PRICE TREND ANALYSIS OF STEEL IN THE FIELD OF CONSTRUCTION By T.R.MANIKANTAN Reg No.41909631049 OfSRI SAIRAM ENGINEERING COLLEGE (SRI SAIRAM INSTITUTE OF MANAGEMENT STUDIES) A SUMMER PROJECT REPORT Submitted to the FACULTY OF MANAGEMENT STUDIES In partial fulfilment of the requirements For the award of the degree OfMASTER OF BUSINESS ADMINISTRATION Anna University Chennai 600 025 July 2010
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The "trend analysis" refers to the concept of collecting information and attempting tospot a pattern, or trend , in the information. In some fields of study, the term "trend
analysis" has more formally-defined meanings.
Although trend analysis is often used to predict future events, it could be used to estimate
uncertain events in the past, such as how many ancient kings probably ruled between two
dates, based on data such as the average years which other known kings reigned.
In project management trend analysis is a mathematical technique that uses historicalresults to predict future outcome. This is achieved by tracking variances in cost and
schedule performance.
Trend analysis is a form of comparative analysis that is often employed to identifycurrent and future movements of an investment or group of investments. The process may
involve comparing past and current financial ratios as they related to various institutions
in order to project how long the current trend will continue. This type of information isextremely helpful to investors who wish to make the most from their investments.
The process of a trend analysis begins with identifying the category of the investments
that are under consideration. For example, if the investor wishes to get an idea on the
potential for making a profit with pork bellies, the focus will be on the performance of pork bellies in a commodities market. The trend analysis will include more than one
supplier for the commodity, in order to get a more accurate picture of the current status of
pork bellies on the market.
Once the focus is established, the investor takes a long at the general performance for thecategory over the last couple of years. This helps to identify key factors that led to the
current trend of performance for the investment under consideration. By understanding
how a given investment reached the current level of performance, it is then possible todetermine if all or most of those factors are still exerting an influence.
After identifying past and present factors that are maintaining a current trend in
performance, the investor can analyze each factor and project which factors are likely to
continue exerting influence on the direction of the investment. Assuming that all or most
of the factors will continue to exert an influence for the foreseeable future, the investor can make an informed decision on whether to buy or sell a given asset.
India has experienced steady growth in the steel industry; the successive governments
have supported the industry and pushed for its robust development.
Further illustrating this plan is the fact that a number of steel plants were established in
India, with technological assistance and investments by foreign countries.
In 1991, a substantial number of economic reforms were introduced by the Indiangovernment. These reforms boosted the development process of a number of industries -
the steel industry in India in particular - which has subsequently developed quite rapidly.
The 1991 reforms allowed for no licenses to be required for capacity creation, except for
some locations. Also, once India’s steel industry was moved from the listing of the
industries that were reserved exclusively for the public sector, huge foreign investmentswere made in this industry.
Yet another reform for India’s steel industry came in 1992, when every type of controlover the pricing and distribution system was removed, making the modern Indian Steel
Industry extremely efficient, as well as competitive.
Additionally, a number of other government measures have stimulated the growth of the
steel industry, coming in the form of an unrestricted external trade, low import duties,and an easy tax structure.
India continually posts phenomenal growth records in steel production. In 1992, India produced 14.33 million tones of finished carbon steels and 1.59 million tones of pig iron.
Furthermore, the steel production capacity of the country has increased rapidly since1991 - in 2008, India produced nearly 46.575 million tones of finished steels and 4.393
million tones of pig iron.
Both primary and secondary producers contributed their share to this phenomenal
development, while these increases have pushed up the demand for finished steel at avery stable rate.
In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the
total amount of domestic steel consumption was 43.925 million tones. With the increaseddemand in the national market, a huge part of the international market is also served by
this industry. Today, India is in seventh position among all the crude steel producingcountries.
It is common today to talk about "the iron and steel industry" as if it were a single entity, but historically they were separate products. The steel industry is often considered to be
an indicator of economic progress, because of the critical role played by steel in
infrastructural and over all economic development.
The economic boom in China and India has caused a massive increase in the demand for steel in recent years. Between 2000 and 2005, world steel demand increased by 6%.
Since 2000, several Indian and Chinese steel firms have risen to prominence like Tata
Steel (which bought Corus Group in 2007), Shanghai Baosteel Group
Corporation and Shagang Group. ArcelorMittal is however the world's largest steel producer .
In 2005, the British Geological Survey stated China was the top steel producer with about
one-third of the world share; Japan, Russia, and the US followed respectively.
In 2008, steel started to be traded as a commodity in the London Metal Exchange. At theend of 2008, the steel industry faced a sharp downturn that led to many cut-backs.
Iron and steel are used widely in the construction of roads, railways, other infrastructure,
appliances, and buildings. Most large modern structures, such
as stadiums and skyscrapers, bridges, and airports, are supported by a steel skeleton.
Even those with a concrete structure will employ steel for reinforcing. In addition towidespread use in major appliances and cars. Despite growth in usage of aluminum, it is
still the main material for car bodies. Steel is used in a variety of other construction materials, such as bolts, nails, and screws.
Other common applications include shipbuilding, pipeline transport, mining, offshore
construction, aerospace, white goods (e.g. washing machines), heavy equipment such as
bulldozers, office furniture, steel wool, tools, and armour in the form of personal vestsor vehicle armour (better known as rolled homogeneous armour in this role).
LARSEN & TOUBRO LIMITED was established in 1938, and a today India’s largest
multi-dimensional engineering and construction company involved in manufacturing
and supplying various types of industrial and household equipment. Two Danish young
men, Mr. HOLCK LARSEN & Mr. S. KRISTIAN TOUBRO attended the same college
and passed out as chemical and civil engineers respectively decided to work in the same
company, F.L. Smith and Co, Copenhagen, Denmark. Mr. Toubro was sent to India in
1934 to help, erect & commission machinery supplied for a cement plant by F.L.Smith
and Co. Fortunately Mr. Larsen was also sent to India in 1935 to assess the cement
manufacturing capabilities of various manufacturing groups. In 1938, the two Danes
decided to seek their fortunes in postwar India and so came together in that age of
entrepreneur to set up Larsen & Toubro, as a partnership firm by setting up a small
office in downtown Mumbai (then Bombay). Initially they began marketing Danish
dairy equipment, which was a great success. A year later, when World War II broke
out, the fledgling Company’s genius for innovation came to the fore. It began to make
the products it used to import. In 1945, L&T was appointed dealers of Caterpillar, theAmerican earthmoving machinery giant. In 1946, the firm became a limited company,
and soon a nationwide network of offices was set up.
MISSION
L&T believes that the true and full measure of growth, success and progress lies
beyond balance sheets or conventional economic indices. It is best reflected in the
difference that business and industry make to the lives of people. Through its social
investments, L&T addresses the needs of communities residing in the vicinity of its
facilities, taking sustainable initiatives in the areas of heath, education, environment
conservation, infrastructure and community development.
A research cannot be conducted abruptly. Every Researcher has to proceedsystematically in a planned direction with the help of a number of steps in sequential
order to make the research systemized for completing the project is called Research
Methodology.Data becomes information only when a proper methodology is adopted. Thus we
can say methodology is tools which process the data to reliable information.
RESEARCH OBJECTIVE
It is the way scheme the research problem systematically. It may be understood as a
science of studying how research is done scientifically. In other words, it is thespecification of the methods and procedures for acquiring the information needed tostructure or identify the variation. It is the overall operational pattern or framework of
the project that stipulates what information is to be collected, from which sources and
The primary goal of this project report is to analyze and understand the steel sector
price pattern in the field of construction and to forecast the future cost which is to
occur. The L&T company ECC division department which is expertise in the field of
construction would find this report to be helpful as to analyze the variations in the price
pattern of the TMT bar steel which they have procured for the past 5 yrs and acompleted analysis and deep knowledge is been acquired.
Before the introduction of the Bessemer process and other modern productiontechniques, steel was expensive and was only used where no cheaper alternative
existed, particularly for the cutting edge of knives, razors, swords, and other items
where a hard, sharp edge was needed. It was also used for springs, including those usedin clocks and watches. With the advent of speedier and thriftier production methods,
steel has been easier to obtain and much cheaper. It has replaced wrought iron for a
multitude of purposes. However, the availability of plastics in the latter part of the 20thcentury allowed these materials to replace steel due to their lower cost and weight.
Today, trend analysis often refers to the science of studying changes in social patterns,