respectively) 106,021 62,913

Gross margin 18,915 2,197

Selling, general and administrative 6,590 3,875

Operating income (loss) 12,325 (1,678)

Income from investments in associates and joint ventures 1,653 58

Financing costs - net (note 17) (2,352) (2,817)

Income (loss) before taxes 11,626 (4,437)

Income tax expense (benefit) (note 18) 1,128 (4,512)

Net income (including non-controlling interests) 10,498 75

Net income attributable to:

Equity holders of the parent 9,466 118

Non-controlling interests 1,032 (43)

Net income (including non-controlling interests) 10,498 75

Earnings per common share (in U.S. dollars)

Basic common shares 6.84 0.08

Diluted common shares1 6.83 0.08

Weighted average common shares outstanding (in millions) (note 16)

Basic common shares 1,383 1,445

Diluted common shares1 1,386 1,446

Calculating the Fixed and Variable costs:

In business there are two different types of costs: fixed and variable. Fixed costs are those costs that remain the same regardless of production. Common fixed costs are rent, capital leases and certain utilities. Variable costs, on the other hand, are those costs that change based on the level of production. That is, high levels of production generate higher variable costs, while fixed costs remain the same. Calculating fixed and variable operating income is easy if you know the fixed and variable costs.

Fixed Cost:

Identify and sum fixed costs associated with operations. These are accounts that do not change directly with sales or production levels. Look for interest payments, administrative labour, tuition reimbursement, research and development--any line item that does not change with changes in production. Sum these together for an estimate of total fixed costs.

Fixed Costs

Expenses 2009 2010

Staff costs 137 110

Wages and salaries 86 85

Social security costs attributable to wages and salaries 8 8

Supplementary pensions 14 11

Other social security costs 29 6

Value adjustments in respect of formation expenses

and of transferable securities held as current assets 4 7

Other operating expenses 284 227

Value adjustments in respect of financial assets

and tangible and intangible fixed assets 2,655 80

Interest payable and similar expenses 1,078 3,799

In respect of affiliated undertakings 653 128

Other interest payable and expenses 425 3671

Profit/(Loss)