The Indian government has meticulously built the Iron and Steel industry from the time of independence. The industry scenario has changed a lot after liberalization and globalization phenomenon of 1991 as the need was felt for continuous improvement in the production processes and products. As it has always been a capital intensive industry, huge investments are required in order to continue its growth. In countries like India, where economy is still growing, it is a common phenomenon that the firms which are part of big business groups perform financially much better than the stand alone individual firms. This is because the group firms are often in a better position with regard to investment and innovation capabilities. This study aims at comparing the performance efficiency of the group firms and individual firms based on certain parameters (Net Sales, NOPAT, ROCE) in the Indian iron and steel industry, in different size categories (high, medium and low).

Iron and Steel is considered today as one of the key infrastructure industries. Iron is the second most abundant metal on Earth and one of the oldest inventions in the world. Also, steel has an important role to play in any modern economy, as per capita consumption of steel is often considered a measure of socio-economic development. India has a well known history of steel-making. One example is the famous Konark Sun Temple in Orissa (built around 1200 AD) where, for the first time in the world, steel structurals were used. The first attempt to build iron and steel industry in India was in 1874, when Bengal Iron Works (BIW) was formed in West Bengal. It was later taken over by Indian Iron and Steel Company (IISCO) in 1936. On August 27, 1907 Tata Iron and Steel Company (TISCO) was formed. It started pig iron production in December 1908 and produced steel for the first time in 1909. In 1948, the government made a commitment to develop basic steel industry in the first Industrial Policy Resolution adopted by the Constituent Assembly. As a result, number of steel plants were set up all over the country. Some of the plants were at Rourkela (Orissa), Bhilai (Madhya Pradesh) and Durgapur (West Bengal). Gradually, India was filled with steel and steel-related plants in public and private sectors, like Alloy Steel Plant, Salem Steel Plant, Kalinga Iron Works, etc.

After the liberalization of Indian economy (post 1991), there has been a steady growth of Indian Gross Domestic Product (GDP) and lot of changes have taken place in the iron and steel industry also. In the new industrial policy announced in 1991, iron and steel industry was exempted from the provision of compulsory licensing. From 1992, the iron and steel industry was also included in the list of high priority industries for automatic approval for foreign equity up to 51% (now 74%). Post-liberalization, India has witnessed many inefficient steel mills with outdated technology being shut down, while new capacities have also been built using latest technology. Export-import regime for iron and steel has also undergone major changes. It was estimated by 2006-07, the demand for finished steel would be around 48.80 million tons, which would provide enough surplus to meet the projected export potential of 9 million tons.

Business Strategy Journal, Group Firms, Indian Government, Globalization, Production Processes, Key Infrastructure Industries, Socio Economic Development, Industrial Policy Resolution, Gross Domestic Product, GDP, Steel Production, Asian Financial Crisis.