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Extensive SWOT Analysis of Sail – Indian Government Owned Steel Producer

Updated on: Feb 6, 2022

Last time we had a look at the detailed SWOT analysis of Shell, an Anglo Dutch-based multinational oil and gas company. This time we will dive deep into the SWOT analysis of Sail and its work.

Sail is a highly capital intensive and cyclical company. Its growth is intertwined with the growth of the economy at large and in particular, the steel-consuming industries such as manufacturing, housing & infrastructure. Sail has a large multiplier effect, given its backward and forward linkages.

Sail’s efforts in marketing have helped them a lot. Marketing helps in achieving the desires and preferences of the target audience. Today every other company is using digital marketing, hence it has become a very important and essential skill to learn. You can check our Free MasterClass on Digital Marketing 101 by Karan Shah, the founder and CEO of IIDE.

Before we begin further with the SWOT analysis of Sail, let us discuss the company, what products it has to offer, its financials and its competitors.

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About Sail,

SWOT Analysis of Sail - Sail Steel

Founded raw material storage and blending yard at Bokaro Steel Plant in the late 1970s. Sail produces iron and steel. It is the eleventh time Winner of the Prime minister’s trophy for the best-integrated Steel plant in the country. Steel Authority of India Limited is the leading steel-making and a ‘Maharatna’ company in India. It is a fully integrated iron and steel maker, producing both basic and special steel for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. It has the country’s largest mining network.

Sail has its corporate office in New Delhi. The Corporate office formulates policies, strategies and overall guidelines for its units. Central organizations like CMO, RDCIS (Research Development Center for Iron and Steel), CET (Center for Engineering and Technology) look after the relevant activities for the plants under SAIL.

 

Quick Stats on Sail
Founder Shri Mohan Kumaramangalam
Year Founded 1954
Origin India
No. of Employees 63,433
Company Type Public
Market Cap Rs 43,411.82 Crore (2021)
Annual Revenue Rs 68,452 Crore (2021)
Net Income/ Profit Rs 1,926 Crore (2021)

 

SWOT Analysis of Sail - Steel Authority of India


Products By Sail

  • Steel
  • Flat steel products
  • Long steel products
  • Wire products 
  • Wheel and Axel for Indian railways
  • Plate


Competitors of Sail

  • Jindal Steel & Power Ltd
  • Sail Ltd
  • Gallantt Ispat Ltd
  • Incredible Industries Ltd
  • Manaksia Steels Ltd


Now that we know everything we need to know about Sail, let’s start with the SWOT analysis of Sail.


SWOT Analysis Of Sail

SWOT analysis is like a formula for identifying Strengths, Weaknesses, Opportunities, and Threats (SWOT) that a market possesses for a company. The main objective of this analysis is to help us, as investors and the company, to make business decisions wisely.

By using this method, we analyze where the company is falling short, where it is excelling, and what needs to be worked upon.

To better understand the SWOT analysis of Sail, refer to the infographic below:

SWOT Analysis of Sail - SWOT Infographics of Sail  

So let us first start by looking at the strengths of Sail from the SWOT analysis of Sail

Strengths of Sail

The strengths of a firm can be positive qualities that help the company to maintain goodwill in the market or give it a competitive advantage. Mentioned below are some of Sail’s strengths: 

  • Backward and Forward Integration: Sail Operates in both the upstream sector and downstream sector. This gives it an additional advantage to avert potential interruptions in raw material sourcing and end-products distribution. This strategy is very beneficial in driving margin expansion if the integrated resources are managed efficiently. It also has a strong distribution channel with its chain of retail outlets.
  • Diversified and Value Added Product Portfolio: Sail is a globally recognized high-end, value-added steel manufacturer. It has a large variety of flat and long products to meet different needs throughout the world. The steel products manufactured by Sail are used by many companies in different sectors like automobile, electrical transmission, oil and petrochemical, heavy engineering, construction, etc.
  • Strong financial Position: Sail has high growth prospects with a consistently increasing revenue and strong financial position in the market. With continuously increasing profits Sail has made a name for itself in front of its stakeholders. Also, the debt of the company has reduced to an extent, plus it also has a large amount of cash to set off that debt.
  • Economics of Scale: Demand for steel has a huge correlation with economic development. Sail is the largest steel manufacturing company in India and hence it enjoys economies of scale. Sail contributes to approx 23% of the total steel produced in India. 


Weaknesses of
Sail

Weaknesses are the areas where the company is lacking behind and needs improvement. Let’s have a look at the weaknesses of Sail:

  • Limited Portfolio Diversification: The portfolio of Sail is not as diversified as compared to other industry leaders like Tata steel, Reliance & BHEL, etc.
  • Nonavailability of Raw Materials: Having fewer mines under its control affects the availability of primal materials. Hence at times, there is the unavailability of the raw material which is required.
  • Capital Utilization: Capital is not utilized to a certain percent. If the capital is invested in a proper way, completely then the company can get to see better results. Sometimes funds are not used in a proper manner or spent on some other things which lead to a lack of funds at the time when there is an urgent need of capital for this reason the capital should be used in a careful manner and used up to its highest dignity. A certain percentage of the money from the total can be invested in other things so that there is an interest, later on.


Opportunities for Sail

Opportunities are uncontrollable external events a person can potentially leverage. These are favourable external factors that could give an organisation a competitive advantage.

  • Expected Rise in Domestic Steel Consumption: With a stable central government and a strong approach to programs like the “Make in India” movement, the domestic demand for steel is expected to rise at a fast pace across all sectors. Sail is favourably poised to take benefits in India’s next growth cycle with a wide variety of outputs, advanced technology, and flexibility.
  • Growing Global Automotive Manufacturing Industry: The automotive industry which had gone into a downfall has been up again. Sail tries to cater to various products for these industries in terms of both quality and quantity. This will also lead to an increase in revenues shortly.
  • Strategic Acquisitions: Strategic acquisitions will help the company to achieve further economies of scale and enhance its product portfolio. The joint ventures between companies like rural companies in India have made Sail the largest steel manufacturing company in India.


Threats to Sail

Threats are the external factors that may cause loss to the firm over time or all at once. 

  • Competition: Competition from existing and foreign players is a huge threat to Sail. Some of the competitors are TATA Steel, Hindalco, sail, etc.TATA steel is its biggest competitor who is the market leader. due to this ongoing competition, there are price cuts which lead to a decrease in profit margin.
  • Government and Environmental Regulations: The government has slightly different and more strict laws for the steel industry because it is our natural core and to maintain their control over the consumption of natural resources. While on the other hand organizations concerned about the environment also have their eyes on the steel industry due to its threat to natural resources and the environment.
  • Changes in the Prices of Raw Materials & End Products: For steelmaking, it requires iron ore, metallurgical coal, limestone, etc. All these resources are scarce and procuring them is a difficult task. Sometimes it’s very difficult to mine in certain areas hence the prices of these materials keep on increasing and even the end products prices tend to change, this is a backdrop of Sail.

This ends our extensive SWOT analysis of Sail. Let us conclude our learning below.

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To Conclude

On the study of the SWOT Analysis of Sail, we know that it is one of the fastest-growing steel companies in India. It has a diverse portfolio and a strong financial position in the market. It can grab opportunities like the rise in domestic consumption of steel and the growing global automotive manufacturing. Even with such advantages in the market it still faces some flaws.

There is a lack of availability of raw materials, an increase in competition, a change in government and environmental regulations. It can reduce some of its flaws by improving its marketing strategy with the use of advanced digital marketing techniques. 

As most people are online nowadays it is easy to advertise your brand to a relevant audience and increase your brand name. Thus digital marketing is essential for every business. If you are interested in learning and upskilling, check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.

We hope this blog on the SWOT analysis of Sail has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.

If you enjoy in-depth company research just like the SWOT analysis of Sail, check out our IIDE Knowledge portal for more fascinating case studies.

Thank you for taking the time to read this, and do share your thoughts on this case study of the SWOT analysis of Sail in the comments section below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

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