Analysis of Steel Sector in India, With Special Focus On Units in Eastern India

Analysis of Steel Sector in India, with special focus on units in Eastern India
By:udayam Kumar singh reg no.-pgdm b12/55 ifmr, chennai
Analysis of Steel Sector in India, with special focus on units in Eastern India
By:Udayam Kumar Singh Reg. No.-PGDM B12/55 IFMR, Chennai SBI Capital Markets Ltd.
A report submitted in partial fulfillment of the Requirement of PGPM Program of IFMR, Chennai Date of submission: 15/05/2012
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Declaration
I, Udayam Kumar Singh of IFMR, Chennai have successfully completed the project on, Analysis of Steel Sector in India, with special focus on units in Eastern India as per the curriculum and that the information provided is true and to the best of my knowledge.
SIGNATURE OF STUDENT, (Udayam Kumar Singh)
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Authorization
I ......hereby certify that Udayam Singh of IFMR, Chennai has successfully completed the project on Analysis of Steel Sector in India, with special focus on units in Eastern India as per the curriculum and that the information provided is true and the best to my knowledge.
SIGNATURE OF PROJECT GUIDE (Mr. Pinaki Paul, AVP-PA & SF)
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Acknowledgement
Any attempt at any level cannot be satisfactorily completed without the support and guidance of learned people. I would like to express sincere gratitude to a few people without whom the project completion would not have been possible. I would like to thank Mr. Pinaki Paul (AVP, PA&SF, Regional Office, Kolkata) for being my mentor, without his guidance and persistent help this dissertation would not have been possible. I would also like to thank Mr. Aditya Khemka (Dy Manager, PA&SF) who gave me constant motivation and advice. I would also like to thank the entire staff of SBI Capital Markets, Kolkata for providing me their precious time and making this internship a successful learning experience. Lastly i would like to thank my parents and colleagues who gave me the support, co-operation for the completion of this project and god almighty who gave me the inner strength to withstand all the obstacles that came my way.
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Abstract
Indian steel production has grown strongly in recent decades and India is now the worlds fourth largest steel producer. Nevertheless, Indias consumption of steel relative to the size of its economy is very low by international standards. As the economy develops further, steel consumption is likely to increase. The report describes the various steel manufacturing processes, its raw material requirements and classification of steel and alloys. The primary objective of this report is to analyze the steel sector and its performance. Various steel manufacturing companies production performance, their raw material requirement. Competitive advantage of the steel industry in East India. The domestic and global scenario of steel industry. Analysis of price movement of steel products and its raw materials. Analysis of Capital structure of steel industries in India. Porters Five force model for Steel industries in India. SWOT analysis of steel industry and main steel manufacturers.
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Contents Declaration .......................................................................................... 3 Authorization ....................................................................................... 4 Acknowledgement ................................................................................ 5 Abstract .............................................................................................. 6 1. 2. Introduction ............................................................................... 10 Steel manufacturing process ........................................................ 11 Blast Furnace method ............................................................. 11 Electric Arc Furnace(EAF) ........................................................ 12 COREX or Cipcor Process ........................................................ 13 Induction Arc Furnace (IAF) .................................................... 14
2.1. 2.2. 2.3. 2.4. 3. 4. 5. 6.
Raw Materials ............................................................................. 16 Classification of iron ore............................................................... 19 Classification of Steel and Alloys ................................................... 21 Steel Producers .......................................................................... 28 Main Producers ...................................................................... 29 Steel Authority of India(SAIL) ............................................ 29 6.1.1.
6.1.
6.1.2. Rashtria Ispat Nigam Ltd (RINL)/Vizag Steel ........................... 37 6.1.3. Tata Iron and Steel Company (TISCO) (Jharkhand) ................. 40 6.2. Major Producers..................................................................... 45 6.2.1. JSW Steel Ltd. .................................................................... 45 6.2.2. Ispat Industries Ltd. (IIL) / JSW Ispat Steel Ltd.(JSPL) ............ 48 6.2.3. ESSAR Steel Ltd. ................................................................. 51 6.2.4. Jindal Steel & Power Ltd. (JSPL) ............................................ 55 6.2.5. Bhusan Steel Ltd. ................................................................ 57 6.3. Other Producers .................................................................... 60 6.3.1. Shyam Steel Industries Ltd................................................... 60 6.3.2. Jai Balaji Industries Ltd. ....................................................... 61
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6.3.3. Electrosteel Casting Ltd. ....................................................... 63 6.3.4. Usha Martin Ltd................................................................... 66 6.3.5. Adhunik Metaliks Limited ...................................................... 68 7. Profile of the industry .................................................................. 70 Global Scenario ..................................................................... 71 Domestic Scenario ................................................................. 72 Production ....................................................................... 73 Demand - Availability Projection ......................................... 74 Steel Prices ...................................................................... 75 Imports of Iron & Steel...................................................... 75 Exports of Iron & Steel ...................................................... 76 Levies on Iron & Steel ....................................................... 77 Opportunities for growth of Iron and Steel in Private Sector ... 78 7.1. 7.2.
7.2.1. 7.2.2. 7.2.3. 7.2.4. 7.2.5. 7.2.6. 7.2.7. 8. 9. 10.
Competitive advantage of the steel industry in East India ................ 81 Trends in International Trade in Iron & Steel .................................. 87 Trend in prices of steel and raw materials during the 11th Plan......... 89
10.1. Iron ore, coking coal prices not to see big movement in 2013 ..... 91 10.2. Mining tax in Australia ............................................................ 92 10.3. Impact of Coal India Ltds New pricing system for thermal coal .... 93 11. Issues in Indian Steel Industries ................................................... 94 11.1. Raw Materials ........................................................................ 94 11.2. Infrastructure ........................................................................ 95 11.3. Investment ........................................................................... 96 11.4. Technology and Research & Development ................................. 96 11.5. Environmental Management and Pollution Control ..................... 98 11.6. Safety Measures .................................................................... 99 12. Five trends in India's steel industry ............................................. 100 12.1. Consolidation ...................................................................... 100 12.2. Doggedness of foreign firms .................................................. 100 12.3. Relocation, smaller plants ..................................................... 101
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12.4. Use of low grade raw materials .............................................. 101 12.5. Environmental awareness ..................................................... 101 13. Analysis of capital structure trend in the Indian steel sector ........... 102 13.1. Total Debt/Equity Ratio & EPS effect on Indian steel industry .... 102 13.2. Financial coverage Ratio & EPS effect on Indian steel industry ... 105 14. Understanding the Steel industry using Michael Porters Five Forces Model .............................................................................................. 109 14.1. Entry barriers: High ............................................................. 109 14.2. Competition: High ................................................................ 110 14.3. Bargaining power of suppliers: High ....................................... 110 14.4. Threat of substitutes: Low .................................................... 111 14.5. Bargaining power of Consumers: Mixed .................................. 111 15. 16. The SWOT Analysis on Indian Steel Industry ................................ 113 SWOT Analysis of main steel producers of India ............................ 118
16.1. SWOT Analysis of Steel Authority of India (SAIL) ..................... 118 16.2. SWOT Analysis of Tata Iron & Steel Company .......................... 118 16.3. SWOT Analysis of RINL/Vizag Steel ........................................ 119 17. 18. Conclusion & Recommendations .................................................. 120 References ............................................................................... 125
Appendix A ...................................................................................... 126 Appendix B ...................................................................................... 128 Appendix C ...................................................................................... 134
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1.
Introduction
Iron is one of the oldest inventions in the world with its first usage reportedly dating back to 4000 BC. Steel is crucial to the development of any modern economy and is considered to be the backbone of the human civilization. Today Steel (the carbon alloy of Iron) finds application in every imaginable facet of our life. The global steel industry has been witnessing many interesting events that have influenced market dynamics in the last ten years. Iron is a chemical element with the symbol Fe (from Latin: ferrum) and atomic number 26. It is a metal in the first transition series. It is the most common element (by mass) forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust. Steel is an alloy made by combining iron and another element, usually carbon. When carbon is used, its content in the steel is between 0.2% and 2.1% by weight, depending on the grade. Alloy steel is steel that is alloyed with a variety of elements, in addition to the carbon, in total amounts between 1.0% and 50% by weight to improve its mechanical properties. Alloy steels are broken down into two groups: low-alloy steels and high-alloy steels. Common alloyants include manganese (the most common one), nickel, chromium, molybdenum, vanadium, silicon, and boron. Less common alloyants include aluminium, cobalt, copper, niobium, titanium, tungsten, tin, zinc, lead, and zirconium.
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2.
Steel manufacturing process
Steel is one of the most important and widely used products in the world. Currently, the steel industry is undergoing a process of change. As a result of ongoing technical and economic developments, the production and use of electric arc furnace steel is, beneath the steel production in a blast furnace, becoming increasingly important, continuously gaining share of world-wide steel production over the past 30 years.
2.1. Blast Furnace method

The figure shows a flowchart of the integrated manufacturing process for iron and steel using the blast furnace and basic oxygen furnace (denoted BF and BOF hereinafter, respectively), which is presently the most commonly used method (51% of world steel production). After the BF-BOF process, molten steel is controlled to a target composition and temperature and is then cast by continuous casting machine to produce slabs, blooms, and billets. These castings are rolled to the required dimensions by the rolling mill to produce steel products. The smelting and refining process for iron and steel in the BF-BOF process involves the carbon reduction of iron ore (Fe2O3) in the BF to make molten iron, and decarburization of molten iron in the BOF to make molten steel.
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Major reducing agent in the BF is the carbon monoxide gas(CO) generated by the oxidation of the carbon(C) in coke. Consequently, carburization takes place at the same time as reduction, producing hot metal(molten iron) containing about 4% carbon. The hot metal is decarburized to the required carbon content in the BOF. The main reaction in this process is the oxidization of the carbon in the hot metal by both pure oxygen gas (O2) and iron oxide (Fe2O3). The residual oxygen, after contributing to this decarburization reaction, remains in the molten steel. This oxygen is fixed and removed by deoxidizing reagents such as silicon and aluminum as SiO2 and Al2O3 or is removed as carbon monoxide gas in the subsequent vacuum degassing process.
2.2. Electric Arc Furnace(EAF)

In addition to the BF-BOF process, there is another process which utilizes mainly scrap as an iron source, with some direct reduced iron whenever necessary. The direct reduced iron is produced by reducing iron ore with reformed natural gas, whose principal components are hydrogen, carbon monoxide, and methane. The scrap, along with direct reduced iron, is then melted in an electric arc furnace (denoted EAF hereinafter) to produce molten steel which is subsequently processed by the continuous casting machine, as mentioned above.
The molten steel from the BOF and EAF is then deoxidized and alloying elements are added in the prescribed amounts. The molten steel is then held at the target temperature and continuously cast, and the castings obtained are cut to the prescribed length. After heating to the rolling temperature in a reheating furnace, these castings are hot-worked to the required products. Steel shapes, bars, and wire rods are worked on section and bar mills and
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wire-rod mills equipped with caliber rolls, plates are worked on reversing mills, and hot-rolled steel sheets are worked on hot strip mills. After pickling to remove scale from the surface, the hot-rolled steel sheets are worked to cold-rolled steel sheets on reversing mills or tandem rolling mills, and the cold-rolled steel sheets are tinned or galvanized as required to produce various surface-treated steel sheet products. Steel pipe is produced by forming and welding steel sheets or plates, or by piercing a billet and rolling to the final dimensions without a seam. Presently, there are 38 Electric Arc Furnace based steel plants working in the country with an aggregate capacity of 18.041 million tonnes per annum. Apart from the working units, there is one unit, which is closed. Production of Ingots/Concast Billets by EAF units, which have been reporting their production to Joint Plant Committee, during 2009-10 (prov.) was 15.48 million tonnes as compared to 14.15 million tonnes during 2008-09, registering a growth of 9.4%. This sector continued to be under constraint of rising cost of inputs, increasing power tariffs, shortage of power & resource crunch.
2.3. COREX or Cipcor Process

COREX is an advance process of making steel. Though few use this process, it is possible to use non-coking coal directly in smelting work and it also makes it possible to use lump ore and pellets as inputs. These two advantages allow steel producers to eliminated coking plants and sinter plants. Purpose of coking plant is to convert non-coking coal into more
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efficient fuel and purpose of sinter plant is purify lump ore or pellets for further processing. Basic inputs to COREX are iron-ore and coal. Jindal Iron & Steel Company (JISCO) uses COREX technology to produce finished steel.
2.4. Induction Arc Furnace (IAF)

IAF is one of the most advance processes of making steel. Like EAF it uses electricity as its main fuel. IAF is most environment friendly and efficient way of producing steel. However, its lack of refining capacity requires clean products as its inputs. Large numbers of small steel companies use this technology. The high weight of the product significantly pushes up transport and movement costs. Therefore large integrated plants are the norm for cost efficient production. For specialized steel and alloys efficient production by smaller plants is possible. During 2009-10 (prov.), it is estimated that 1114 units with a capacity of 24.40 million tonnes were in operation. The total production of induction furnace units registered a growth of 10% during 2009-10, producing 19.86 million tonnes against a production of 18.05 million tonnes in 2008-09, as reported to Joint Plant Committee.
Merits & Demerits: Players using the BOF route enjoy higher profitability as compared to players using the IF route, as steel made in a blast furnace is more refined and fetches higher realizations. Higher profitability and economies of scale in the BOF route help players earn better returns on investments. Cash accruals and debt-servicing indicators are also better as compared to steelmakers who use the IF route. However, the BF-BOF process entails higher
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investments and only large players are present in this category. On the other hand, in the IF route, investment requirements are lower. EAF allows steel to be made from a 100% scrap metal feedstock. This greatly reduces the energy required to make steel when compared with primary steelmaking from ores. Another benefit is flexibility: while blast furnaces cannot vary their production by much and are never stopped for years at a time, EAFs can be rapidly started and stopped, allowing the steel mill to vary production according to demand. Although steelmaking arc furnaces generally use scrap as their primary feedstock, if hot metal from a blast furnace or direct-reduced iron is available economically, these can also be used as furnace feed. A typical steelmaking arc furnace is the source of steel for a mini-mill, which may make bars or strip product. Mini-mills can be sited relatively near to the markets for steel products, and the transport requirements are less than for an integrated mill, which would commonly be sited near a harbor for access to shipping. Steel capacity additions in India have risen at a CAGR of 10 per cent over 2005-06 to 2009-10. Of the major steelmaking routes (Basic Oxygen Furnace (BOF), electric arc furnace (EAF) and induction furnace (IF)) capacity additions have been the most in the IF route. The dependence of producers using the IF route on non-coking coal -- whose prices have been stable so far -- gives them a cost advantage over players using the BOF route. However, this trend is expected to change in 2012-13 as non-coking coal prices increase. Meanwhile, a fall in coking coal prices has reduced costs for players using the BOF route.
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3.
Raw Materials
Coal Coal is a family name for a variety of solid organic fuels and refers to a range of combustible sedimentary rock materials spanning a continuous quality range. For convenience, this continuous series is divided into four categories: 1) Anthracite, 2) Bituminous coal (metallurgical coal), 3) Sub-bituminous coal, 4) Lignite. Coal is the primary fuel used by integrated iron and steel producers. The process of coal block allocation is discussed in detail in Appendix c. Coke A solid carbon based product derived from baking bituminous coal at high temperature to remove volatile constituents. Metallurgical coke ('met coke') is used as the main fuel in the smelting of iron ore in a blast furnace. The quality of coke has a significant influence on furnace productivity and iron production costs. Iron Ore Iron ore is formed of rocks, minerals or meteorites from which metallic iron can be extracted. Typically, the iron is in the form of iron oxide, which varies in colour from dark grey, bright yellow and deep purple to rusty red. Iron ore can have up to 65% ferrous content, but is often lower and needs to be refined before use. Iron ore is the raw material used to make pig iron, which is one of the main raw materials for making steel. 98% of mined iron ore is used to make steel. Pig Iron A key intermediate material in the integrated (converter-based) steelmaking process, pig iron is the product of smelting iron ore, coke and limestone in a blast furnace. Pig Iron is used directly in the manufacture of steel. Merchant pig iron is sometimes used as a substitute for scrap in EAF steelmaking, when there is a need to control residuals.
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DRI Direct Reduced Iron (DRI) or sponge iron is processed iron ore that is iron-rich enough to be used as a scrap substitute in electric furnace steelmaking. It is made by the reduction (removal of oxygen) of iron oxide (iron ore) at temperatures below the fusion point of iron. As mini-mills expand their product abilities to sheet steel, they require much higher grades of scrap to approach the quality of output from integrated mills. DRI enables mini-mills to use iron ore without having a blast furnace. It serves as a low residual raw material and alleviates the mini-mills dependence on cleaner, higher priced scrap. HBI Hot Briquetted Iron (HBI) is Direct Reduced Iron that has been processed into briquettes. Instead of using a blast furnace, the oxygen is removed from the ore using natural gas and results in a substance that is 91%94% iron. Because DRI may spontaneously combust during transportation, HBI is preferred when the metallic material must be stored or moved. Because of its high iron content and low residual levels, HBI can be used in almost every type of steelmaking operation. It has advantages over steel scrap due to its high bulk density and the very low content of undesirable chemical elements. Ferro-Alloys Alloys of iron, with a high proportion of added elements - such as silicon, nickel, chromium, molybdenum, vanadium and manganese are used to improve properties in the production of special steels. As part of the steel production process, ferro-alloys are added to the usual mix of raw materials to alter the chemistry as required for certain specific end uses. The added elements determine whether the steel will end up as paper clips, a car body, the undercarriage of a jumbo jet, or a beam in a high-rise building. Scrap Steel can be recycled almost indefinitely without losing its properties. Obsolete ferrous scrap is derived from steel-containing goods at the end of their useful lives (e.g. a drinks can, a 15-year-old car, a 50-year-old building). Revert scrap is steel waste produced and recycled within a steelworks. New production scrap is generated when steel is cut and formed
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during the manufacturing of finished products or components. The scrap is returned to steelworks and foundries. Ferrous scrap is mainly used in electric arc furnace steelmaking. About 500 million tonnes of scrap are melted each year. Manganese Manganese is used in steel alloys to increase many favourable characteristics such as strength, hardness and durability. In fact steel cannot be produced without manganese; it is an essential ingredient in the process. Steel becomes harder when it is alloyed with manganese. It has similar applications when alloyed with aluminium and copper. Hardened steel is important in the manufacture of construction materials like L-beams (24% of manganese consumption), machinery (14% of manganese consumption) and transportation products (13% of manganese consumption).
Raw material Iron ore DRI(Sponge iron) Coal Coke Ferro-alloys Scrap Manganese Oxygen Electricity
Primary process
Secondary process
-used in small proportion Scrap and DRI (Sponge iron) move in opposite direction as they can be used as substitute for other.
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4.
Classification of iron ore
Magnetite: A kind of iron oxide ore, the main ingredients are Fe3O4, and is the compounds of Fe2O3 and FeO, dark gray, the density about 5.15, with Fe72.4%, O 27.6%, and of magnetism, after a long period weathering it become hematite. Hematite: Fe2O3, Is a kind of iron oxide ore, the main ingredients is Fe 2O3, dark red, the density about 5.26, with Fe70%, O 30%, is the most important iron ore. Due to the its structural condition, it can be divided into many different categories, such as red hematite, SPE cularhematite, mica iron ore (Micaceous hematite), Red Ocher and so on. Limonite: This is the ore containing ferric hydroxide. It is the common name of the two different structures of ore Goethite HFeO2 and LepidoCRocite FeO (OH), also the chemical formula of its main component was written as mFe2O3. nH2O, showing Khaki or brown color, containing Fe about 62%, 27% O,11% H2O , the density is about 3.6 to 4.0, mostly being attached to other iron ore. Siderite: The carbonate of iron containing ore, its main ingredients is FeCO3, showing blue gray, with the density about 3.8. Most of this ore contain quite a lot of calcium and magnesium. Silicate Iron: Such ore is a complex salt, there is no definite chemical formula, ingredients vary widely, usually with dark green, and the density about 3.8, very low iron content, is a poor iron ore. Iron sulfide: This Kind of ore containing FeS2, with Fe only 46.6% while the content S reached 53.4%, appears sallow, the density about 4.95 ~ 5.10. Because this ore often contains many other precious metal such as Copper, Nickel , Zinc, Gold, Silver , so they are often used as raw materials for other metal smelting; also because it contains a large amount of sulfur, so is often used to distill the sulfur, thus rendered iron a by-product, and so it cannot be classified as iron ore.
Commercially, the iron ore are available in five different product categories:
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1. 2. 3. 4. 5.
Calibrated Iron Ore Iron Ore Iron Ore Pellets Iron Ore Fines Iron Ore Lump
The different classification is based on different parameters like Fe content, moisture, size and reduction properties.
Source: www.indiamart.com
Process of allocation of captive iron ore mines has been discussed in detail in appendix B.
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5.
Classification of Steel and Alloys
Pig iron is the main primary product of the iron and steel industry, it can be:

Alloy or non alloy pig iron. In the form of pigs, blocks, lumps (whether or not broken) or in the molten state. Brittle and unworkable, but this can be remedied by annealing.
Pig Iron comprises three main types: 1. Basic Grade Pig Iron - Used in Electric arc steel making. 2. Foundry Grade Pig Iron - Used in manufacture of Grey Iron Castings in cupola special grade furnaces. 3. SG Grade Pig Iron (Nodular) - Used in manufacture of Ductile Iron Castings. Direct-reduced iron (DRI), also called sponge iron, is produced from direct reduction of iron ore (in the form of lumps, pellets or fines) by a reducing gas produced from natural gas or coal. The reducing gas is a mixture majority of hydrogen (H2) and carbon monoxide (CO) which acts as reducing agent. This process of directly reducing the iron ore in solid form by reducing gases is called direct reduction. Spiegeleisen is generally obtained directly from ores, despite often being referred to in normal trading as a ferro-alloy. It is:

used principally in steel manufacture (in the Bessemer process) to deoxidise and recarburise the iron, and for alloying has a high manganese content - ie approx 15 per cent, but more than 6 per cent and less than 30 per cent
Ferro-alloys are used to add definite proportions of alloying elements to steel or pig iron in order to obtain special qualities. They are in the form of pigs, blocks, lumps or similar primary forms, granules, powder form or in forms obtained by continuous casting, such as billets. Ferro-alloys generally:

contain 4 per cent or more of the element iron and other elements contain less iron than in pig iron
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Ferrous products obtained by direct reduction of iron ore and other spongy ferrous products. Iron and steel products of this heading are produced by reducing the ore without fusion - known as direct reduction. They are obtained from ore in lumps, granules, or from concentrated ore in briquette or pellet form and contain more than 80 per cent by weight of metallic iron. They also have a spongy structure (sponge iron) and can be used in the production of steel. Ferrous waste and scrap are generally used for the recovery of metal by re-melting or for the manufacture of chemicals. Waste and scrap are a result of the manufacture or mechanical workings of metals, and metal goods definitely not usable due to breakage, cutting up, wear or other reasons. They take the form of:

crop ends, filings and turnings (from the manufacture or mechanical working of iron or steel) shearing or flame-cutting of heavy and long pieces compression into bales (particularly in the case of light scrap, using for example, a hydraulic press) fragmentation/shredding of vehicle bodies crushing and agglomeration into briquettes of iron and steel filings and turnings breaking up of old iron articles remelting scrap ingots such as products roughly cast in the form of ingots without feeder-heads or hot tops, or pigs having obvious surface faults and not complying with the chemical composition of pig iron, spiegeleisen, or ferro-alloys
Granules (of pig iron, spiegeleisen, iron or steel) are products of which less than 90 per cent by weight passes through a sieve with a mesh aperture of 1 millimetre and of which 90 per cent or more by weight passes through a sieve with a mesh aperture of 5 millimetres. Granules include shot (more or less round in shape) and angular grits. Shots and grit are used for:

cleaning up and de-scaling surface hardening (shot peeling) metal polishing or engraving metal or glass working stone or like material sometimes adding to concrete as a hardener (or to increase its impermeability to X-rays or gamma rays)
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Powders (of pig iron, spiegeleisen, iron or steel) are products of which 90 per cent or more by weight passes through a sieve with a mesh aperture of 1 millimeter. They are suitable for compacting or agglomeration. These powders (including sponge iron powder) can be sintered into various items such as electromagnetic coils in telephony or magnetos, and used in the manufacture of welding electrodes and welding powders, reducing agents and pharmaceutical products. Ingots are blocks of metal made by casting the liquid metallic contents of a furnace or crucible into open metallic moulds. Ingots are the raw material for the metal working process. Other primary forms include:

steel in the molten state blocks and lumps (chiefly obtained from agglomerates or build-ups produced by a direct reduction of iron ore or by electrolytic deposition) puddled bars and pilings (after rolling, provide a product with a characteristic fibrous structure by virtue of its slag content)
Semi-finished products are defined as:

continuously cast products of solid section, whether or not subjected to primary hot rolling other products of solid section, that have not been further worked other than being subjected to primary hot rolling or roughly shaped by forging, including blanks for angles, shapes or sections
These products may not be in coils. Semi-finished products include:

Blooms - are larger than billets and are used for re-rolling to bars, rods, angles, shapes and sections or for the manufacture of forgings. Billets - are used for re-rolling to bars, rods, angles, shapes and sections or for the manufacture of forgings. Rounds - have a circular or polygon cross-section of more than four sides. They are used as intermediate products for the manufacture of seamless-steel tubes. They differ from bars and rods in that they are usually supplied in lengths of 1 to 2 metres and their ends are often cut by a blow lamp (bars/rods are normally more accurately cut).
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Slabs/sheet bars - are rectangular (not square) in section and their widths are greater than their thickness.
Flat-rolled products are:
rolled products of solid rectangular (not square) cross section, which do not conform to the definition of semi-finished products, and are in the form of: o coils of successively superimposed layers o straight lengths that if of a thickness less than 4.75 millimeters are of a width at least 10 times the thickness; or if thickness is 4.75 millimeters or more are of a width which exceeds 150 millimeters and is at least twice the thickness those with patterns in relief derived directly from rolling (such as grooves, ribs, chequers, tears, buttons, lozenges) and those that have been perforated, corrugated or polished provided they do not assume the character of articles or products of other headings
Flat-rolled products other than rectangular or square, of any size are to be classified as products of a width of 600 millimeters or more, provided they do not assume the character of articles or products of other headings. Hot rolled - this is a method of shaping steel by rolling. The temperature range depends on various factors such as the composition of the steel. For general guidance, the final temperature of the work-piece in hot rolling is about 900C. Cold rolled - this is a process which is carried out on products that have not been heated immediately prior to the cold-rolling operation in which they are reduced to final thickness. The objectives of cold rolling are to improve the surface finish and to obtain smaller and more uniform thickness than is possible in hot rolling. Cold-worked products tend to be very hard and possess great tensile strength. Angles and shapes must have the following characteristics:

the sections most commonly falling in this heading are H, I, T, Z, U (including channels) capital omega, obtuse, acute and right L angles corners can be square or rounded, the limbs equal or unequal and the edges may or may not be bulbed
Alloy steel is defined as steel with additional metals. This is made by smelting mixed ores that may either be added with the steel in the furnace
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or in the molten bath near the end of the finishing period, in the ladle, or in the moulds. For classification purposes, the main ferro-alloys include:

ferro-manganese ferro-silicon ferro-silico-manganese ferro-chromium ferro-silico-chromium ferro-nickel ferro-molybdenum ferro-tungsten (ferro-wolfram) ferro-silico-tungsten ferro-titanium ferro-silico-titanium ferro-vanadium ferro-niobium ferro-silico-magnesium ferro-silico-calcium
Stainless steel is defined as alloy steel containing, by weight, 1.2 per cent or less of carbon and 10.5 per cent or more of chromium, with or without other elements. Cast iron is iron mixed with other metals. The iron must predominate by weight over these additional metals. These additional metals must not be in the quantities stated for the chemical composition of steel. Malleable cast iron is cast iron that under pressure or hammering can easily spread and flatten. Forging is a process where the metal is formed into a shape by heat and pressure. Hot-drop forging and drop stamping are methods in the production of metal shapes or sections (usually on a conveyor line) by the hot shaping of cut blanks in dies by means of special tools. These are carried out by pressure or impact, generally in successive phases, following preliminary operations of rolling, hammering, hand forging or bending.
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Wire drawing is a cold process in which bars or rods in irregularly wound coils are drawn through one or more dies at high speed to obtain coiled wire of a smaller diameter. Bright drawing is a cold process in which bars or rods, whether or not in irregularly wound coils, are drawn at slow speed through one or more dies to obtain products of smaller or different shaped sections. Rolled or obtained by continuous casting is a method of casting molten steel directly into useful or semi-finished shapes. Wrought means shaped by hammering or beating. Wrought iron is an iron alloy with a very low carbon content, in comparison to steel, and has fibrous inclusions, known as slag. This is what gives it a "grain" resembling wood, which is visible when it is etched or bent to the point of failure. Wrought iron is tough, malleable, ductile and easily welded. Historically, it was known as "commercially pure iron"; however, it no longer qualifies because current standards for commercially pure iron require a carbon content of less than 0.008 wt%. Hot extrusion is a process consisting of enclosing a piece of metal heated to forging temperature in a chamber (called a container). High pressure is applied to the metal which is then forced through a die. Cold extrusion is a process similar to hot extrusion above except that the metal is at room temperature. Dies are metallic or other permanent devices that provide a given shape to a piece of metal. The word in metallurgy covers a range of meanings and includes dies that are used to shape solid metal in presses and those for making die casting from. Hot drawing is a process in which metal is heated and passed through a die to produce the finished shape. Sintering is where compacted metal powder (obtained by moulding, usually coupled with pressing) is spread out and passed under a burner. The powder ignites. Air is then drawn through the powder causing any sulphur or carbon present to oxidise. This causes a partial fusion of the particles in the powder, leaving them to adhere together in the form of a porous cellular clinker known as a sinter.
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Closed-die forging is where hot metal is shaped within the walls of two dies that come together to enclose the work piece on all sides. The process starts with a rod or bar cut to the length required to fill the die. Open-die forging is the process of hammering hot metal between flat or contoured dies. There are three basic types of dies for this process - flat dies, V dies, and swage dies. Annealing is the process of heating a metal or alloy to a predetermined temperature (below its melting point) maintaining that temperature for a time, then cooling it slowly. Annealing generally provides softness.
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6.
Steel Producers
Broadly there are two types of producers in India viz. integrated producers and secondary producers. Integrated steel producers have traditionally integrated steel units have captive plants for iron ore and coke, which are main inputs to these units. Currently there are three main integrated producers of steel namely Steel Authority of India Limited (SAIL), Tata Iron and Steel Co Ltd (TISCO) and Rashtriya Ispat Nigam Ltd (RINL). SAIL dominates amongst the three owing to its large steel production capacity plant size. Secondary producers use steel scrap or sponge iron/direct reduced iron (DRI) or hot briquetted iron (HBI). It comprises mainly of Electric Arc Furnace (EAF) and Induction Furnace (IF) units, apart from other manufacturing units like the independent hot and cold rolling units, rerolling units, galvanizing and tin plating units, sponge iron producers, pig iron producers, etc. Secondary producers include Essar Steel Ltd., Ispat Industries Ltd., and JSW Steel Ltd. There are 120 sponge iron producers; 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces; and 1,200 re-rollers in India. The integrated producers constitute most of the mild steel production in India. Their main products include flat steel products such as Hot Rolled, Cold Rolled and Galvanised steel. They also produce long and special steel in small quantities. On the other, secondary producers largely produce long steel products. Re-rollers are the units that come under secondary producers category, and produce small quantity of steel like long and flat products. These units either procure their inputs from the market or through their backward integrated plants. They use sponge iron, pig iron or combination to produce finished steel or ingots.
Producer Group Wise Production of Crude Steel, 2006-07 to 2010-11
1.Main Producer SAIL RINL TATA STEEL TOTAL
2006-07 13.51 3.50 5.17 22.18
2007-08 13.96 3.13 5.01 22.10
Production of Crude Steel(Million Tonnes) 2008-09 2009-10 2010-11 (P) 13.41 2.96 5.65 22.02 13.51 3.21 6.56 23.28 13.76 3.24 6.86 23.85
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2. Major JSWL ISPAT ESSAR JSPL TOTAL
2.64 2.76 3.01 8.41
3.15 2.83 3.56 9.54
3.22 2.20 3.34 1.46 10.22
5.26 2.69 3.47 1.96 13.38
5.85 2.38 3.37 2.27 13.87
3. Other Producer EAF Units/ 4.84 COREXBOF * INDUCTION 15.39 FURNACE* TOTAL 20.23
5.28
8.15
9.36
9.79
16.93 22.21
18.05 26.20
19.82 29.18 65.84
22.07 31.86 69.58
GRAND 50.82 53.86 58.44 TOTAL Source: JPC, P=provisional, *Reclassified as others
The following table highlights the total as also the contribution of the private and public sector in crude steel production in the country:
6.1. Main Producers 6.1.1. Steel Authority of India(SAIL)

It was established in 1973. SAIL is a government undertaking and is responsible for the management of steel plants at Bhilai, Durgapur, Rourkela, Bokaro and Burnpur and also the Alloy Steel Plant at Durgapur and Salem. The management of the Indian Iron and Steel was taken over by the Government on 14th July, 1976. SAIL also took over Maharashtra
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Elektrosmelt Limited, a mini steel plant, in January 1986. Visweswaraya Iron and Steel Limited were also taken over by SAIL in August 1989.
Major Units
SAIL Integrated Steel Plants Rourkela Steel Plant (RSP) in Orissa set up with German collaboration (The first integrated steel plant in the Public Sector in India, 1959) Bhilai Steel Plant (BSP) in Chhattisgarh set up with Soviet collaboration (1959) Durgapur Steel Plant (DSP) at Durgapur, West Bengal set up with British collaboration (1965) Bokaro Steel Plant (BSL) in Jharkhand (1965) set up with Soviet collaboration (The Plant is hailed as the countrys first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how) IISCO Steel Plant (ISP) at Burnpur, West Bengal Special Steel Plants Steel Authority of India Limited (SAIL), Kanpur, Uttar Pradesh Alloy Steels Plants (ASP), Durgapur, West Bengal Salem Steel Plant (SSP), Tamil Nadu Visvesvaraya Iron and Steel Limited (VISL), at Bhadravathi, Karnataka
Subsidiaries Maharashtra Elektro-smelt Limited (MEL) in Maharashtra 6.1.1.1. Rourkela Steel Plant (Orissa)
It was set up in 1959 with West Germany's collaboration. It is situated at a distance of about 400 kms from Kolkata on Kolkata- Mumbai main rail line. It is the biggest steel rolling mill in Asia. The Centre is at the confluence of rivers Sankya and the Koel which later merge to form the Brahmani River. The following geographical and economic factors have favoured the development of the plant: The iron-ore of Bonai (Barsua and Gua Iron ore mines) is close by. Coal is brought from Jharia, Bokaro and Kargali fields of Jharkhand State.
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Limestone is obtained from Hathibari and Birmitrapur situated at a distance of about 25 km. Water is supplied by the Mahanadi and the Sankya rivers. Hirakud multi-purpose river valley project supplies water-power. Rourkela is well-connected by rail and road with other centres of India. Labour is locally available. The annual production of this plant is 30,000 tonnes of pig iron, 11 lakh tonnes of crude steel and 10 lakh tonnes of saleable steel. Other important items manufactured here are slabs, plates, pipes etc. 6.1.1.2. Bhilai Steel Plant (Chhattisgarh)
The plant was set up in 1957 with Russian collaboration at Bhilai. It is situated at a distance of about 720 kms west of the South- Eastern railway. The development of this plant is attributed to the following factors: Bhilai was a silent village in the Durg district of Chhattisgarh state. The availability of extensive flat land facilitated the setting up of the plant. Iron-ore comes from Dhali, Rajhara mines situated at a distance of about 45 km from the plant. Coal is brought from Bokaro of Jharkhand state and Korba of Chhattisgarh state. Limestone is obtained from the Nandini quarries. Tandula and Maroda tanks provide water to the steel paint. The Korba thermal plant supplies electricity. Labour is locally available. Tribals serve as labour at low wages. The plant produced steel to its full capacity in 1961. The annual production is over 5 lakh tonnes of pig iron, 23 lakh tonnes of crude steel and 20 lakh tonnes of saleable steel. This plant is known for its special items of sleeper bars, heavy structural, merchant bars and billets for re-rolling. 6.1.1.3. Durgapur Steel Plant (West Bengal)
This plant has been established with British collaboration. It was completed in 1960. It is situated on river Damodar and on Kolkata-Delhi railway line at a distance of 175 kilometres from Kolkata. The following factors have favoured the growth of this plant:
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Iron ore is obtained from Gua mines of Jharkhand. Coal is brought from Jharia and Barakar coal fields. Limestone is brought from Rourkela and Bisra area of Orissa. Water is provided by the Damodar River. Hydel power is supplied by D.VC. The plant enjoys excellent transport facilities. Labour comes from adjoining areas.
Electrified railway system, a major highway and a navigable canal connect Durgapur place with the biggest consuming and industrial centre of Kolkata. This plant is nearest to Kolkata as compared to other plants of Jharkhand, West Bengal and Chhattisgarh. The annual production of this steel plant is 6 lakh tonnes of pig iron, 8-7 lakh tonnes of crude steel and 7 lakh tonnes of saleable steel. Durgapur Steel Plant specialises in the manufacture of light rails, beams, and fish plates, railway items of wheel, axils and sleepers. Its other products arc construction material. 6.1.1.4. Bokaro Steel Plant (Jharkhand)
Bokaro Steel Plant was set up in 1965 with the help of erstwhile U.S.S.R. This plant was set up because the other plants could not meet the growing demand of the country. Its capacity was over 30% of the total installed capacity of integrated plants of India. It is the largest steel plant in India. It is also called Swadeshi Steel Plant. Almost all the structural steel, electrical equipment, mechanical equipment etc. of this plant was manufactured in India. The plant enjoys the following advantages: Coal is available locally from Bokaro, Kargali and Jharia coal fields. Iron ore is obtained from Berjmada belt in Southern Jharkhand. Limestone is brought from Bhagwant Pur and Daltonganj quarries in Palamau district of Jharkhand. Water is obtained from the Damodar River. Cheap labour is available from the densely populated areas of Jharkhand, West Bengal, U.P and Bihar.
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The annual production of this plant is over 50 lakh tonnes of pig iron, 20 lakh tonnes of crude steel and 17 lakh tonnes of saleable steel. Various items of production are rolled light plates, cold rolled coils, rolled sheets etc. 6.1.1.5. Indian Iron and Steel Company (IISCO) (W. Bengal).
The plants of this company are the oldest in India. The plants are located at Kulti, Burnpur and Hirapur in West Bengal (about 225 kilometres from Kolkata). The management of this company was taken over by the government in 1972. The following factors have worked for the development of these three plants: The plants are located near coal fields of Raniganj and Jharia. Iron ore is obtained from Singhbhum and Mayurbhanj districts which are not far away. Limestone is obtained from nearby quarries of Paraghat, Baradhar and Bisia. Kolkata industrial region serves as the main market. Kolkata serves as a port. Power is available from Damodar Valley Corporation Project. Water is obtained from the Damodar River. These plants are located very near (6-10 kilometres) to railway junction of Asansol. Modernization of development of Burnpur plants was done in 1981 with the help of erstwhile U.S.S.R. 6.1.1.6. Visvesvaraya (Mysore) Bhadravati (Karnataka) Iron and Steel Works,
This plant was established in 1923 with the help of an American Company under the name of Mysore Iron and Steel Works Limited. It is now a state owned plant. It was taken over by the state government in 1962. The following factors are responsible for its growth: Iron ore comes from Kemmagundi ore fields of Bababudan hills, 40 kilometres South of Bhadravati. Limestone is obtained from Bhundigunda deposits lying at a distance of only 20 kilometres.
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The rich forest wealth of Shimoga and Kadur districts supplied charcoal to the plant. Now the plant is served by hydro-electricity from Jog falls. Water is available from the Bhadra River. Bhadravati is served by Southern Railway. Shimoga and Chitradurga supply manganese. Bhadravati is a wide valley thus enough land is available. After independence, Hindustan Steel Limited was established. In 1973, the integrated steel plants opened by H.S.L. were taken over by Steel Authority of India Limited (SAIL). 6.1.1.a. Maharashtra Elektrosmelt Ltd. : A subsidiary of SAIL Maharashtra Elektrosmelt Limited is situated in Chandrapur, Maharashtra, and is a major producer of ferro manganese and silico manganese for captive use of SAIL plants. The authorized and paid-up share capital of the company as on March 31, 2010 was ` 30 crore and ` 24 crore respectively. SAIL's holding is approximately 99.12% of the paid-up capital.
Production performance
The detail of the actual production is given below:
SAIL has a steel manufacturing capacity of 14mn tonnes, commanding 20% market share in domestic steel production. As demand for high margin
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value-added products has been continuously growing, the company is planning to change its product-mix accordingly. SAIL total saleable steel reached its maximum volume of 13044 thousand tonnes in 2007-08 which was contributed by hot metal production volume of 14981 thousand tonnes. There was a huge dip in the total saleable steel produced from 2007-08 to 2008-09 due to global slowdown. Thereafter, there has been constant increase in the total saleable steel volume. The company is currently implementing a mega modernization & expansion (M & E) plan to enhance its metal production capacity in a phased manner. Post expansion, the steel manufacturing capacity is expected to reach 23mn tonnes. The M & E plan will not only help strengthen the company's market position but also improve its operational efficiency. For the M & E plant, the company has planned CAPEX outlay of around Rs. 700bn of which around Rs. 366bn has already been incurred. As of H1FY12, SAIL had huge cash of Rs. 157bn on the balance sheet, which may be utilized to fund the CAPEX without over leveraging the balance sheet. Production data of each Steel Company under Steel Authority of India (SAIL)
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Raw materials
SAIL has fulfilled the requirement of iron ore from its captive mines of its steel plants by producing about 23.44 million tonnes during 2009-10. The production of fluxes from captive mines was 2.31 million tonnes. During 2009-10, continued thrust on production of Coal from SAIL's captive collieries resulted in record annual production of over 1.36 million tonnes, registering a growth of 34%. During year 2010-11 (April-December'2010) production of iron ore, fluxes and Coal from SAIL's captive collieries was 18.2 million tonnes, 1.74 million tonnes and 0.86 million tonnes respectively.
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Raw Materials Product Name Coal Iron Ore Others Silico Manganese Limestone Ferro Manganese Coke Dolomite Aluminium Ferro Silicon Hot Rolled Stainless Steel Coils Zinc Intermediary Products Total
------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Quantity 13,937,602 23,069,987 NA 125,553 3,215,608 73,819 225,536 3,089,311 16,795 25,233 16,913 6,749 57
Mar 2011 Value 15,359.98 2,337.79 1,090.34 700.45 666.70 533.34 525.02 325.16 197.99 171.39 92.36 75.51 0.37 22076.4
The table above shows the cost and quantity of raw materials used for production.
6.1.2. Rashtria Ispat Nigam Ltd (RINL)/Vizag Steel

Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP) set up its first shore based integrated steel plant at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August 1992 with a capacity to produce 3 million tonnes per annum (MTPA) of liquid steel. The plant has been built to match international standards with state-of-the-art technology, incorporating extensive energy saving and pollution control measures. RINLVSP has an excellent layout capable of expanding up to 20 MTPA. RINL-VSP is today on the growth path and almost doubling it's capacity to 6.3 MTPA of liquid steel and the new units are set to come on stream progressively from 2011-12. Within a short period of time since its commissioning, the plant achieved high levels of performance in production and technological norms. Right from the year of its integrated operation, VSP established its presence both in the domestic and international markets with its superior quality of products. VSP has been awarded all the three international standards certificates, namely, ISO 9001:2000, ISO 14001:1996 and OHSAS 18001:1999. RINL-VSP is the first Indian steel plant to get the 'Capability Maturity Model Integrated (CMMI) - Level 3' certification issued by 'Software
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Engineering Institute (SEI) of Carnegie Mellon University', USA for implementation of IT systems in VSP. RINL-VSP is the first PSE & first in Steel sector in India to get BS EN 16001 (Energy Management system) certification on 28.12.10, a recent feather in it's cap. The company has emerged as a good corporate citizen and has contributed substantially for the development of the region.
The physical performance in terms of production and percentage achievement of rated capacities along with financial/marketing performance for the year 2010-11 (Actual upto Dec '10 and forecast for the period JanMar '11) is given below:
The company has drawn its Corporate Plan aiming to reach 20 Million Tonnes by 201920 in phases and is presently executing its first phase of expansion of liquid steel production to 6.3 Million tonnes from 3.0 Million tonnes.
Raw materials
RINL is the only Public Sector integrated steel producer without captive linkage for major raw materials such as Coking Coal and Iron Ore. RINL faces challenges, during 2010-11, on multiple accounts:
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Quarterly pricing mechanism introduced by international coking coal suppliers. Ensure wider vendor base for adequate availability of raw materials to meet the requirements after 6.3 MT expansions. Ensure availability of coking coal during Q4 when Force Majeure was declared by Australian suppliers. Captive Mines of minor raw materials Brief about Captive Mines of Visakhapatnam Steel Plant Madharam Dolomite Mine (MDM) MDM is located at Madharam village in Singareni Mandal of Khammam District, A.P. The mining lease is for exploitation of Dolomite covering an area of 384.46 Hectares for about 20 years. The lease area is a captive source for Rashtriya Ispat Nigam Ltd (RINL) / Visakhapatnam Steel Plant (VSP) for use of Dolomite in its Iron and Steel making processes.The present Dolomite reserve is 31.03 million tones. It is an open cast mechanized mine of VSP to cater to the requirement of Dolomite.
Jaggayyapeta Limestone Mine (JLM) Jaggayyapeta Limestone mine (JLM) is located 5 Km south West of Jaggayyapeta connected by a black top road in Krishna District, A.P. This is a captive mine of VSP to cater to the requirement of BF Grade Limestone of VSP. An area of 1295 Hectares out of which 900 Ha is forest land and 395 Ha is acquired private lands. The lease is valid upto 07.08.2020. This mine is an open cast mechanized mine with a capacity of 4,50,000 tonnes of BF Grade Limestone per year The Limestone reserve of 130 million tones is occurring in the area.
Garbham Manganese mine (GMM) Garbham Manganese mine (GMM) is a captive source for manganese ore for VSP. It is located 16 Km away from Garividi connected by the black top road in Merakamududam Mandal, Vizianagaram District, A.P. There are two mining leases adjacent to each other covering an area of 264.54 Hectares. The present reserve of Manganese is 7,03,760 tonnes as on 01.01.2008 with a life of 46 years producing 15,000 tonnes per annum. The annual production of the mine is @ 16,000 tonnes.
Saripalli Sand Mine (SSM) This is a captive source for catering to the requirement of Silica sand for VSP. This is located in Champavati River near Nellimarla Mandal of Vizianagaram District, A.P. The sand is transported from this mine by trucks covering a distance of 95 Km from the area to VSP. The requirement of sand
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is 50,000 per annum. Loading, transportation and unloading is carried by contractual agency. Only one Junior Officer is posted to look after the mining activities of Saripalli sand Mine. The total reserve of sand is 3,20,000 tonnes.
6.1.3. Tata Iron (Jharkhand)
and
Steel
Company
(TISCO)
Tisco plant is located at Sakchi, now known as Jamshedpur. The plant was set up by Shri Jamshedji Tata in 1907. It is situated in a valley formed by the river Subarnarekha and the Khorkai in the Singhbhum district of Jharkhand State. The plant enjoys the following localisational advantages: Coal comes from Jharia, situated at a distance of about 150 km. Iron-ore is brought from Gurumehsani, Okampad, Badampahar and Noamandi deposits. All these centres are within a distance of 100 km from Jamshedpur. The rivers Subarnarekha and Khorkai provide water. Dolomite is obtained from Pagposh (Gangpur); Limestone from Birmitrapur and fire clay from Belapahar. The works are in an infertile and thinly populated region as such labour comes from other parts of Bihar, M.P, Orissa and U.P Jamshedpur is served by South-Eastern railway. Kolkata, situated at a distance of about 250 km provides main market. It also serves as a port for the export of finished products. All these factors have attributed to the development of TISCO the installed capacity of the plant is 2 million tonnes of steel ingots per annum. In addition to steel, various types of items like bars, rails, billets, tin plates, tin sheets, railway wheels, steel wires etc. are manufactured. TISCO also runs another steel plant set up in Orissa at Gopalpur, 170 km SE of Bhubaneswar. The favorable factors here are: Coastal location Nearness to iron ore Cheap land
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Fresh water from streams It is an integrated steel plant of latest technology having a capacity of production of 10-12 million tonnes.
Production performance 1. Steel division:

The production and sales figures of the Steel division of the Company are shown in the following table:
Sales Overall sales at 6.42 million tonnes grew by 4% over last year (6.17 million tonnes in FY 10). Due date performance (which measures delivery compliance) improved signifi cantly from 93% to 96% in fl at products and from 87% to 91% in long products. Flat Products The sales of fl at products at 3.54 million tonnes increased by 2% in FY 11 (3.47 million tonnes in FY 10). The division crossed 1 million tonnes fl at products sales to automotive segment (1.042 MT) and for the Branded Products (1.054 MT). The division also achieved the best ever sales performance in Skin Panel (0.49 MT) and Galvanised Annealed (0.83 MT).
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Long Products Sales of Long products at 2.88 million tonnes increased by 7 % in FY 11 (2.70 million tonnes in FY 10). The division achieved best ever TISCON sales of 1.82 MT in FY 11 against the previous best of 1.57 MT in FY 10 thus becoming the market leader in retail sector of rebar.
2. Ferro Alloys & Minerals division: The trend of production and sales volume of Ferro Alloys & Minerals Division is shown below:
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3. Tubes division: The trend of production and sales volume of Tubes Division is shown below:
4. Bearings division: The performance of Bearings division in terms of production and sales volume is shown below:
Raw materials
The raw materials division of the steel company raises over 14 million tonnes of ores from its captive collieries, iron ore mines and quarries spread over the states of Jharkhand and Orissa. Coal, iron ore, manganese ore,
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chrome and dolomite are produced at various mines and quarries. The Company's steel plant in Jamshedpur and its customers consume the highgrade raw materials from these units. Tata Steel Limited has two collieries in West Bokaro and Jharia, in the state of Jharkhand. While West Bokaro unit is an open cast mine, the Jharia unit is underground. The coal mines are about 150 kms from the steel plant at Jamshedpur and produce superior grades of clean coal. The iron ore units are located in Noamundi, Joda and Katamandi in the states of Jharkhand and Orissa. The Steel Company's iron ore units produce 9 million tonnes per annum of various grades of high quality iron ore including rich blue dust ore.
Tata Steel Limited also has a manganese mines and dolomite quarries in Orissa. To enrich its raw material supply Tata Steel Limited has also set up joint ventures outside India in Queensland, Australia and Thailand.
Raw Materials Product Name Coke Spelter, Sulphur Coal ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Metric Tonnes Quantity 3,565,464 1,115,813 1,199,247 Mar 2011 Value 3,553.89 1,246.55 1,134.07
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Iron Ore Dolomite & Limestone Zinc & Alloy Zinc Ferro Manganese Total
Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes
11,737,116 2,392,355 21,231 23,836
896.84 495.67 234.31 103.82 7665.15
6.2. Major Producers 6.2.1. JSW Steel Ltd.

JSW Steel, the flagship company of the JSW Group, is the largest integrated private steel manufacturer in India in terms of installed capacity. JSWs history can be traced back to 1982, when the Jindal Group acquired Piramal Steel Limited, which operated a mini steel mill at Tarapur in Maharashtra and renamed it as Jindal Iron and Steel Company (JISCO). The Group set up its first steel plant in 1982 at Vasind near Mumbai. Soon after, it acquired Piramal Steel Ltd., which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, who had wide experience in the steel industry, renamed it as Jindal Iron and Steel Co. Ltd. (JISCO). In 1994, in order to achieve the vision of moving up the value chain and building a strong, resilient company, Jindal Vijayanagar Steel Ltd. (JVSL) was set up, with its plant located at Toranagallu in the Bellary-Hospet area of Karnataka, the heart of the high-grade iron ore belt and spread over 3,700 acres of land. It is just 340 km from Bangalore, and is well connected with both the Goa and Chennai ports. In 2005, JISCO and JVSL merged to form JSW Steel Ltd. JSW Steel offers the entire gamut of steel products Hot Rolled, Cold Rolled, Galvanized, Galvalume, Pre-painted Galvanised, Pre-painted Galvalume, TMT Rebars, Wire Rods & Special Steel Bars, Rounds & Blooms. JSW Steel has manufacturing facilities at Toranagallu in Karnataka, Vasind & Tarapur in Maharashtra and Salem in Tamil Nadu. By 2020, the Company aims to produce 34 million tons of steel annually with Greenfield integrated steel plants coming up in West Bengal near Salboni about 35 km from Kharagpur and Barenda in Ranchi district of Jharkhand.
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JSW Steel is Indias leading steel manufacturer, with a steel manufacturing capacity of 7.8 MTPA..The company has four manufacturing facilities at the following locations: Vijaynagar (6.8 MTPA integrated steel facility), known as the upstream unit, Tarapur and Vasind (for value-added flat products), known as downstream facilities and Selam (1 MTPA for long products of high value and special steels).
The production performance during FY 2010-11 was as under:
The company registered an improved performance in 2010-11, reflected an increase in output hot metal production increased by 8.5%, crude steel production increased by 7.4% and HR coils production increase by 41%.
Raw materials
Iron ore: The Company has been allotted iron ore mines for its captive requirement, which are at various stages of clearance. Of these, the mine at
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Hadimmapade in Karnataka (with 36mn tons reserves of 63% Fe grade) is likely to begin operations in FY12. JSW has received environmental clearance for the same and expects the pending forest clearance to come shortly. The estimated landed cost is Rs600/ton. With the commissioning of the mine, JSWs captive iron ore would rise from the current 16% to 40%, thereby saving Rs2,000/ton on steel cost. However, our estimates do not factor in any benefit from the same. We believe that the clearance for the mine will be a major positive trigger for the company over the next six months. Coal: The Company has been allotted Rohne coal block in Jharkhand, which has geological reserves worth 250mn tons of mineral reserves of medium and high grade coking coal. The mine is held jointly by JSW and two other companies in the ratio of 69%, 24% and 7% respectively. The annual capacity of the mine would be ~8mn tons and JSWs share of the mine comes at 5.6mn tons per year. On JSWs expanded steel manufacturing capacity, output from this mine will be able to meet more than 50% of coking coal requirement.
Power: JSW currently has a power capacity to produce 230MW from waste heat gases at Vijay Nagar, 30MW at Tarapur and 30MW at Salem. The current power generation is not enough to meet JSWs complete power requirement. The company is now setting up a 300MW power plant at Vijaynagar other than the 300MW power plant associated with the 3.2MTPA expansion plan to meet its rising demand from the rolling mill. The first 300MW power plant associated with the 3.2MTPA expansion plan is expected to be operational by October 10 and the second 300MW power plant would be operational by June 11. With the commissioning of both the power plants, JSW would be self-sufficient for its complete power requirement on
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the expanded capacity of 3.2MTPA. The company has been allotted the Utkal thermal coal block (11% share in the JV) for its thermal coal requirement.
Raw Materials Product Name Coke & Coal Iron Ore Lumps Others Coils (Hot Rolled) Zinc & Other Alloys MS Slab / Ingot Scrap Total ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Quantity 7,803,364 12,972,111 NA 158,138 41,152 29,128 NA Mar 2011 Value 8,328.21 3,707.80 2,121.87 563.11 446.33 75.44 0.00 15242.76
6.2.2. Ispat Industries Ltd. (IIL) / JSW Ispat Steel Ltd.(JSPL)

Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector producer of hot rolled coils in India. It has two integrated steel plants, located at Dolvi and Kalmeshwar in the state of Maharashtra. 1. Integrated Steel Plant at Dolvi, Maharashtra The Dolvi complex has a captive port located close to it on the Amba River, which opens into the Arabian Sea. This port can handle barges and mini-bulk carriers up to 4000 dry weight tonnage (DWT). Moreover, a jetty adjoining the complex is capable of handling cargo of up to 10 million tonnes per annum.
Manufacturing Facilities:

DRI - Sponge Iron Plant Blast Furnace Compact Strip Production
2. Integrated Steel Plant at Kalmeshwar, Maharashtra The integrated steel plant at Kalmeshwar uses the latest steel manufacturing technology to produce galvanized sheets and products, apart from cold rolled coils. The
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Kalmeshwar complex houses a total of three advanced plants - a 0.325 million tonnes Galvanized Plain/Galvanized Corrugated plant, a 0.33 million tonne Cold Rolled Coils plant and a 60,000 tonne Colour Coated Sheets plant.
Manufacturing Facilities

Cold rolling mill Galvanizing line Colour coating line
Taken Over by JSW Steel Ltd. On 21 December 2010 it was declared that JSW Steel will buy controlling interest in Ispat Industries at an enterprise value of $3 billion to emerge as India's largest producer of the commodity with an annual capacity of 14.3
million tonnes. The company will now be called JSW Ispat Steel Ltd. .
Production of Hot Rolled Coils at 2.2 Million MTs was lower by 16.9%compared to the previous period, on an annualized basis. Production of Direct Reduced Iron (Sponge Iron) at 1.21 Million MTs and production of Hot Metal at 1.35 Million MTs were respectively lower by 10.2% and 20.6% compared to the previous period. The incidence of lower production in all the product segments was due to plant shut-down during most part of November and December, 2010 for technical up gradation and maintenance activities.
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Restriction in availability of Natural Gas had cascading effect on input prices and also severely impacted production of Direct Reduced Iron. Production of Cold Rolled Steel Coils/Sheets and Galvanized Coils/Sheets were lower at 0.21 Million MTs and 0.14 Million MTs, respectively. Production of Galvalume at 0.048 Million MTs had registered an increase of 90.1% over the previous period. Production of Tubes and Pipes, however, was lower at 0.014 Million MTs.
Raw materials
Ispat is the only steel maker in India and among a few in the world to have total flexibility in choice of steel making route, be it the conventional blast furnace route or the electric arc furnace route. Its dual technology allows Ispat the freedom to choose its raw material feed, be it pig iron, sponge iron, iron ore, scrap or any combination of various feeds. It also has total flexibility in choosing its energy source, be it electricity, coal or gas. Iron ore mining concession in Maharashtra and coking coal concession in Madhya Pradesh. Minority stake in JV for iron ore concessions in Brazil and coking coal concessions in Colombia.
Raw Materials Product Name Hot Metal Direct Reduced Iron ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Quantity 2,030,058 1,641,385 Jun 2010 Value 3,831.12 2,187.56
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Coke Iron Ore Pellets Sintered Products Coils (Hot Rolled) Iron Ore Lumps Coils (Cold Rolled) Iron Ore Fines Others Scrap (Melting) Ferro Alloys Coils Galvanised Coal Galvanised Products Zinc & Zinc Aluminium Alloy Pig iron Hot Briquetted Iron Total
Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Not Reported Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes
1,076,900 1,781,007 2,767,726 348,721 1,619,714 243,182 2,125,272 NA 171,671 NA 61,275 319,386 20,370 7,137 22,179 18,003
1,798.64 1,273.34 1,223.89 1,034.14 913.93 791.45 743.44 332.20 291.63 256.90 227.55 222.17 84.48 73.41 38.44 20.70 15344.99
6.2.3. ESSAR Steel Ltd.

Essar Steel is a global producer of steel with a footprint in India, Canada, USA, the Middle East and Asia. Essar Steel is one of India's largest exporters of flat products, exporting to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. Visakhapatnam: Pellet plant Essar Steel has built an 8 MTPA iron ore pellet plant in Visakhapatnam, Andhra Pradesh, to cater to the pellet requirements of the HBI plant in Hazira, Gujarat. The plant has an assured supply of high-quality iron ore from the beneficiation plant at Bailadilla, Chhattisgarh. The pellets produced at the plant are DRI grade. The plant is located strategically near a deep draft, all-weather port that ensures the movement of large vessels to supply pellets throughout the year to the Hazira steel-making facility.
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Hazira facility Steel complex at Hazira, Gujarat, houses a 6.8 MTPA sponge iron plant, the world's largest gas-based sponge iron plant in single location. The plant provides raw materials for our state-of-the-art 7.5 MTPA hot rolled coil (HRC) plant, the first and largest of India's new generation steel mills. This plant is fed with inputs from four electric arc furnaces and three casters. The complex's sophisticated infrastructure includes independent water supply and power, oxygen and lime plants, a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes. Our steel complex at Hazira (Gujarat, India), houses a 10 MTPA steel plant, which is the largest single-location flat steel producer in India and the fourth-largest single-location flat steel producer globally. . The plant is supported by a complete infrastructure setup, including a captive port, power plant, lime plant and oxygen plant. The plant's downstream facilities include: Plate Mill Essar Steel has a state-of-the-art plate mill at Hazira, Gujarat with a capacity of 1.5 MTPA, making it one of the widest plate mills in the world. Essar plates undergo close process metallurgy and chemistry, keeping in mind the specific requirements of different application segments The stateof-the art plant is not only capable of producing high-quality plates but also conforms to clean steel norms prescribed by all leading international standards agencies. Pipe Mill The Pipe Mill, located at Hazira, Gujarat, has a combined capacity of 0.6 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2 million square meters annually. This pipe making facility is backed by external and internal anti-corrosion coating facilities. Cold rolling complex At the other end of the value chain, our downstream facilities include a 1.4 MTPA cold rolling complex, which adds further muscle to our steel making facilities. The complex comprises two pickling lines of 1.4 MTPA capacity, a
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reversing mill and a 1.2 MTPA tandem mill, two galvanizing lines of an aggregate capacity of 0.5 MTPA, a batch annealing furnace of 0.7 MTPA, and a skin pass mill of 1.0 MTPA. This enables us to get into the genre of products that are tailor-made for the automotive, white goods, shipbuilding, agriculture and construction industries - segments that had been the exclusive domain of a few international manufacturers. Essar now holds the leadership position in the cold rolling, galvanizing and pre-coated segments. Pune: Downstream capability hub The Essar Steel Pune facility is strategically located near Pune, Maharashtra, which is one of the largest industrial hubs in India. The facility comprises a 0.6 MTPA Pickling line, a 0.6 MTPA Cold Rolling mill, a 0.5 MTPA Galvanising line and a 0.4 MTPA Colour Coating mill. Paradip: Pellet plant Essar Steel commissioned a six million tonnes per annum (mtpa) pelletmaking facility at Paradip in Odisha in April 2012. This is the first phase of the 12 mtpa pellet plant to be commissioned by 2013. The company is also setting up 12 mtpa iron ore beneficiation plant at Dabuna and a 253 km slurry pipeline connecting Dabuna and Paradip. The plant has an assured supply of high-quality iron ore from the beneficiation plant at Dabuna, Orissa. Its close proximity to the Paradip port ensures that the pellets are quickly shipped to the steel plant in Hazira in Gujarat.
Essar Steel has a total iron making capacity of 10.2 MTPA using three technologies HBI/DRI, Corex and Blast Furnace. These technologies provide flexibility in terms of raw material inputs, be it iron ore or energy. The Hot Briquetted Iron (HBI) plant at Hazira is one of the world's largest gas-based plant with a production capacity of 6.8 MTPA, while the Corex and Blast Furnace facility has a production capacity of 1.7 MTPA each. The plant is supported by a captive power plant of 32 MW and is equipped with stateof-the-art technology to optimize raw material costs.
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Essar has emerged as the largest pellet producer in India with a capacity of 14 mtpa. Hot Rolled Coils The CONARC and EAF facilities provide liquid steel for the 8.6 MTPA hot rolled coil (HRC) plant, the first and the largest of India's new generation steel mills, and the most modern 3.5 MTPA Compact Strip Mill. Essar Steel is the only Indian steelmaker with a 1.2 MTPA hot skin pass mill that enhances the steel's surface quality to match international standards. Pickling Two pickling lines with a combined capacity of 1.4 MTPA and turbulence technology ensure the production of a perfect steel strip with clean, scalefree surfaces without over-pickling the steel strip. Cold Rolling A sophisticated 2 MTPA Cold Rolling plant adds further muscle to the steelmaking facilities. Equipped with a reversing mill, a 1.2 MTPA tandem mill and a batch annealing furnace of 0.7 MTPA, the plant manufactures the finest cold rolled product. Galvanising The Essar Steel Hazira complex has two galvanising lines with an aggregate capacity of 1 MTPA. By applying a coating of molten Zinc to the surface of a Cold Rolled product, the lines manufacture galvanised coils that have excellent corrosion resistance and are used extensively in various industries.
Raw materials
Bailadilla: Beneficiation plant Essar Steel operates an 8 MTPA beneficiation plant at Bailadilla, Chhattisgarh, which has some of the finest iron ore reserves in the world. Under intensive treatment, the plant facilitates the extraction of high-quality ore to be used in the process of iron and steel-making. The treated ore is then transported through a slurry pipeline to the pellet plant at Visakhapatnam.
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Dabuna: Beneficiation plant In Dabuna, Orissa, Essar Steel has set up a 12 MTPA beneficiation plant to have close access to the rich iron ore reserves in the state.
Raw Materials Product Name Iron Ore Fines Iron Ore Others Coils (Hot Rolled) Zinc Cast Slab Total ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Metric Tonnes Metric Tonnes Quantity 4,699,185 1,022,711 NA 67,497 16,692 48,944 Mar 2010 Value 1,937.03 568.09 422.32 189.42 181.23 119.98 3418.07
6.2.4. Jindal Steel & Power Ltd. (JSPL)

JSPL commenced operations in 1991, Jindal Steel & Power Limited (JSPL) is one of Indias leading steel manufacturers with a significant presence in mining, power generation and infrastructure. JSPL has manufacturing plants located at Raigarh in Chhattisgarh, Angul in Orissa and Patratu in Jharkhand. The Machinery division is located in Raipur. Raigarh Plant, Chhattisgarh JSPLs state-of-the-art steel plant at Raigarh, Chhattisgarh, can produce up to 3 million tonne steel. Equipped with modern machinery, the plant boasts of world-class production facilities. This plant has the worlds largest coal based sponge iron manufacturing facility. Patratu, Jharkhand JSPL is setting up an integrated steel plant in Patratu, Jharkhand; orders for major technological packages have been finalized and in certain cases orders have been placed. The steel plant is expected to be commissioned in the second half of 2014.
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Angul, Orissa Expanding its reach in the domestic market, JSPL has gone ahead to make considerable investments in various parts of Orissa. The company would be investing US $10.00 billion in the state for steel production and power generation. The proposed steel plant to be set up in Orissa will produce 12.5 MTPA steel in phases and generate 2600 MW of power in phases. In the first phase, the company is setting up a 6.0 million TPA integrated steel plant at Angul along with a 900 MW of captive power generation facility. Production performance JSPL products cater to diverse Industry needs, Widening visibility and brand recall. Rails (121 metres) Parallel Flange Beams Medium and Light Structural Mill Plates and Coils Fabricated Structural Wire Rods TMT Bars from Rebar Mill
Sponge Iron The Company produced 13,19,840 MT of Sponge Iron in the year under report as against previous years production of13,09,408 MT and achieved a capacity utilization of 96.3%. Steel The production of steel products during the year under report, compared to previous year is given below: Product Production in MTs Sl No. 1 2 Finished steel products Semi steel products (2010-11) 15,85,327 22,72,692 (2009-10) 12,14,583 19,64,032
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Ferro Chrome The Company produced 17,149 MT of HC Ferro Chrome/ silico manganese during the year as against 540 MT in the previous year.
Raw materials
Captive coal mines are located at Dongamahua and Tamnar, Chhattisgarh, iron ore mine at Tensa, Orissa and iron ore pelletisation plant at Barbil, Orissa. The mines at Tensa meet a part of the companys iron ore requirement for the sponge iron plant. Equipped with fully mechanized techniques, it currently produces about 9,00,000 MT of sponge grade iron ore. An additional mobile screening unit has been installed to ensure the availability of high-grade iron ore / fines for its sinter plant at Raigarh (Chhattisgarh). Spread over 705 hectares, Tanmar coal mine is well connected to JSPL's Raigarh plant by a metal road built exclusively for this purpose. The working faces and the haul roads are regularly sprinkled with water to keep them dust free. The production capacity of the mines is 6 million MTPA and the entire coal is used for steel making and power generation.
Raw Materials Product Name Coking Coal Others Iron Ore Total ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Not Reported Metric Tonnes Quantity 1,188,208 NA 5,868,716 Mar 2011 Value 1,157.98 804.39 767.98 2730.35
6.2.5. Bhusan Steel Ltd.

Bhushan Steel is the largest manufacturer of auto-grade steel in India. JSPL is planning to expand its capacity to 12 million tonnes annually, from the present installed capacity of around one million tonnes.
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The Khopoli plant, commissioned in 2004 has been playing a remarkable role not only in the growth of exports, but in the production of a much wider variety of value added steel like Colour Coated Sheets, High Tensile Steel Strappings, Hardened and Tempered Strips and Precision Tubes. In addition to these, the Khopoli plant has recently launched the Value Added Product such as Galume added steel (Aluminium & Zinc Coated Shee t) for the first time in the country. Operating with the most advanced technology, expressed through a large fleet of latest equipments, machinery and systems, the Khopoli plant has given a tremendous boost of 425000 MT per annum to BSL's total production capacity Including 240000 MT of Galvanized steel, which are further forward integrated into Colour Coated Sheet, Galume and other value added products. Giving a tremendous volume-thrust to the production capacity of BSL is its plant at Sahibabad, with a production of 475,000 MT per annum comprising products such as Automotive Grade C R Sheet and Galvanized Sheets. The most brilliant milestone in BSL's journey of excellence is the setting up of a state-of-the-art Hot Roll Steel & Power Plant in Orissa. This Integrated Steel and Power Plant will, no doubt, put BSL firmly on the fast track of progress. As one of the prime movers of the Technological Revolution in the Indian Cold Rolled Steel Industry, BSL has emerged as the countrys largest and the only CR steel plant with an independent line for manufacturing Cold Rolled coils and sheets up to a width of 1700 mm, as well as Galvanized Steel Coils & Sheets up to width of 1350mm.
Bhushan Steel Limited has a portfolio of flat products, which are manufactured at steel processing facilities at Sahibabad, Uttar Pradesh. The Company is producing cold rolled close annealed coils (CRCA), galvanized sheets, precision tubes, high tensile steel, hardened and tempered steel strip (H&T strips), wire-rods, color-coated sheets and galume. The Company also produces, sponge iron, pig iron, billets, slabs, HRC and power. During the fiscal year ended March 31, 2011, the Company partially installed the Phase II of the integrated steel plant at Orissa with the production facility of hot roll coil mill (1.90 million tons per annum). During fiscal 2011, the Company
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manufactured 1191,415 million tons of cold-rolled steel strips/sheets/coils; 545,196 million tons of cold-rolled galvanized steel strips/sheets/coils; 118,691 million tons of color coated galvanized steel strips/sheets/coils, and 126,642 million tons of precision tubes.
Raw materials
Iron Ore: The company has been allotted iron mines at Barbli Orissa to the tune of 60MT. BSL is in the process of obtaining necessary environmental clearance, the mines are expected to be operational by the end of FY13. Coking Coal Mines: BSL has been allotted the Utran coking coal mine, which has grades of soft coking coal with reserves of 55MT. This mine will 55MT reduce the companys coking coal dependence as the coal from these mines will be blended with hard coking coal from Australia. Thermal Coal Mines: BSL has been allotted coal mines in New Patrapara, Orissa, in a joint venture with Visa Steel, SMC Power Generation Ltd, Orissa Sponge Iron and Steel, Deepak Steel and Power, Sri Metaliks and Adhunik Corp. The company holds majority chunk (50% stake) in the joint he ( venture. Total reserves are estimated to the tune of 650MT, of which BSLs share will be 325MT, the mines are expected to be operational by Q2 of FY13. Bowen Energy: As a strategic move, the company has acquired 60% stake in Bowen Energy Australia through its subsidiary Bhushan Steel (Australia) for Rs70cr, with an aim to ensure long term supply of quality coking coal. Bowen Energy has licenses to explore 3 coking coal blocks in Bowen basin coal in Queensland, Australia.
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Raw Materials Product Name CR/HR Coils/Strips/Skelp Coal Iron Ore Zinc & Alloy Zinc Paints Dolomite Total
------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Quantity 1,035,128 2,303,283 2,162,496 39,432 3,765 157,971
Mar 2011 Value 2,509.96 753.41 505.26 426.79 59.62 21.85 4276.89
6.3. Other Producers 6.3.1. Shyam Steel Industries Ltd.

Shyam Steel Industries Limited made a humble beginning in 1953 with a small factory at Howrah district in West Bengal, one of the earliest pioneering efforts in the steel industry in the Eastern region. Today, apart from its three speciality rolling mills at Howrah, the company is proud to have two integrated steel plants at Durgapur and Barbil in Orissa state. Shyam Steel Industries Ltd. fully Integrated Steel Manufacturing Plant at Durgapur. The plant comprises of
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(i) (ii) (iii) (iv)
DRI Unit The Steel Melting Shop equipped with Electric Arc Furnace Continuous Billet Casting Plant, and Rolling Mill
Shyam Steel Industries Ltd. is the only company in the private sector offering the widest range of construction steel. Its range of TMT Re-Bars suffices the rarest need of a civil engineer. The range of Structural Steel offered by the company meets the demands of the engineering sector. The products offered are: (i) (ii) (iii) TMT Re-Bars Structural Steel M. S. Billets
There has been considerable increase in the sponge iron production almost 80%. Although the installed capacity of Ignot/Billets/Bloom increased from 158,000 MT to 280,000MT, the actual production dropped by 6.8%. The hot rolled steel production saw a jump from 211,190MT in 2009 to 258,756MT in 2010.An increase of 22.52%.
6.3.2. Jai Balaji Industries Ltd.

Jai Balaji Group is one of the largest manufacturers of steel in the private sector in Eastern India. We have integrated facilities for producing steel in
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our eight manufacturing units spread across the states of West Bengal, Chhattisgarh, Orissa and Jharkhand in India. Our Group has a chain of value-added products which include DRI, Pig Iron, Ferro Alloys, Alloy and Mild Steel Billets, Reinforcement Steel TMT Bars, Wire Rods, Ductile Iron Pipes and Alloy and Mild Steel Heavy Rounds. We draw our strength from an old tradition of reliable customer service and quality products. With vibrant and dedicated employees forming the core of our Group, we have grown from strength to strength under the dynamic leadership of our promoters and directors. Our combined experience has propelled our Group into the league of formidable steel players in Eastern India, which has not only diversified into power generation in West Bengal and Chhattisgarh but has progressed work in allied industries like cement as well. Present Group Manufacturing Facilities Jai Balaji is an integrated steel manufacturer with five units in three mineral-rich states In eastern India; the Companys cumulative capacities comprise:
DRI Pig iron Ferro Alloys Alloy and Mild Steel Billets Reinforcement Wire Rods Alloy and Rounds Steel Bars and 6,90,000 tonnes per annum 5,09,250 tonnes per annum 1,06,000 tonnes per annum 10,20,430 tonnes per annum 3,60,000 tonnes per annum
Mild
Steel
Heavy
16,500 tonnes per annum 2,40,000 tonnes per annum 116.80 MW
Ductile Iron Pipes Power
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Jai Balaji industries ltd. has to reduce the volume of product mainly due to high cost of raw materials (i.e. coke & iron ore). It introduced a line of product Ductile Iron Pipe. Although it reduced the steel products, it produced more power over last year.
Raw Materials(Mar 2010) in Rs. Cr. Product Name Unit Quantity Value Coal Metric Tonnes 940,257 578.6 Iron Ore Metric Tonnes 1,243,036 348.33 Sponge Iron Metric Tonnes 120,118 166.33 Manganese Ore Metric Tonnes 76,576 86.21 Billets Metric Tonnes 19,648 42.2 Lime Stone Metric Tonnes 180,812 21.29 Pig iron Metric Tonnes 7,668 14.89 Scrap Steel Metric Tonnes 19,632 12.91 Ferro Alloys Metric Tonnes 625 3.63 Iron Ore Pellets Metric Tonnes 4,099 2.64 Total 1,277.03 The table above shows the cost and quantity of raw materials used for production.
6.3.3. Electrosteel Casting Ltd.

Electrosteel Casting Ltd. is engaged in the business of manufacturing Ductile Iron Pipes, Fittingsand Cast Iron Pipes. Additionally, it also undertakes turnkey solutions for water transportation and sewerage management, which includes manufacturing DI Pipes, supplying and laying various types of pipes, operating the system and transferring to the owners.
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In 2005, the company was allotted coking coal mines in the state of Jharkhand and is in process of developing it. As the Indian coal has a higher percentage of ash, it has also set up a Washery of 2 million TPA to reduce the ash from coking coal. The company has also been allotted an Iron Ore mine at Kodolibad in state of Jharkhand. Once this mine is developed, it would help in reducing the production cost further. The company is also developing the Dolomite mine at Chandrapura, which will supply low silica high grade Dolomite for operations. The Companys first manufacturing facility at Khardah is now into production of Ductile Iron Pipes, DI Fittings and Pig Iron. CI spun pipes are now manufactured at the Company facility in Elavur (Tamil Nadu) while Low Ash Metallurgical Coke (LAMC), is produced at the Industrial Unit at Haldia (West Bengal).
Ductile Iron Pipes The production of DI pipes increased during the year from 2,35,463 MT last year to2,70,327 MT i.e. by 14.81%. Year 2008-09 2009-10 2010-11 DI Pipe production 2,51,823 MT 2,35,463 MT 2,70,327 MT
The increase in production was mainly due to improved productivity and debottleneckingin the manufacturing facilities. > Cast Iron Pipes Production was lower at 30,199 MT against 40,651 MT in the previous year. This is dueto reduction in demand as an effect of preference of DI Pipes over Cast Iron Pipes. > DI Fittings & Accessories
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Production of DI Fittings increased during the year from 4,683 MT last year to 5,038MT. Company improved the performance of the division by targeting more value added products and higher exports to niche markets.
Raw Materials Product Name Coal Iron Ore Others Pig iron M S Scrap Ferro Silicon Coke Hard Scrap Cast Iron Total
------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Quantity 289,791 495,184 NA 21,932 60,864 5,892 24,763 3,337
Mar 2011 Value 285.38 204.57 117.44 46.44 44.18 40.76 22.72 5.95 767.44
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6.3.4. Usha Martin Ltd.

The company set up a steel plant with wire rod rolling mill at Jamshedpur, to benefit from business integration. This ensured a steady supply of steel for the manufacture of value added products. Today, the Jamshedpur unit has a truly integrated speciality steel manufacturing facility of 700,000 MT per annum. Out of which, about 35% is consumed internally by its plant in Ranchi, Hoshiarpur & Bangkok, producing steel wire, steel strand, steel cords, bright bar and steel wire ropes. Factory/plant Wire Ropes & Speciality Products Division: Tatilswai, Ranchi Steel Division: Adityapur, Jamshedpur Machinery Division: Doddanekundi Industrial Area, Bangalore Construction Steel Division-North: Nawalganj, Agra Wire & Wire Rope Division North: Hoshiarpur, Punjab Iron Ore mines: Barajamda, Jharkhand Coal mines: Daltongunj, Jharkhand
Finished Products PRODUCT UNITS NAME Wire Ropes, Strands & Metric Locked Coil Tonnes Wire Ropes Metric Bars Tonnes Metric Wire Rods Tonnes Metric Wires Tonnes Metric Rolled Product Tonnes Metric Bright Bars Tonnes INSTALLED PRODUCTION SALES CAPACITY QUANTITY QUANTITY 129708.00 104004.00 99759.00
323000.00 400000.00 111060.00 72300.00 25480.00
173048.00 318567.00 80087.00 42581.00 19278.00
152586.00 128117.00 72330.00 42164.00 15812.00
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Metric 1000000.00 500140.00 6589.00 Tonnes Metric Conveyor Cord 3600.00 1786.00 1766.00 Tonnes Metric Pig iron 570000.00 292994.00 5177.00 Tonnes Equipment & Material for Prestressed Pieces 6500000.00 1892326.00 1874096.00 concrete System Ferrules, Stings, Fitting Pieces 700000.00 116057.00 123976.00 & Accessories Hydraulic Mach. & Presses Proof Pieces 100.00 60.00 60.00 Load. Mach.& Accesories Jointing Pieces 100000.00 20637.00 20637.00 Products Metric Sponge Iron 300000.00 237209.00 0.00 Tonnes Usha Martin has been producing under capacity. Billets is being produced at 50% capacity, pig iron is being produced at 51.4%. The maximum capacity utilization is in case of sponge iron at 79%. Billets
Raw Materials Product Name Coke Metallic Other Raw Materials Alloys Total ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Not Reported Metric Tonnes Mar 2011 Value 424.33 295.93 166.81 149.63 1,036.70
Quantity 245,066 686,739 NA 14,355
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6.3.5. Adhunik Metaliks Limited

Adhunik Metaliks Limited (AML), the flagship of the Group, has emerged as one of the fastest growing alloy, special and construction steel manufacturing companies in the country with significant presence in the mining and power sectors through its subsidiaries. It has completed almost all major capital expenditure for both backward and forward integration and emerged as an integrated manufacturer of special steel with downstream utilization of products. It has set up an integrated steel plant of 0.45 million ton at Sundergarh, Orissa, with state-of-the-art technology,engaged in the production of value added steel, alloy steel and stainless steel for the automobile, construction, engineering and household industries. It has been allotted a captive iron ore mine at Keonjhar and captive coal mines at Talcher and Angul in Orissa. The Company has an integrated business model supported by both merchant and captive iron ore, manganese mines and coal blocks. The Company recently ventured into merchant mining through their acquisition of Orissa Manganese & Minerals. It also has two power plants under development.
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Products Auto Steel Bearing Steel Spring Steel Carbon Heading Steel Cold Heading Steel Shape Steel Free Cutting Steel Stainless Steel
Production
performance
There has been considerable decrease in the amount of ferro alloys & billets produced. There has negligible change in the amount of rolled steel produced during the Q4 10 to Q3 12. There has been an increase of pig/hot iron produces from 9478 tonnes to 15789 tonnes.
Raw Materials Product Name Coke Coal Iron Ore Scrap Sponge Iron Manganese Ore ------------------- in Rs. Cr. ------------------Unit Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes Quantity 151,140 662,243 665,225 29,135 27,612 75,440 Mar 2010 Value 215.40 167.10 141.47 49.44 33.17 32.88
The above table shows quantity and cost of raw materials used.
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7.
Profile of the industry
Indian Steel industry is almost 100 years old now. Till 1990, the Indian steel industry operated under a regulated environment with insulated markets and large scale capacities reserved for the public sector. Production and prices were determined and regulated by the Government, while SAIL and Tata Steel were the main producers, the latter being the only private player. In 1990, the Indian steel Industry had a production capacity of 23 MT. 1992 saw the onset of liberalization and the Indian economy was opened to the world. Indian steel sector also witnessed the entry of several domestic private players and large private investments flowed into the sector to add fresh capacities. The last decade saw the Indian steel industry integrating with the global economy and evolving considerably to adopt world-class production technology to produce high quality steel. The total investment in the Indian steel since 1990 is over Rs 19,000 crores mostly in plant equipments, which have been installed after 1990. The steel industry also went through a turbulent phase between 1997 and 2001 when there was a downturn in the global steel industry. The progress of the industry in terms of capacity additions, production, consumption, exports and profitability plateaued off during this phase. But the industry weathered the storm only to recover in 2002 and is beginning to get back on its feet given the strong domestic economic growth and revival of demand in global markets. With a current production of 72.2 MT the Indian Steel Industry is the 4th largest producer of steel in the world. Today, India produces international standard steel of almost all grades/varieties and has been a net exporter for the past few years, underlining the growing acceptability of its products in the global market. Steel is a highly capital intensive industry and cyclical in nature. Its growth is intertwined with the growth of the economy at large, and in particular the steel consuming industries such as manufacturing, housing and infrastructure. Steel, given its backward and forward linkages, has a large multiplier effect. It spread over three Business Sessions dealing with issues confronting the growth of the steel sector. - Infrastructure Requirements and Environmental Concerns in Steel Projects - Raw Materials and Energy Inputs to Steel Sector - Competitiveness & Investment in Indian Steel Sector India has been recognized as a potential growth centre for the steel industry the world over. Foreign investors, global steel players, as well as
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Indian entrepreneurs are showing great interest in setting up Greenfield projects in the country as well as adding to the existing capacity. With capital investments of over Rs 125,000 crores, the Indian steel industry currently provides direct/indirect employment to over 2 million people. As India moves ahead in the new millennium, the steel industry will play a critical role in transforming India into an economic superpower.
7.1. Global Scenario
In 2011 the world crude steel production reached 1527 million tonnes (MT) and showed a growth of 6.8% over 2010. (Source: World Steel Association or WSA; data provisional) China remained the worlds largest crude steel producer in 2011 (695.5 MT) followed by Japan (107.6 MT) and the USA (86.2 MT). India occupied the 4th position (72.2 MT) for the second consecutive year. (Source: WSA; data provisional) The WSA has projected that apparent steel use will increase by 6.5% to 1,398 MT in 2011, following growth of 15.1% in 2010. In 2012, it has projected that the same will grow further by 5.4%. Such growth will be largely driven by China and India with Chinas apparent steel use in 2011 and 2012 expected to increase by 7.5% and 6% respectively. For India, growth in apparent steel use is expected to be subdued at 4.3% in 2011 but expected to go up by 7.9% in 2012. Per capita finished steel consumption is estimated at 206 kg for world, 427 kg for China.
Source: WSA
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7.2. Domestic Scenario
The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 4th largest producer of crude steel and the largest producer of sponge iron or DRI in the world. As per the report of the Working Group on Steel for the 12th Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others. At the time of its release, the National Steel Policy 2005 had envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, the Working Group on Steel for the 12th Plan has projected that the crude steel steel capacity in the county is likely to be 140 MT by 2016-17. Further, based on the status of MOUs signed by the private producers with the various State Governments, it is expected that Indias steel capacity would exceed 200 MT by 2020. The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid developments in the domestic steel industry (both on the supply and demand sides) as well as the stable growth of the Indian economy since the release of the Policy in 2005.
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In spite of being one of the largest producers of steel in the world, India has been lagging behind other major steel producing countries in terms of intensity of steel usage in overall economic activities (i.e., per unit of GDP) or per capita consumption of steel. In 2010 our per capita consumption of steel was only 51.7 kg as against the world average of 202.70 kgs. There is a tremendous potential for improvement in the domestic steel consumption given the economys large untapped markets especially in rural areas. This is reflected in the steady rise in consumption levels over the last few years at a rate faster than the world average growth rate as seen in the following Table
As for consumption of finished steel, while demand for certain steel products such as GP/GC, CR & large dia. Pipes etc. was quite robust during the period, that for others like Railway materials, structural and plates were relatively much lower as shown
7.2.1. Production

Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. Today, India is the 4th largest crude steel producer of steel in the world.
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In 2010-11 (prov), production for sale of total finished steel (alloy + non alloy) was 66.01 MT. Production of Pig Iron in 2010-11 (prov), was 5.54 MT. India is the largest producer of sponge iron in the world with the coal based route accounting for 78% of total sponge iron production in the country (27 MT in 2010-11; prov.). Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy) are given below:
Indian steel industry : Production for Sale (in million tons) Category Pig Iron Sponge Iron 200607 4.93 18.34 200708 5.284 20.37 56.07 200809 6.21 21.09 57.16 200910 5.88 24.33 60.62 201011* 5.54 26.71 66.01
Total Finished Steel (alloy + non 52.53 alloy) Source: Joint Plant Committee; *provisional
7.2.2. Demand - Availability Projection

Demand Availability of iron and steel in the country is projected by Ministry of Steel in its Five Yearly Plan documents. Gaps in availability are met mostly through imports. Interface with consumers by way of a Steel Consumers Council exists, the meetings of which are conducted on regular basis. Interface helps in redressing availability problems, complaints related to quality.
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7.2.3. Steel Prices

Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces. Domestic steel prices are influenced by trends in raw material prices, demand supply conditions in the market, international price trends among others. An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel, under the Chairmanship of Secretary (Steel) to monitor and coordinate major steel investments in the country. The Government also took various fiscal and other measures for stabilizing steel prices like significant reduction in import duties on steel, major raw materials, including mineral products and ores and concentrates in last few years. Also, excise duty for steel is currently at 10%. To ensure sufficient domestic availability and curb the rising price of hot-rolled coils in the domestic market, its imports have been freed by the government. The government has also imposed export duty of 30% on iron ore fines and lumps in order to discourage its export and conserve the mineral for long term requirement of the domestic steel industry. For ensuring quality of steel, several items have been brought under a quality control order issued by the Government. The matter to bring more steel items under this order is under examination.
7.2.4. Imports of Iron & Steel

Iron & Steel are freely importable as per the extant policy. Last five years import of Finished (Carbon) Steel is given below:-
Indian steel industry : Imports (in million tonnes) Category 200607 200708 7.03 200809 5.84 200910 7.38 201011* 6.79
Total Finished Steel (alloy + non alloy) 4.93 Source: Joint Plant Committee; *provisional
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7.2.5. Exports of Iron & Steel

Iron & Steel are freely exportable. Exports of finished carbon steel and pig iron during the last five years and the current year is as :
Indian steel industry : Exports (in million tonnes) Category 2006-07 2007-08 2008-09 2009-10 5.08 4.44 3.25 2010-11* 3.46
Total Finished Steel (alloy + non alloy) 5.24
Source: Joint Plant Committee; *provisional
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CATEGORY-WISE EXPORTS
7.2.6. Levies on Iron & Steel

SDF levy- This was a levy started for funding modernization, expansion and development of steel sector. The Fund, inter-alia, supports: 1. Capital expenditure for modernization, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants. 2. Research & Development 3. Rebates to SSI Corporations 4. Expenditure on ERU of JPC 5. SDF levy was abolished on 21.4.94
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6. Cabinet decided that corpus could be recycled for loans to Main producers 7. Interest on loans to Main Producers be set aside for promotion of R&D on steel etc. 8. An Empowered Committee has been set up to guide the R&D effort in this sector. EGEAF Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.
7.2.7. Opportunities for growth of Iron and Steel in Private Sector

The New Industrial Policy Regime The New Industrial policy opened up the Indian iron and steel industry for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are now freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of a facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario. The Growth Profile (i) Steel The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the country. At present, crude steel making capacity is 84 MT and India, the 4 th largest producer of crude steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. The country is expected to become the 2 nd largest producer of crude steel in the world by 2015-16, provided all requirements for creation of fresh capacity are adequately met.
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(ii) Pig Iron India is also an important producer of pig iron. Post-liberalization, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounted for 90% of total production for sale of pig iron in the country in 2010-11 (provisional). The production of pig iron has increased from 1.6 MT in 1991-92 to 5.54 MT in 2010-11 (provisional).
(iii) Sponge Iron India is the worlds largest producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor and accounted for 78% of total sponge iron production in the country (27 MT; 2010-11; prov.). Capacity in sponge iron making too has increased over the years and stands at around 35 MT.
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8.
Competitive advantage of the steel industry in East India
During British rule, Tata Group founder Jamsetji Tata keenly felt that India should develop heavy industry. He searched all over India for the most appropriate site. After years of searching, he decided that Jamshedpur in Jharkhand State was the best place. In 1912, Asias first steelworks was built there. East India is favorably located for blast furnace steelworks that melt iron ore and coal to make molten iron. Since independence from Britain, the government of India has established steelworks one by one in Orissa, Chhattisgarh, West Bengal, and Jharkhand. As a result, these four states collectively accounted for almost half of the entire steel production of India as of 2009, showing that East India is a hub for the Indian steel industry. With India continuously maintaining an economic growth rate of about 8%, demand for steel, which is essential for construction, infrastructure, and manufacturing, is growing by more than 10% each year. It is no exaggeration that the future of the Indian economy is dependent on East Indias ability to increase production of steel, the rice of industry. Harvard Business School Professor Michael Porter`s Diamond Model includes four attributes: factor conditions; demand conditions; related and supporting industries; firm strategy, structure, and rivalry. This topic is to analyze the competitive advantage of the steel industry in East India based on Porters Diamond Model. Factor conditions: an abundance of iron ore
When it comes to factor conditions in the steel industry, East India has rich iron ore and mineral reserves: 80% of the countrys reserves of hematite, 80% of its coal, 95% of its chromite, and 92% of its nickel. The eastern states have ample manganese ore reserves, too. Based on national mineral production, India ranks fourth in the world in production of iron ore, third in coal, second in chromite, and sixth in manganese ore. These high rankings give an idea of just how rich East Indias mineral reserves are. East Indias iron ore reserves are concentrated in Orissa, Chhattisgarh, and Jharkhand, but not West Bengal. Much of these reserves is hematite, which is suitable for steel production and has a high iron content of 62-66%. East India has highly favorable conditions for steel production compared to South Indian states such as Karnataka, whose reserves have a high percentage of magnetite with an iron content of only 35-45%. India has approximately 267.2 billion tons of coal reserves, but only
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33.4 billion tons are coking coal reserves for steel production, accounting for only 12.5% of coal reserves. Most Indian steelmakers are dependent on coking coal imports, because most of the reserves are low-grade coal with high ash content. To make matters worse, the international coking coal price, which was USD 55/ton in 2004, has recently exceeded USD 300/ton. Under these circumstances, India is seeking ways to utilize coking coal buried in the country. The major coal belts in India are located in Orissa (24% of total reserves), Jharkhand (29%), Chhattisgarh (16%), West Bengal (11%), Andhra Pradesh, Madhya Pradesh, and Maharashtra. Coking coal is mostly found in Jharkhand.
Demand conditions: Weak steel-consuming industries
Among the many steel-consuming industries, the construction and infrastructure sectors account for more than 50% of steel consumption, while the secondary steel industry and the manufacturing industry, including automotive, shipbuilding, consumer electronics, and machinery sectors, constitute the rest. Manufacturing companies are mostly located in the western, northern, and southern parts of India. Based on statistics on automotive production capacity in 2009, North India, with companies like Maruti Suzuki and Honda, has the highest production capacity with 1.1 million units, followed by West India (GM, Tata, and Mahandra) with 1.08 million units, South India (Hyundai, Ford, and Toyota) with 760,000 units, and East India with only 24,000 units.
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North India is home to the consumer electronics companies such as LG, Samsung, Whirlpool, and Hitachi, as well as Indian companies including Videocon, Voltas, and Godrej. West India has LG, Whirlpool, and Siemens, and some Indian companies. In South India, there is Samsung, Whirlpool, Sony Ericsson, and Nokia. On the other hand, there is just one Indian consumer electronics company in East India. Shipyards are primarily located in West and South India, and machinery companies are mainly distributed throughout North and South India. Steel demand in East India totaled 14.45 million tons, accounting for only 24.1% of the national demand. If high-end steel production increases and the investment environment improve, many more manufacturing companies will build plants in East India. Related and supporting industries: urgent need for freight railway construction
Logistics costs account for a huge proportion of the expenditures of the steel industry. However, East India does not have a competitive edge in logistics infrastructure, including roads, railways, power, and ports, compared to other regions. In terms of roads, the government-built Golden Quadrilateral highway network has favorably affected the states that it services: Orissa (440), West Bengal (406), and Jharkhand (192). West Bengal also benefits from the East West Corridor National Highway. As for railways, it is more important to build freight railways that connect mines and steelworks than to build new passenger railways. The site in Orissa where POSCO is planning to build a new steelworks is 290 away from the mines. The government of India plans to build new railways for industrial development and to construct a new Dedicated Freight Corridor (DFC) connecting four major cities; West Bengal, Orissa, and Jharkhand are likely to benefit from these plans. There are currently only three major ports in India. However, the deepwater shore of East India provides favorable conditions for the shipping of steel
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materials and products. In addition, East India is relatively close to Southeast Asia, a major net importer of steel. Rivalry: intensifying competition among Steel Companies
The five steelworks of the state-owned Steel Authority of India Limited (SAIL), Indias largest steel company, are all located in four eastern states. Tata Steels steelworks is in Jharkhand. Existing steelworks are expanding their production capacity, and there is a spate of new plans to build or extend steelworks in East India. Since 2005, a whopping two hundred steel MOUs have been concluded, and the combined production capacity of these proposals would reach 257.5 million tons, more than 90% of Indias total production capacity. This shows that investment in steel is concentrated in East India.
In 2005, POSCO announced a plan to build an integrated steelworks in Orissa with a production capacity of 12 million tons. The worlds largest steel company, ArcelorMittal, also revealed a plan to build steelworks in Jharkhand and Orissa, each with a production capacity of 10 million tons. Tata Steel is setting up a 6 million tonnes per annum (MTPA) integrated steel plant in Orissa, in addition to an expansion project which will increase its existing steelworks capacity to 10 million tons. Tata has also signed MOUs to build two steel plants in Jharkhand and Chhattisgarh. State owned iron ore miner National Mineral Development Corporation (NMDC) is building a steel plant in Chhattisgarh with a capacity of 3 million tons, while Bhushan Steel and Jindal Steel and Power Ltd. (JSPL) are constructing steel plants in Orissa. Because projects for building large integrated steelworks were
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hindered by backlash from residents, JSW and Bhushan Steel are planning to construct steel plants in West Bengal, where there are no iron ore reserves. These companies decided to give up captive mines to more easily secure steel plant sites. Many of these projects have not been realized, but competition among steel companies in East India will surely become fiercer than ever. Discordance between central and state government policies
After Michael Porter suggested the Diamond Model, he added government support and policy factors to make up for shortcomings in the Model, which did not apply to the actual cases of Japan and Korea. These factors seem to play an important role in determining whether East India can realize its growth potential. Government support and policies bolstering the industry are necessary to get the most value from steel. In reality, however, state governments lack of administrative ability has led to failure in land acquisition, stalling large-scale projects proposed by POSCO and ArcelorMittal for 5-6 years. The government of India has delayed granting environmental approval on the grounds of protecting tribes living in mountain areas. These tribes represent a high proportion of the total population: 34% in Chhattisgarh, 29% in Jharkhand, and 22.1% in Orissa. Despite rampant activities by Maoist rebels called Naxalites in mountain areas of East India, there has been no effectual crackdown on Naxalites by the central government. Some people point out that there is little cooperation between East Indian state governments and the central government, because the political parties in control of East India are different from those in the central government (Indian National Congress). In conclusion, East India has all of the factor conditions for development of the steel industry, but it has limited executive ability. Therefore, unless central and state governments take innovative measures, the two hundred MOUs are very likely to be cancelled. It is expected that steel production will be far short of demand, and net imports to reach 40-50 MT by 2020. It seems that production capacity will likely increase only after all stakeholders reach consensus. However, it is expected that reaching such a consensus will take few years.
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Proposed Region-Wise Capacity - 2012

The above figure shows the proposed the region wise capacity-2012. This shows the dominance of steel industries on the Eastern India. The proposed capacity is highest in Orissa with 38 MTPA followed by Jharkhand with 34 MTPA. This indicates the strategic advantage of Eastern India for steel manufactures.
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9.
Trends in International Trade in Iron & Steel
Prior to deregulation, imports of steel were permitted under a rigorously defined Foreign Trade Policy designed to bridge the gap between domestic demand and domestic availability. Like most other industries the steel industry was also insulated from foreign competition by high import tariffs and quantity restrictions via canalization and import licensing. As for exports- it took place primarily to take care of surplus availability if any. Deregulation brought about far-reaching changes in the international trading scene for the globally integrated Indian steel industry. Import duty rates were progressively reduced from above 150% to 5% with abolition of all quantitative controls. Protection from unfair import competition is currently being provided through the mechanism of Trade Actions (Anti-Dumping, Anti-Subsidy and Safeguard actions) as permitted under the WTO. Most importantly, during the 10th Five Year Plan (2002-07) there was substantial reduction in the peak duty rates i.e from then existing 25% to 5%. In the case of seconds and defective steel products, however, a higher import duty rate of 20 per cent continues to be maintained. Liberalization of the foreign trade regime has had a favorable effect on Indian exports as it is no longer subject to availability of surplus. In fact between 1991-92 and 2002-03 our exports grew fast at a rate exceeding 25% per annum. Thereafter, till 2005-06 export levels stagnated at around 4-4.5 Million Tonnes per year. During this period, the countrys export basket also changed in favour of more value added and sophisticated products. The export destinations also got widened with Indian steel reaching a very large number of countries across the world During the first four years of the 11th plan period (i.e. up to 2010-11), additions to existing capacities have not been adequate to meet the growing demand. Further, with the onset of global financial crisis, there was significant decline in global demand and International Steel Producers had to substantially scale down their operations. Under such conditions margins on export sales had also come under pressure and domestic producers had to opt for domestic sales to contain their losses. As a result finished steel exports declined from 5.24 million tonnes in 2006-07 to 3.46 million tonnes in 2010-11. Exports of semis have also showed a similar declining trend during the period.
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As regards steel Imports it remained static around the pre-liberalization level of 1- 2 million tonnes per annum till 2003-04 but thereafter almost doubled between 2003-04 and 2005-06 i.e., from 1.7 million tonnes to 4.1 million tonnes. This surge has continued during the 11th plan also - primarily to bridge the gap between domestic demand and availability as well as due to price considerations. From 4.93 million tonnes in 2006-07 steel imports peaked to 7.38 million tonnes in 2009-10 before declining marginally to 6.8 million tonnes in 2010-11. An important reason for the high level of imports during the 11th Plan has been the domestic non-availability or limited availability of sophisticated/specialized steel products like the following: i. CR Sheets / Coils for Auto Sector ii. CRGO and High Grades of CRNO iii. Over Dimensional Plates, Quenched and Tempered Plates, Special grades of Boiler Quality Plates, etc. iv. Organic coated, Vinyl coated sheets. v. Prime quality Tinplate (OTSC Grade) vi. API Grade large diameter pipes etc.
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10. Trend in prices of steel and raw materials during the 11th Plan
Today prospects of the steel industry are primarily determined by market forces-domestic as well as global, and these signals are transmitted through the movements in the prices of both raw materials and the finished products. During the first three quarters of 2007-08, the steel prices after remaining stable had witnessed sharp increase which was coupled with high volatility from the last quarter of 2007-08. The rising trend in steel prices continued till July 2009. Government and large scale integrated producers both in public and private sectors took following important initiatives to moderate the impact of rise in steel prices on the general inflation levels: Self-restraint by the producers on further hike in steel prices and reduction in export of steel as a result of mutual deliberations and advice by the Government Roll back of prices of steel products such as TMT, Galvanized sheets etc. used by common man for house hold construction Removal/reduction of fiscal barriers on imported steel-removal of customs duty, suspension of CVED on imported TMT bars Disincentivization of exports by withdrawal of DEPB benefits and imposition of export tax Facilitating access of steel producers to steel-making raw material/inputs at competitive prices by removal of customs duties on imports Increase in allocation of steel by Main producers (SAIL and RINL) to Small Scale Industries Corporations (SSICs) and National Small Industries Corporation (NSIC). As a result of initiatives taken by the Government and Steel producers, the rising trend in steel prices was arrested and prices started to moderate from third quarter 2008-09. With the onset of global financial crisis, international and domestic prices of steel collapsed in the last quarter of the year i.e. end of 2008-09. The prices of steel remained at a comparatively subdued level till middle of 2009-10 and the year ended with marginal increases which were maintained till first quarter of next year i.e. 2010-11. From second quarter onwards there was some moderation in prices of long products while the prices of flat products remained at high levels till June 2011. During first quarter of current year i.e.Q1 2011-12, once again there was a modest increase in prices and especially that of long products. Presently steel prices are under pressure following the slowdown in Europe specially the EU and
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USA with adverse implications for investment and manufacturing activities within the country. Another important factor that contributed to the pressure on prices during the year specially of core raw materials was the earthquake and floods in the worlds major producer and exporter i.e. Australia with adverse impact on global availability. In fact the movement in the Quarterly Price Index may also confirm that substantial part of increase in steel prices could be traced to the steep rise in prices of raw materials crucial for steel making i.e. coking coal, iron ore. Coking coal accounts for about 45% of the raw material cost for steel manufacturers in India. Rising coal prices affected the profit margins of steel producers and support an increase in iron ore prices. The effect of coal prices had an impact when steel makers sign a contract with mining companies for Q2 2011. The steel prices in India increase by USD 20-30 per metric ton in that quarter. These higher prices drove steel companies' margins down by 400-500 basis points, compared to the January-March quarter. Fall in margins of steel companies was reflected in the stock values on the BSE. Shares of JSW Steel, which had bought 45% in rival Ispat Industries, fell the maximum in the period, by about 23%, while Tata Steel, India's largest private steelmaker was down 6%. Other companies including state-run SAIL fell about 12%, while the stock of Jindal Steel & Power was down about 7%. Margins of most steel companies, especially those that don't have captive resources, were under pressure. While steel companies have already raised prices, twice in January, the cost pressures dented the profitability figures at two large companies; SAIL and JSW Steel. SAIL Q3 2011 net profit fell 34% to Rs 1,107 crore due to high coal prices. This also came as a surprise as integrated steelmakers, who constitute 2530% of India's steelmaking capacity, were expected to be insulated from rise in prices as they source all of their iron ore, and a large part of their coking coal, from captive mines.
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10.1. Iron ore, coking coal prices not to see big movement in 2013
The global crude steel production is likely to grow by only two per cent in 2013 and with this, there would not be much movement in the coking coal and iron ore prices. However, pricing pressure could build up if there is a natural calamity like the one witnessed in Australia in early 2011, resulting in skyrocketing of the prices of coking coal.
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Following the floods, the cost of the coking coal jumped to USD 330 per tonne in the first quarter of the last fiscal from USD 200 a tonne in the yearago period. Global iron ore prices mostly depend upon demand from China, though the Chinese economy is expected to grow by eight per cent this year but steel industry is not expected to show strong growth. So, if the Chinese steel production comes down, then for iron ore also comes down. Besides, a lot of iron developed globally helping China to secure iron ore Thereby, its compulsion to get ore from one single Hence, iron ore prices are also getting settled. obviously the demand ore mines have been from diverse sources. country has reduced.
The worst appears to be over for Indian steel makers, at least in the short to medium term, as domestic steel prices have improved and raw material costs have come down. Steel manufacturers are likely to report an expansion in operating profit margins for this quarter. But this may be already factored into the current market price of steel stocks as the longer term outlook is not very encouraging. Domestic steel prices, as measured by the Indian Steel Price Index, are about 7% higher than the year ago period. This is an improvement of about 4% since the October-December 2011 quarter. Demand growth is expected to slowdown, but several steel makers are increasing capacity. Between 2012 and 2013 steel capacity in India is expected to increase by 20 million tonnes, reports suggest. This is likely to stabilize prices in the long run.
10.2. Mining tax in Australia

The 30% tax levied by the Australian government on mining companies in the resource-rich country is not likely to have much impact on international coal prices. Since the tax is levied on profits of mining companies, they are not expected to pass this on to their consumers, thereby having no impact on export of coal to Indian steel companies.
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10.3. Impact of Coal India Ltds New pricing system for thermal coal
Coal India Ltd (CIL) has adopted a new pricing system for non-coking coal from January 1, 2012, and has also increased the prices of non-coking coal. The company has benchmarked non-coking coal on the basis of gross calorific value (GCV) as against the prevalent system of Useful Heat Value (UHV) benchmarked pricing. The price revision is applicable only for noncoking coal, with no change to coking coal prices. The revised prices and pricing mechanism would be reviewed by Coal India at the end of the quarter. The estimated increase in prices of coal by about 15-20 % (Source- CRISIL Report). Sponge iron price to rise due to hike in coal prices; margins to fall Players to largely pass on cost increase of coal. As coal accounts for 30-35 per cent of the sponge iron manufacturing cost, the increase in coal price will lead to a further decline in the already poor financials of sponge iron players. To compound matters, sponge iron players are already grappling with high iron ore cost. Marginal impact on steel players Power costs to increase marginally, no major impact on steel manufacturers The increase in coal prices will minimally impact the profitability of steel players, as power accounts for only about 6-7 per cent of the total cost of manufacturing steel. Large steel players in India purchase around 56 per cent of their power requirement from utilities, while the balance is generated internally. Based on the differential increase in the cost of power procured from utilities and power produced through the captive route, the aggregate power cost for Indian steel players is expected to rise only by Rs 50-100 per tonne, implying a marginal increase in power costs.
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11. Issues in Indian Steel Industries 11.1. Raw Materials

India is endowed with abundant Iron ore resources, the basic input for steel making. Of late, large scale exports of iron ore have raised concerns about future availability of iron ore resources to meet the fast rising domestic steel demand. Large quantities of iron ore fines are exported due to mismatch between domestic production and consumption and also lack of adequate sintering and pelletisation facilities for steel making. Steel industry confronts the problem of depletion of high grade ore deposits and lack of domestic technological capabilities to process low grade iron ores. In the larger national interest of conservation of natural resources and environment, efforts are being made to preserve and utilize the precious Iron ore fines for domestic production of steel and at the same time the Ministry has taken measures to discourage export by imposing higher tariffs and special levies etc. The domestic availability of Coking coal, a critical raw material required by steel industry is limited and therefore the Indian Steel industry has to depend heavily on imported coking coal to meet its needs. Currently, domestic steel makers meet 70% of their coking coal requirement through imports. The quantum of imports may go up significantly in the 12th plan as steel production in a large number of new projects is likely to be through the BF-BOF route. To ensure raw material security and minimize the impact of volatility in coal prices, it is desirable to acquire overseas coking coal assets. International Coal Ventures Limited (ICVL), a Joint Venture company promoted by SAIL in 2008-09 and consisting of RINL, NMDC, CIL and NTPC to achieve the above objective has not made much progress so far but it is imperative to make this venture more effective. In view of the limited availability of coking coal in the global market and the fact that its supply is controlled by a few large companies, it will be extremely important to increase the domestic production of coking coal and upgrade its quality to meet the requirements of steel making. Technologies which require less of coking coal and lower grades of it will need to be encouraged. Non-coking coal used for production of sponge iron is also increasingly becoming scarce in the country. With the demand for non-coking coal from priority sectors like power, Fertilizers etc going up further, its availability for steel making is likely to be limited during the 12th plan. While sponge iron
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producers may opt for import of coal, the economic viability of this sector may be under pressure due to higher prices of imported coal. Moreover, the gas based DRI units face restricted supply of CNG, largely due to priority allocation of gas to power and fertilizer sectors. Supply of CNG to this sector is a major concern for its growth and these units may have to depend more on imported source of fuel supply. Many existing and new producers propose to create additional capacity manifold under gas based route in Twelfth plan period.
11.2. Infrastructure
Development and growth of Infrastructure sector is critical for rapid growth of domestic steel industry in the country. Steel industry is a major user of infrastructural facilities especially of Railways, roads, power, and ports. Besides, the competitiveness of domestic steel industry depends heavily on the expansion and provision of efficient infrastructural facilities. As per the working group projections, the steel production in the country will nearly double within the next five years. This requires rapid growth of railways, roads, ports and power facilities. The existing infrastructural facilities are not adequate. The domestic steel industry meets 70% of its coking coal requirement from imported sources and if the same trend is maintained, nearly 50 million tonnes of coking coal will have to be imported by 2016-17. There is urgent need for expansion of port capacity to handle the raw materials and finished goods of steel sector. The steel plants which are likely to come on stream in Twelfth plan period will need to transport 85 to 90 million tonnes of iron ore from the mines and also deliver 45 to 50 million tonnes of finished steel from steel plants to distribution centres. Therefore, there is immediate need for substantial up gradation of infrastructural facilities to meet the increasing steel requirements of the steel industry. Investments to the tune of US $ 1 Trillion are proposed in the infrastructure sector in the 12th plan. An investment of this scale and size is likely to generate higher domestic demand for steel and at the same time help build necessary infrastructure required for the steel industry. Large investments of this nature suffer from gestation lags, constraints in mobilization of financial resources, land acquisition issues and hurdles in obtaining statutory clearances in case of mega infrastructural projects. These need to be sorted out since the development of infrastructure sector has strong forward and backward linkages and contributes significantly to overall growth and development of the economy.
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11.3. Investment
Requirement of financial resources to support an additional capacity creation of about 60 million will be approximately 2.5 lakh crores during the 12th Plan and securing such large investible funds at reasonable cost will be a challenging task. FDI in the steel sector has been lagging behind, despite massive investment intentions by some major global steel majors. In order to ensure sufficient availability of financial resources for the growth of Indian steel industry, it is imperative to review steel related sectoral caps of the banking sector. Government may also consider easing of norms connected with external borrowings (ECBs). Special purpose long term financing facility may be created to finance huge investment in new steel plants.
11.4. Technology and Research & Development

A cursory examination of the present status of Performance Indices shows that the technological performance of Indian Steel Plants in terms of specific consumption of raw material / consumables, specific energy / power consumption, environmental and pollution norms is significantly lower than those in the advanced countries. The poor performance standards of the domestic industry are primarily attributable to poor quality of raw materials / inputs, prevalence of obsolete technology and lack of R&D to overcome the technological gaps. Major areas where focus /attention of Industry and Government are required in the 12th Plan are as follows: i) Iron ore quality in terms of high alumina content and high alumina to silica ratio is a serious concern. ii) There is a need to reduce the coal ash substantially to make our coals suitable for coke making and iron making operations. iii) It is suggested that the improvement in raw materials be achieved through selection of appropriate beneficiation process and improvement in operational practices of ore beneficiation / coal washing circuit. iv) Above 20% of the ROM (run of mine) which is known as slime has low percentage of iron (less than 55%). The size of slimes is lower than 150 micron and further beneficiation is difficult and not economical. There is an immediate need to find out solutions for the realization of iron value from slimes. Alternative iron making process such as FASTMELT or ITmk3 may be useful to realize the iron value efficiently. v) Use of mine wastes such as Jharia coal in Iron and Steel production will be helpful to increase the mine life. Coal gasification of non coking coals and recovery & utilization of CBM are some of the steps to address issues such as coal / coke shortage and CO2 emissions.
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vi)Large size Blast Furnaces with the state of the facilities have done well in terms of productivity, consumption norms and hot metal quality. With installation of such furnaces in future, the need for agglomerated burden (sinter + pellet) is likely to increase. The improvement in burden quality will facilitate higher injection of coal fines and thereby reduction in metallurgical coke requirement and overall fuel rate. vii) The units that have adopted DRI HM EAF and DRI IF routes for iron making are suffering due to non availability of hard iron ore lump, high cost of natural Gas, non availability of good quality coal, absence of good scrap and rising prices of raw material inputs for BF. To alleviate the shortages of iron ore lump, there is a need to put up pellet plants. Coal gasification is believed to be a good option to replace natural gas for the production of synthesis gas (reducing gas in shaft kiln process). viii) Large quantity of slag is produced in BOF / EAF. It is not easy to dispose of the steel making slag due to the presence of free lime and high percentage of iron oxide. Technologies have been developed (ORP, MURC) in Japan to reduce the generation of slag and reduce the Phosphorous level below 0.010%. Some of the technologies for reuse in the form of brick for pavement / construction of dykes, flux / iron bearing material in cupola and construction material after sufficient aging can be adopted to gainfully utilize the slag. There is also a possibility to recover the iron values through smelting reduction. ix) DRI EIF route suffers from lack of refining capacities. The steel melted by the process has higher percentages of Phosphorus and Nitrogen. Rotary kiln DRI-EIF route needs to improve its technology substantially to avoid obsolescence, market acceptability due to poor quality and to reduce its adverse impact on the environment. There is a dire need for Technology Up gradation in Secondary Steel Sector in general and the EIF sector in particular to make them competitive in terms of Productivity, Quality and Environment friendliness. . x) Dynamic soft reduction and Near net shape casting will result in quality improvement and energy saving respectively and these emerging technologies are likely to be adopted in the coming years by the Steel Industry. xi) Due to increasing demand for High Strength Steel, current BAF (Batch Annealing Furnace) technology may get replaced with Continuous Annealing Technology. xii) Environmental concerns would be a major criterion for the selection / adoption of new technology in near future. Therefore the steel industry may have to carry out research in the areas of carbon foot print, CO2 absorption and sequestration.
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xiii) There is a need to develop sound indigenous capacity to develop technologies to a) suit indigenous raw materials, b) improve energy input norms through energy-efficient technologies and c) meet national norms for emission per ton of products and comply with global responsibilities for carbon foot print. xiv) The Research and Development systems should also match the composite structure of the steel industry in the country. While some large corporate houses which could afford in-house R&D and acquire plants overseas could adopt global approaches for developing and acquiring technologies, R&D and technology needs of several small units engaged in manufacturing remain unaddressed. Small enterprises are not able to leverage the benefits of improved technologies and this explains their poor performance standards when compared to national and international benchmarks. xv) Pre-competitive research in steel related technologies for a) energyefficiency, b) emission control, c) solid waste minimization, d) more efficient use of Indian coal resources and e) value addition to indigenous raw materials in public and private sector R&D would need to be promoted through a Challenge Award Scheme. International Science & Technology cooperation in the area of steel making technologies would be necessary considering that the number of Indian experts engaged in R&D in steel making is significantly low. Synergies within the country and through international cooperation may need to be developed for growing industryrelevant R&D activities.
11.5. Environmental Control
Management
and
Pollution
i) The Indian steel industry currently is at a crucial stage with challenges of climate change. While the industry is expected to accelerate ramp up steel production to meet the needs of its population by infusion of additional capacity, global issues like Climate change necessitate guided growth through low carbon intensive routes for steel production. It is therefore imperative that all the steel makers across the country adopt energy efficient and environment friendly technologies in all areas of iron and steel making in line with SOACT and BAT guidelines. ii) It is also necessary that all protection measures are adopted at the planning stage itself, as the cost of correction at a later date will be very high. Existing plants need to evolve short term and long term action plan to phase out the old and obsolete facilities by state-of-art clean and green technologies with an aim not only to achieve higher standards of productivity
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but also to harness all waste energy with minimized damage to the environment. iii) Since the cost of measures for energy and environment management is expected to be high, it is imperative that Government evolve suitable measures in the form of capital subsidy or incentives to promote adoption of such measures.
11.6. Safety Measures

i) The safety policy adopted in the Iron and Steel Industry in India is comparable to the policy followed internationally. However, implementation and monitoring of these policy guidelines on the ground leave much to be desired. As a result, the number of accidents, casualties, disabilities, loss to plant and machinery and consequential loss of man-days and production is quite significant. It calls for an introspection and review of the whole situation. ii) It has been observed that adherence to safety measures and policy is lacking due to many factors, viz. Indifference on the part of management and workers, financial problems, lack of awareness, complicated and slack legal machinery and lack of adequate statutory provisions. iii) Use of many out-dated technologies still prevalent in India exacerbates the hazards and risks in the plant.
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12. Five trends in India's steel industry

Growth for India's steel industry has been hampered by regulatory and environmental hurdles, land acquisition delays and social opposition. But players are finding ways to expand capacities as demand for steel races in one of the fastest growing economies of the world. India targets 120 million tonnes of domestic steel output at the end of 2012 from nearly 70 million tonnes in 2009/10. Following are five trends seen in the industry:
12.1. Consolidation
Analysts say buyouts could be an easy way of getting hold of land and regulatory approvals by companies seeking growth. Over the next couple of years, there could be mergers and acquisitions, particularly in the sponge iron sector, it refers to the hundreds of small units, many of which are unviable. In December, JSW Steel agreed to buy a controlling stake in loss-making rival Ispat Industries that would push its capacity to the top most position. It also agreed to buy Bellary Steel.
12.2. Doggedness of foreign firms

South Korean POSCO got an approval for its 12 million tonne plant in eastern Orissa state last month after waiting since 2005, and its plans for another plant in Karnataka and a joint venture with Steel Authority of India (SAIL) in Jharkhand remain. The world's top steelmaker ArcelorMittal has also waited years to build plants in Jharkand, Orissa and Karnataka and has a stake in Uttam Galva Steel. Foreign players have taken the difficulties in their stride. As the industry expands, there will be opportunities for them to come in as joint venture partners, technology partners or on their own. The delays have not discouraged the industry and other foreign players who have set foot in India are: - Japan's Nippon Steel in joint venture with Tata Steel for making cold rolled sheets. - Japan's JFE Holdings in talks with JSW for a stake buy. - Japan's Kobe Steel and SAIL in talks for a joint venture. - Russia's Severstal and NMDC in joint venture to a build steel plant.
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12.3. Relocation, smaller plants

ArcelorMittal, POSCO, Bhushan Steel and JSW have chosen Karnataka state in the south for making new steel plants, away from east India that is mineral rich, but fraught with social and land-acquisition problems. If we can't get your steel plant simply because we can't get the land, it doesn't matter whether we have got an iron ore deposit nearby. Bristow said investors may even look to the west coast that has less iron ore, but is closer to Africa from where coking coal is imported. ArcelorMittal has also spoken about a shift towards smaller modular sites as against mega projects.
12.4. Use of low grade raw materials

Traditional steel blast furnaces can take only iron ore lumps and coking coal. But now, industry members are looking at technology that will enable them to use iron ore fines and non coking coal as they are abundantly available in India. A big part of India's over 200-million tonne iron ore output is the powdery iron ore fines while coal production of over 500 million tonnes is mostly non coking coal. Raw material costs account for 50% to 55% of the total cost of steel production. We need to utilize low grade raw materials available locally. SAIL's joint venture plan with POSCO is for using the Finex technology that can use iron ore fines directly in the blast furnace.
12.5. Environmental awareness

With stricter implementation of environmental rules, and a new mining bill that seeks to have companies pay 26 of their profits to displaced locals, companies are expected to spend more on environment and society. We expect the industry to be more cognizant towards social responsibility.
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13. Analysis of capital structure trend in the Indian steel sector 13.1. Total Debt/Equity Ratio & EPS effect on Indian steel industry
The volume of dependence of EPS on the Debt Equity structure of the companies, all the 25 companies are grouped into 4 categories as shown in the table viz., Saturated, Dependent, Slightly dependent and Independent. Saturated category is so named because the EPS has reached the point where a change in the Debt Equity structure is no way benefit the EPS of the companies. 56.00% of the total sample falls under this category. Accordingly in this category a change in the debt equity structure drives the EPS positive. The reason is reduction in debt and increase in owners equity. Whenever the owner equity increased there will be the small percentage of
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increase EPS. This suggests that companies should have optimal Debt Equity to gain over interest tax benefit. The companies under this category are: 1. Steel Authority of India(SAIL) 2. JSW Steel Ltd.(JSWL) 3. JSW Ispat Steel Ltd. 4. ESSAR Steel Ltd. 5. Mahindra Ugine Steel Company Ltd. 6. Steelco Gujrat Ltd. 7. Welspun Corp Ltd. 8. Monnet Ispat & Energy Ltd. 9. Orissa Sponge Iron & Steel Ltd. 10. Bihar Sponge Iron Ltd. 11. Tata Sponge Iron Ltd. 12. Vikash Metal & Power Ltd. 13. Tata Mettalics Ltd. 14. Kirloskar Ferrous Industries Ltd. Dependent category is 4.00% of total sample, which are dependence on Debt Equity structure. The reason for such high dependence is high debt than the owner stake. The debt equity ratio is steeping up towards optimal capital structure. This category shows as an advantage over tax benefit. The company under this list is: 1. MSP Steel Power Ltd. Slightly dependent category holds a share of 36.00% of the total sample. There has been continuous decrease in equity component in the capital structure of these companies. This tendency is unlike what happened in the structure category, the trend to debt components to equity component is slightly similar to that dependent category. The only difference is the volume of change in the equity components of both the category the percentage of change every time is not less than 50% in the slightly dependent category. The companies under this list are: 1. 2. 3. 4. Rastria Ispat Nigam Ltd.(RINL) Tata Iron And Steel Ltd. Jindal Steel & Power Ltd.(JSPL) Bhusan Steel Ltd.
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5. 6. 7. 8. 9.
Jai Balaji Industries Ltd. Electrosteel Casting Ltd. Usha Martin Ltd. Adhunik Metalliks Ltd. Rathi Steel And Power Ltd.
Independent category has 4.00% of the total sample. The very obvious reason for this category is the debt equity component is either zero or negligible. The company under this list is: 1. Lloyds Steel Industries Ltd.
r value Number of Companies Percentage Share (%) Saturated (<0) 14 56.00 Dependent (>0.5) 1 4.00 Slightly dependent (0 to <0.5) 9 36.00 Independent Total 1 4.00 25 100
Categorizing the companies based on their r values between the Total Debt/Equity Ratio and EPS The above analysis shows that dependence category of EPS & Debt Equity structure mostly results the debt component in the capital structure. The companies in the dependence category reached the maximum point of debt than other categories.
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13.2. Financial coverage Ratio & EPS effect on Indian steel industry
Coverage ratio gives the idea of ability to cover the financial charges of the firms with the help of corporate profits. Financial charges with the help of corporate profits. Financial charges include components like debt servicing, leasing charges etc. if the company having high coverage ratio in completely equity financed company. The point of discussion here is to make out the kind of relationship between coverage ratio and EPS of the companies. The classification of the companies made in the table is the vertical classification based on regression coefficients calculated between the coverage ratio and the EPS.
Category r values Highly correlated r>0.5 Correlated 0 <r<0.5 Independent r<0 Total
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Number of companies Percentage (%)
17 68.00 28.00
7 4.00
1 100
25
Categorizing the companies based on their r values between the coverage Ratio and EPS Highly Correlated: The companies in which EPS and coverage Ratio highly correlated i.e. the interest paid on debt are high. The companies are: 1. Steel Authority of India (SAIL) 2. Rastria Ispat Nigam Ltd.(RINL) 3. Tata Iron And Steel LTd. 4. JSW Steel Ltd. 5. Essar Steel Ltd. 6. Jai Balaji Industries Ltd. 7. Electrosteel Casting Ltd. 8. Usha Martin Ltd. 9. Adhunik Metalliks Ltd 10. Mahindra Ugine Steel Ltd. 11. Steelco Gujrat Ltd. 12. Welspun Corp Ltd. 13. Lloyds Steel Industries Ltd. 14. Orissa Sponge Iron & Steel Ltd. 15. Bihar Sponge Iron Ltd. 16. Tata Metalliks Ltd. 17. Kirloskar Ferrous Industries Ltd. Correlated: The companies in which EPS and coverage Ratio slightly correlated i.e. the interest paid on debt are comparatively less. The companies are: 1. 2. 3. 4. 5. 6. 7. JSW Ispat Steel Ltd. Jindal Steel & Power Ltd. Bhusan Steel Ltd. Monnet Ispat & Energy Ltd. MSP Steel & Power Steel Tata Sponge Iron Ltd. Vikash Metal & Power Ltd.
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Independent: These are the companies which doesnt have any influence on EPS on interest coverage ratio. The companies are: Rathi Steel And Power Ltd.
Summary of Findings: The steel industry has undergone a drastic change in the capital structure during 2007-12. The changes are due to the high demand for steel both at the global and domestic arena. This brought changes in the debt equity ratio and capital structure of the firm. Given below is some companies EPS growth rate from 2007 to 2011.
The green blocks show an increase in EPS over last year, whereas the red blocks indicate decrease in EPS from last year. During Global slowdown of 2008-09, most of the companies suffered lower profit and so the EPS declined.
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Interestingly, some of the small steel industries like Tata Sponge Iron Ltd., Rathi steel & Power Ltd. maintained their EPS growth due to new technology of operations and better hedging against increased cost of production. The decrease in EPS in 2010-11 is mainly due to increase in cost of raw materials and expansion programs of various steel companies. Small companies like Bihar sponge iron ltd, Tata metalliks ltd. have increased their debt component of Capital structure leading to increase in financial expenses, thus decrease in EPS. There is a need for restructuring capital structure of steel companies, to reach an optimal level who have lowered their EPS. There is a high correlation in EPS & interest coverage ratio in 17 companies out of 25. They belong to Infant & Adult categories. This shows that companies are more interested in clearing the debt with rise in Net sales. In independent category Rathi Steel And Power Ltd has average growth in EPS, because Rathi Steel And Power Ltd showed the negative impact on EPS and interest coverage ratio & positively impacted on EPS & debt equity ratio. This helped Rathi Steel And Power Ltd manage the debt equity and EPS according to change in Net sales. This analysis on the Indian steel industry clearly shows that companies are paying more corporate taxes. Their lead to reduction in EPS. The companies are more conscious about covering their debt. This clearly indicates that Indian steel industry lacks expansion in production capacity.
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14. Understanding the Steel industry using Michael Porters Five Forces Model
Backed by robust volumes as well as realizations, steel Industry has registered a phenomenal growth across the world over the past few years. The situation in the domestic industry was no exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy. However, the current liquidity crisis seems to have created medium term hiccups. In this article, we have analyzed the domestic steel sector through Michael Porters five force model so as to understand the competitiveness of the sector.
14.1. Entry barriers: High

Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set up 1 MTPA capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn depending upon thelocation of the plant and technology used. Economies of scale: As far as the sector forces go, scale of operation does matter. Benefits of economies of scale are derived in the form of lower costs, R& D expenses and better bargaining power while sourcing raw materials. It may be noted that those steel companies, which are integrated, have their own mines for key raw materials such as iron ore and coal and this protects them for the potential threat for new entrants to a significant extent.
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Government Policy: The government has a favorable policy for steel manufacturers. However, there are certain discrepancies involved in allocation of iron ore mines and land acquisitions. Furthermore, the regulatory clearances and other issues are some of the major problems for the new entrants. Product differentiation: Steel has very low barriers in terms of product differentiation as it does not fall into the luxury or specialty goods and thus does not have any substantial price difference. However, certain companies like Tata Steel still enjoy a premium for their products because of its quality and its brand value created more than 100 years back. Bargaining power of buyers: Unlike the FMCG or retail sectors, the buyers have a low bargaining power. However, the government may curb or put a ceiling on prices if it feels the need to do so. The steel companies either sell the steel directly to the user industries or through their own distribution networks. Some companies also do exports.
14.2. Competition: High

The steel industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports. Steel, being a commodity it is, branding is not common and there is little differentiation between competing products. It is medium in the domestic steel industry as demand still exceeds the supply. India is a net importer of steel. However, a threat from dumping of cheaper products does exist.
14.3. Bargaining power of suppliers: High

The bargaining power of suppliers is low for the fully integrated steel plants as they have their own mines of key raw material like iron ore coal for example Tata Steel. However, those who are non-integrated or semi integrated has to depend on suppliers. An example could be SAIL, which imports coking coal. Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto supply nearly two-thirds of the processed iron ore to steel mills and command very high bargaining power. In India too, NMDC is a major supplier to standalone and non integrated steel mills.
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14.4. Threat of substitutes: Low

Plastics and composites pose a threat to Indian steel in one of its biggest markets-automotive manufacture. For the automobile industry, the other material at present with the potential to upstage steel is aluminium. However, at present the high cost of electricity for extraction and purification of aluminium in India weighs against viable use of aluminium for the automobile industry. Steel has already been replaced in some large volume applications: railway sleepers (RCC sleepers), large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and domestic water tanks (PVC tanks). The substitution is more prevalent in the manufacture of automobiles and consumer durables.
14.5. Bargaining power of Consumers: Mixed

Some of the major steel consumption sectors like automobiles, oil & gas, shipping, consumer durables and power generation enjoy high bargaining power and get favorable deals. However, small and retail consumers who are scattered and consume a significant part do not enjoy these benefits.
Sources of competitive advantage in the steel industry Length of production time, i.e., technology used in production process. The cost of production, especially since the steel market is highlypricesensitive. Low-cost, high-quality imports pose a significant threatto the domestic industry and hence, competitive pricing is essential tobe ahead. Dependable delivery, i.e., lower delivery time to consumers.
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Quality of steel produced and distributed. People High productivity of labour at its plants/production facilities. High performance orientation through performance linked compensation plans for employees. Dedicated workforce indicated by lower turnover (only 5%) than the industry average (10%-12%). This could be attributed to the equality of treatment among workers at the production facilities (same colour jackets). Firm level capabilities Simple and flat organization structure with only about 5 layers.
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15. The SWOT Analysis on Indian Steel Industry

Strengths Weakness Availability of iron ore Systemic Deficiencies Availability of labor at low wage Endemic Deficiencies rates High Cost of Capital Abundance of quality manpower Low Labor Productivity High Cost of Basic Inputs and Services Dependence on imports for steel manufacturing equipments & technology Slow statutory clearances for development of mines Opportunities Threats Unexplored rural market Slow Industry Growth Other sectors Technological Change Export penetration Price Sensitivity and Demand Increasing interest of foreign steel Volatility producers in India Dumping of steel by developed Huge Infrastructure demand countries Rapid urbanization Substitutes Slow growth in infrastructure development
15.1. Strengths
Availability of iron ore: India has rich mineral resources. It has abundance of iron ore, coal and many other raw materials required for iron and steel making. It has the fourth largest iron ore reserves (10.3 billion tonnes) after Russia, Brazil, and Australia. Therefore, many raw materials are available at comparatively lower costs. Availability of labor at low wage rates: India has the third largest pool of technical manpower, next to United States and the erstwhile USSR, capable of understanding and assimilating new technologies. Considering quality of workforce, Indian steel industry has low unit labor cost, commensurate with skill. This gets reflected in the lower production cost of steel in India compared to many advanced countries. With such strength of resources, along with vast domestic untapped market, Indian steel industry has the potential to face challenges successfully.
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Abundance of quality manpower: It has the third largest pool of technical manpower capable of understanding and assimilating new technology. Considering the quality of its labour force, the Indian steel industrys low unit labour cost is reflected in the cost of production. (SAIL is one of the worlds lowest cost producers of steel).
15.2. Weaknesses
Unavailability of certain key raw materials (such as, coking coal) poses a challenge for the industry. Major players depend mainly on imports. With prices peaking in global market, this adds to cost of production. Most of the weaknesses in India are, however, classified as systemic deficiencies. Systemic Deficiencies: Most of the weaknesses of the Indian steel industry can be classified as systemic deficiencies. Some of these are described here. Endemic Deficiencies: These are inherent in some of the essential raw materials available in India, e.g., high ash content in indigenous coking coal, adversely affecting the productive efficiency of iron-making and thus is generally imported. Advantages of high Fe content of indigenous ore are often neutralized by high basicity index. Besides, certain key ingredients of steel making, e.g., nickel, ferromolybdenum is also unavailable indigenously. High Cost of Capital: Steel is a capital intensive industry; steel companies in India are charged an interest rate of around 14% on capital as compared to 2.4% in Japan and 6.4% in USA. Low Labor Productivity: In India the advantage of low cost labor gets offset by low labor productivity; e.g., at comparable capacities labor productivity of SAIL and TISCO is 75 t/man year and 100 t/man year, for
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POSCO, Korea and NIPPON, Japan the values are 1345 t/man year and 980 t/man year. High Cost of Basic Inputs and Services: High administered price of essential inputs like electricity puts Indian steel industry at a disadvantage; about 45% of the input costs can be attributed to the administered costs of coal, fuel and electricity, e.g., cost of electricity is 3 cents in the USA as compared to 10 cents in India; and freight cost from Jamshedpur to Mumbai is $50/tonnne compared to only $34 from Rotterdam to Mumbai. Added to this are poor quality and ever increasing prices of coking and non-coking coal. Other systemic deficiencies include: Poor quality of basic infrastructure like road, port etc. Lack of expenditure in research and development. Delay in absorption in technology by existing units. Low quality of steel and steel products. Lack of facilities to produce various shapes and Qualities of finished steel on-demand such as steel for automobile sector, parallel flange light weight beams, coated sheets etc. Limited access of domestic producers to good quality iron ores which are normally earmarked for exports, and High level taxation.
Besides these, Indian steel makers also lack in international competitiveness on determinants like product quality, product design, on-time delivery, post sales service, Performance index (1997-2001): Movement of share prices, distribution network, managerial initiatives, research and development, information technology and labor productivity etc. The weaknesses gets reflected in Indias poor standing in the global competitiveness as measured in terms of indicated parameters.
15.3. Opportunities
The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India. There is untapped potential of increasing steel consumption in India; eg, even to reach the comparable developing and lately developed economies like China and European nations, a quantum jump in steel consumption will be required. Unexplored Rural Market: The Indian rural sector remains fairly unexposed to the multi-faceted use of steel. The rural market was
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identified as a potential area of significant steel consumption way back in the year 1976 itself. However, forceful steps were not taken to penetrate this segment. Enhancing applications in rural areas assumes a much greater significance now for increasing per capital consumption of steel. The usage of steel in cost effective manner is possible in the area of housing, fencing, structures and other possible applications where steel can substitute other materials which not only could bring about advantages to users but is also desirable for conservation of forest resources. Other Sectors: Excellent potential exists for enhancing steel consumption in other sectors such as automobiles, packaging, engineering industries, irrigation and water supply in India. New steel products developed to improve performance simplify manufacturing/installation and reliability is needed to enhance steel consumption in these sectors. Main objective here have to be improvement of quality for value addition in use, requirement of less material by reducing the weight and thickness and finally reduction in overall cost for the end user.Latest technology must be adopted by Indian steel manufacturers for production of superior quality of steel for these applications. For example, pre-coated sheets can be used in manufacture of appliances, furnishings, electric goods and public transport vehicles. Production and supply of superior grades of steel in desired shapes and sizes will definitely increase the steel consumption as this will reduce fabrication need; thereby reduce cost of using steel. Export Market Penetration: It is estimated that world steel consumption will double in next 25 years. This poses as a huge opportunity to the steel industry.
15.4. Threats
Slow Industry Growth: The linkage between the economic growth of a country and the growth of its steel industry is strong. The Indian steel industry is no exception. The growth of the domestic steel industry between 1970 and 1990 was similar to the growth of the economy, which as a whole was sluggish. This sluggish growth in the steel industry has resulted in enhanced rivalry among existing firms. As the industry is not growing the only other way to grow is by increasing ones market share. Consequently, the Indian steel industry has witnessed spurts of price wars and heavy trade discounts, which has done Indian steel industry no good as a whole.
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Technological Change: Technological changes often force the industry structure to change. For a developing country like India where capital itself is costly, technological obsolescence is a major threat. Price Sensitivity and Demand Volatility: The demand for steel is a derived demand and the purchase quantity depends on the end-user requirements. The traders tend to exhibit price sensitivity and buy when there are discounts. This volatility of demand often affects the integrated steel manufacturers because of their inability to tune their production in line with the market demand fluctuations. Dumping of steel by developed countries: India has turned into a net importer in 2009-10. Indian manufacturers face a threat from cheap imports of China. Although government has already taken measures by raising the import duty as well as imposing an anti-dumping duty on certain high-end stainless steel products, there is a tangible gap between domes-tic production and consumption which has to be filled by imports. Substitutes: Increasingly steel is being replaced by aluminium in the automobile sector to reduce vehicle weight. In addition, huge sums of R&D funding have been committed across the world to test whether plastics can replace steel in terms of strength and durability. Some other threats are: Ever decreasing import duty on steel. High quality products from developed countries available for import at very competitive prices. Non-availability of capital from financial institutions for iron and steel sector.
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16. SWOT Analysis of main steel producers of India 16.1. SWOT Analysis of Steel Authority of India (SAIL)
The SWOT Analysis for SAIL can be carried out in the following manner:
Strengths Staff Customer base Market position Financial Resources Sales channels Products/Services Profitability Availability of Captive mines Weakness Staff Profit margin to low Competitive Vulnerable Lack of new products/services Corruption & Mismanagement
Opportunities Expansion & Growth Strategic Alliance Funding Merger/Acquisition Products/Services
Threats New Govt. Regulations Economy Increases Competition Decreasing profit & sales Lose key staffs New Technology
16.2. SWOT Analysis of Tata Iron & Steel Company

The SWOT Analysis for TATA steel can be carried out in the following manner:
Strengths Low cost production Easy access to raw materials Low debt to equity ratio Vast experience Weakness Non availability of latest R&D facility Transportation cost increasing day by day Investment
Opportunities Threats To become a world leader in low To compete with other big global
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cost and high quality steel Opportunities with acquired companies
players Global slowdown Resources & safeguarding of the environment
16.3. SWOT Analysis of RINL/Vizag Steel

Strengths Weakness Availability of funds for Lack of in-house or captive raw investment materials mines resulting in high cost of raw materials Availability of land and infrastructure facilities for Capital repairs, up gradation and expansion upto 16 MT. modernization due to major facilities Located near Vishkhapatnam port making export easier Lack of high level of automation Superior steel making technology Opportunities Threats Commissioning of Gangavaram Rising input costs port will enhance port advantage Massive expansion plans of for RINL existing competitors Entry of international players Dependency on single supplier for sourcing iron ore
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17. Conclusion & Recommendations

Higher profitability and economies of scale in the BOF route help players earn better returns on investments. However, the BF-BOF process entails higher investments and only large players are present in this category. On the other hand, in the IF route, investment requirements are lower. Of the major steelmaking routes (basic oxygen furnace (BOF), electric arc furnace (EAF) and induction furnace (IF)) capacity additions have been the most in the IF route. The dependence of producers using the IF route on non-coking coal -- whose prices have been stable so far -- gives them a cost advantage over players using the BOF route. However, this trend is expected to change in 2012-13 as non-coking coal prices increase. Meanwhile, a fall in coking coal prices has reduced costs for players using the BOF route. East India has all of the factor conditions for development of the steel industry, but it has limited executive ability. Therefore, unless central and state governments take innovative measures, the two hundred MOUs are very likely to be cancelled. It is expected that steel production will be far short of demand, and net imports to reach 40-50 MT by 2020. It seems that production capacity will likely increase only after all stakeholders reaches consensus. The analysis of the Indian steel industry highlights some of the emerging trends in the Indian steel industry. The growth in the demand is outstripping that in production and there is tardy capacity increase in the integrated sector. Due to these trends there is high volatility and intense upward pressure on prices of the steel. Because of these, there are stagnating exports and quantum jump in the imports. As a result India emerged as a net importer as of steel in 2009-2010 with net import of 7.3 MT. These trends have also resulted in the growth of small scale producers to bridge the gap between the demand and supply. By analyzing all the factors associated with the Indian steel industry, it is expected that the in the future the demand for the steel would increase with the rate of 10%. Factors like rate of infrastructure development are very high in the future which will provide a boost to the steel industry. Backed up by all the strengths and the opportunities available to the Indian steel industry, Indian steel industry in the future have the potential to become the second largest steel producer in the world. Indian steel industry is facing some serious problems which are restricting their growth presently and in the future. They have to start concentrating to minimize these problems as soon as possible so as
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to fully utilize their potentials. India should start working on devising various strategies on how to popularize steel in the rural sector, as the present consumption of steel in the rural sector is only 10 kgs as per the per capita GDP of India where, rural sector represents majority of Indian population. Currently, the per capita consumption of steel in India is only around 55 kg against the world average of 206 kg and chinas 427 kg. A study was commissioned through the joint plant committee (JPC) during the 201011 to estimate the per capita demand for iron and steel in the rural sector of India and to determine the factors that can contribute to its enhancement. The emergence of the rural market for steel currently consumes around 10 kg per capita buoyed by projects like Bharat Nirman, Pradhan mantri gram sadak yojana, Rajiv Gandhi Awaas Yojana among others. Problem of low productivity in the Indian steel industry should be carefully addressed as this would not only have an effect on the steel industry but would also effects the as whole economy. Because of its low productivity, Indian steel industry is lagging behind the set targets and is not being able to completely utilize the full investments made. The Indian government should start taking initiative to improve infrastructure which is essential for the steel production like expansion, modernization and maintenance of the ports, railways and roadways. Indian government like other developed nations should protect its domestic steel industry from the exposure of the outer forces like cheap imports from competing nations. For the overall health of the Indian manufacturing sector, steel industry should be allowed to have a good return on investment and the exposure by the banks and by other financial institutions should be made available. Today, the Indian mining industry is governed by the Indian government and only some percentage of the mines is in the hand of private sector. Indian government should start thinking about the deregulation of the mining sector like steel sector, which only was deregulated about two decades ago. Mining conditions and technology in India are very obsolete and huge amount of investments in this sector is urgently required. For procuring the required quantity of the various minerals, detailed and scientific exploration is required in all the locations, known and unknown.
Immense growth potential in Indian Steel Sector
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Domestic crude steel production grew at a compounded annual growth rate of 8.4% in the last few years. Crude steel production capacity of the country is projected to be around 110 million tonne by 2012-13. 222 Memorandum of Understandings (MOU) have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.
Investments at stake are to the tune of $187 billion in the Steel sector. Increase in the demand of steel in India is expected to be 14% against the global average of 5-6% due to its strong domestic economy, massive infrastructure needs and expansion of industrial production.
Demand
of
steel
in
the
major
industries
like
infrastructure,
construction, housing, automotive, steel tubes and pipes, consumer durables, packaging and ground transportation. Target for $ 1 trillion of investments in infrastructure during the 12th Five Year Plan. Infrastructure projects (like Golden Quadrilateral and Dedicated Freight Corridor) will give boost to the demand in the steel sector in near future. Projected New Greenfield & up-gradation of existing Airport shall keep the momentum up. Increased demand of specialized steel in hi-tech engineering industries such as power generation, automotive petrochemicals, fertilizers etc. Steel industries of India have to play a critical role in the future so that its economies in the could future possibly for achieve their future targets of of of developments. India should maintain their current percentage investment GDP
the expansion and modernization
their steel plants and should increase the percentage amount with the increase in their level of GDP. Thus it can be concluded that the growth of the steel industry is closely related to the growth of the whole economy and a country should always have a steel growth rate above its GDP growth rate so as to maintain the development level.
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Recommendations
The steel companies having lower debt equity ratio should undergo mergers and acquisitions with high debt ratio firms. This can have change in capital structure and have benefits under sec 72A of Income Tax Act, 1961. The steel companies are less productive in utilizing resources. Latest technologies like COREX are used for updating technology there by benefiting the rise of debt and tax reduction by paying interest to the borrowed debt. The government needs to facilitate achievement of mined resources by formulating and implementing a robust and workable policy for granting leases/ownership of mines of world class size so that (a) the cost of mined resources and (b) the cost of mining are comparable with the best in the world. The government needs to facilitate import of metallurgical quality coal by minimizing the duties. Efforts are required for rapid development of coking coal mines in our country, particularly the prime coking coal. The conversion of iron ore to finished steel is both an energy and technology intensive process. In view of the impending competition from foreign countries, domestic steel producers should emulate latest technologies in order to attain techno economic parameters, benchmarked against the world standard, in terms of energy consumption per tonne of steel, yield percentage, productivity etc. In the evolving market there is much greater requirement as regards physical strength and quality requirement of steel. While carbonaceous fuels are required for steel making as redundant, large quantities of electrical power are essential for steel making process. Though most integrated steel plants have their own captive power plants, but they are dependent on state grid to a great extent. Other than that many of the secondary steel producers have no or little back up support for power. Hence large scale augmentation of power generation capacity with capability to supply quality power is a prerequisite for increased steel capacity. The government should incentivize technology development which will further facilitate R&D initiatives. This will in turn enhance the competitiveness of the Indian steel industry. Our technologies have to
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work towards utilization of low grade iron ore, magnetite ore, iron ore fines etc. Due to large scale deforestation associated with mining activity, there is a need to pay attention to the issue of rehabilitation of mined out areas & afforestation. Decrease in water discharge with improved facilities and recycle is to be encouraged. Capacity building is a necessary pre-requisite for exploring CDM financing options for various energy efficiency projects applicable to the steel sector.
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18. References
http://www.ey.com/Publication/vwLUAssets/Global_steel_2011_trends_2012 _outlook/$FILE/Global_Steel_Jan_2012.pdf http://www.fedmin.com/html/competitionpolicy-asfiroz.pdf http://www.steel.nic.in/ http://jpcindiansteel.nic.in/ http://www.mines.nic.in/ http://www.scribd.com/ http://www.sail.co.in/ http://www.moneycontrol.com/stocksmarketsindia/ http://www.tatasteel.com/ http://www.jsw.in/ http://www.jindalsteelpower.com/ http://bhushan-group.org/ http://www.vizagsteel.com/ http://www.essar.com/section_level1.aspx?cont_id=eLiVfqUiZks= http://economictimes.indiatimes.com/ http://advisoranalyst.com/glablog/2011/07/08/india%E2%80%99sdemand-for-iron-ore-made-of-steel/ http://www.worldsteel.org/media-centre/press-releases/2012/2011-worldcrude-steel-production.html http://www.beroe-inc.com/ http://www.wikipedia.org/ http://www.icra.in/ http://www.careratings.com/ http://www.crisil.com/index.jsp
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Appendix A
Share price movement of major steel producers in India from July 2011 to May 2012. Steel Authority of India (SAIL) Ltd.
Tata Steel Ltd.
Jindal Steel & Power Ltd.
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Bhushan Steel Ltd.
JSW Steel Ltd.
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Appendix B
Procedures Legislation for Grant of Mineral Concessions as per Existing
Ownership of Mines and Minerals In Indian federal structure, the State Governments are the owners of minerals in their respective territorial jurisdictions. In offshore areas, territorial waters, continental shelf, exclusive economic zone and other maritime zones of India, the rights are vested in the Central Government. Laws and mineral rights empower the Government to receive payment of royalty from the lessee for extraction and consumption of minerals. The rates of royalty for various minerals, other than minor minerals, are specified by the Central Government through a notification. The royalty rates for minor minerals are specified by the concerned State Government. Access Over Land Both state owned and privately owned land are available for exploration and mining, except in certain areas, which the Government may reserve through a notification. Since the surface rights of land may vest in either the Government or an individual, the access over land is subject to the consent of the owner of the surface rights. Reconnaissance Permit An application for grant of reconnaissance permit in respect of any land in which the minerals vest in the Government shall be made to the Director, Mines and Geology, of the State Government concerned along with fees as prescribed. The State Government shall acknowledge receipt of the application and shall grant the reconnaissance permit to every applicant who is eligible in terms of the MMDR Act, 1957 and the Rules made thereunder. A Reconnaissance permit entitles the holder to undertake operations for preliminary prospecting of mineral(s) through regional, aerial, geophysical or geochemical surveys and geological mapping. But, excluding pitting, trenching, drilling (except drilling of 20-25 boreholes per 100 sq. km. with 4 diameter) and sub-surface excavations. These permits are granted for a period upto 3 years which is not extendable. The maximum area over which a permit can be granted is 5000 sq.km. subject to total ceiling of 10,000 sq. km. in a State. The Reconnaissance Permits are granted as per the procedure laid down in the Mineral Concession Rules, 1960. The holder of a Reconnaissance Permit has a preferential right to obtain a Prospecting Licence in respect of the land remaining under the permit subject to certain conditions including those relating to minimum expenditure commitment and specific physical targets. The other conditions
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governing the grant of Reconnaissance Permit require the permit holder to progressively relinquish the area granted under permit as follows: i. On completion of two years, the area shall be reduced to 1000 sq. km. or 50% of the area granted, whichever is less; and ii. The area would be further relinquished to not more than 25 sq. kms. at the end of the third year. Prospecting Licence An application for grant of a Prospecting Licence shall be made to the District Collector of the State Government concerned along with prescribed fees. The State Government shall acknowledge the receipt of the application and shall consider only such applications as are eligible in terms of MMDR Act, 1957 and the Rules made thereunder. The prospecting licence holder has a preferential right for obtaining a mining lease in respect of the minerals explored in a particular area. A Prospecting Licence may contain other conditions relating to compensation for damage to land, restriction regarding felling of trees, entry on occupied land, etc. A Prospecting Licence entitles the holder to search and explore the land for minerals, and permits the removal of limited quantities of substances for testing. Prospecting Licenses are granted for upto a period of 3 years. These can be extended, but the total term of the Prospecting License can not exceed 5 years. Maximum area prescribed for prospecting licences is 25 sq. km in a State, which can also be relaxed by the Central Government in the interest of mineral development. One important right attached to the Prospecting License is the right of preemption. This right gives preferential right to the holder, for obtaining a Mining Lease in respect of the minerals explored on a particular area of land. The holder of the Prospecting License has also the right to transfer the license or any right, title or interest therein to an income tax payee, subject to the sanction of the State Government. The procedure for obtaining the licence is given in the Mineral Concession Rules, 1960. Mining Lease An application for grant of mining lease in respect of any land in which minerals vest in the Government shall be made to the District Collector of the State Government concerned along with prescribed fee. Every such application shall also include with it the consent of the land owner and any person having occupation rights over the land. An acceptance of application for a mining lease and before the execution of the lease, the applicant shall prepare a mining plan which is to be approved by the Indian Bureau of Mines(IBM) for the leased area. No mining plan shall be approved unless it is prepared by a qualified person empanelled in this behalf in the prescribed manner.
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A Mining Lease allows for the development and production of minerals from ore bodies discovered by prospecting or exploration operations. Mining Leases can be held for a period, which may vary from a minimum of 20 to 30 years with rights of renewal. Every person who is holding a mining lease for a mineral which is used in his own industry shall be entitled for the renewal of his mining lease for a period not exceeding 20 years, unless he applies for a lesser period. A Mining Lease is subject to the ceiling on the area being mined. The ceiling prescribed is a maximum of 10 sq. kms. in a State. The ceiling may be relaxed by the Central Government if it deems the relaxation to be in the interest of mineral development. The mining lease is transferable, subject to the approval of the State Government. The holder of a mining lease is liable to pay a dead rent till any mineral is removed or consumed. On removal or consumption of the mineral, the holder of a Mining Lease has to pay royalty or dead rent, whichever is higher. The royalty rates and dead rent for various minerals are specified in the second and third schedule to the MMDR Act. The Government has the right to revise the rates. However, the MMDR Act, restricts the Government from enhancing the rates before a period of 3 years have elapsed, from the date of last increase. The procedure for obtaining a mining lease is prescribed in the Mineral Concession Rules, 1960.
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The procedure in grant of mineral concessions for a mining lease is depicted in the chart given below.
Time Limit for Decision on Granting Mineral Concessions Times limits have been prescribed for conveying a decision on application for mineral concession viz. six months for Reconnaissance permit, nine months for prospecting license and twelve months for Mining lease. In case time limit is not adhered to, the reasons for delay will have to be recorded in writing. Private Participation in the Mining Sector According to the National Mineral Policy 2008, private investment (both domestic and foreign), has been permitted for the exploration and exploitation of all non-fuel/non-atomic minerals without any fetters. Level playing field between Governments owned companies and others have been provided. For example, prematurely terminated lease area is
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available for re-grant to both public and private sector. The permission of the Government is required in case of transfer of mining lease. Time limits have been prescribed for conveying a decision on applications for grant of mineral concessions, and for approval of mining plans. Environmental controls for the mining sector are regulated by the Forest (Conservation) Act, 1980 and Environment (Protection) Act, 1986 (EPA).
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Appendix C
Coal Blocks Allocation The allocation of coal blocks to private parties is done through the mechanism of an Inter-Ministerial and Inter-Governmental body called the Screening Committee. The Screening Committee is chaired by the Secretary (Coal) and has representation from Ministry of Steel, Ministry of Power, Ministry of Industry and Commerce, Ministry of Environment and Forest, Ministry of Railways, Coal India Limited, CMPDIL and the concerned State Governments. As regards allocation of small and isolated blocks are concerned, a new policy is being formulated in consultation with the Ministry of Law and Justice for allocation of such blocks. The allocation is made to meet the coal requirement of the permitted end use project. The block may be allotted to an End User Company, JV or a Mining Company which has firm back-to back tie up with specified End User Company (ies). The Mining Company should have a legally binding and enforceable supply contract/ agreement for the life of the mine. The coal produced from the block shall not replace any coal linkage given to the applicant by the Coal India Limited/its subsidiary companies and/or by the Singareni Collieries Company limited, without prior permission of this Ministry. Private-sector participation in the coal sector is restricted to joint ventures and companies that can use coal for captive purposes. If the production is greater than what is required for internal use, the balance must be sold to Coal India Ltd. Process for Coal Mining All new customers are allocated coal through a process of issuance of a letter of assurance (LOA) under which they are required to meet certain project milestones within a specified period. For Central or State Government power utilities, independent power producers, captive power plants and customers in the fertilizer, cement and sponge iron and steel industries, an LOA is issued on the basis of the recommendation of an interministerial Standing Linkage Committee (Long-Term) (the Linkage Committee), which take into account various factors in assessing such application, including LOAs or linkages already granted to customers in the relevant sector, as well as existing capacities and proposed capacity
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additions for such sector. Independent government or other reputed institutions may also be engaged to ascertain coal requirements of the applicant in the event that there are no prevailing norms for such sector.
Application for Prospecting License
Letter of Intent (LoI) by State Govt
Forest clearance for Prospecting
Award of Prospecting License ( for2-3 years)
Carrying out prospecting activities
Submission of the Prospecting Report to the state Govt
Acceptance of prospecting report by State Govt on meeting technical specification as per LoI
Application for granting mining lease to state Govt
Issuing Letter of Intent (LoI) with condition of obtaining various statutory clearances and approval of mining plan Receiving statutory clearances like Forest, Environmental, for building approach road to mining, water, electricity
Approval of mining from Indian Bureau of Mines (IBM)
Approval of Rehabilitation and Resettlement plan from State Govt.
Subject to receiving all clearances and approval of mining plan, signing of the mining lease with state Govt
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Recently, the government has finalized three models - auction, tariff-based competitive bidding and government dispensation route -- for grant of mines to various categories of firms. The ministry had earlier notified the Auction by Competitive Bidding of Coal Mines Rules, 2012 and the MMDR Act, 2010. Grant of mines to companies for specified end-uses other than power will be done by auction through competitive bidding process...Government companies can also participate in the process, though allotment to government companies for end- use can also be made under Government dispensation route", the letter said On allocation of blocks for power generation through competitive bidding. The identified blocks earmarked for allocation to the power sector would be earmarked to Ministry of Power/State Government for carrying out the tariff based bidding. Besides, the allotment would be done to mining/mineral development companies in states for commercial mining on fuel supply agreement/coal linkage basis. The Ministry is against allocation of coal block outside the rules framed for the purpose of allocation of coal blocks, and has already identified 54 blocks for grant through competitive bidding and government dispensation route.
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Analysis of Steel Sector in India, With Special Focus On Units in Eastern India

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Analysis of Steel Sector in India, With Special Focus On Units in Eastern India

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Analysis of Steel Sector in India, with special focus on units in Eastern India

By:udayam Kumar singh reg no.-pgdm b12/55 ifmr, chennai

SIGNATURE OF STUDENT, (Udayam Kumar Singh)

SIGNATURE OF PROJECT GUIDE (Mr. Pinaki Paul, AVP-PA & SF)

2.1. 2.2. 2.3. 2.4. 3. 4. 5. 6.

7.2.1. 7.2.2. 7.2.3. 7.2.4. 7.2.5. 7.2.6. 7.2.7. 8. 9. 10.

Steel manufacturing process

2.1. Blast Furnace method

2.2. Electric Arc Furnace(EAF)

2.3. COREX or Cipcor Process

2.4. Induction Arc Furnace (IAF)

Classification of iron ore

Classification of Steel and Alloys

Semi-finished products are defined as:

These products may not be in coils. Semi-finished products include:

Flat-rolled products are:

1.Main Producer SAIL RINL TATA STEEL TOTAL

2006-07 13.51 3.50 5.17 22.18

2007-08 13.96 3.13 5.01 22.10

2. Major JSWL ISPAT ESSAR JSPL TOTAL

2.64 2.76 3.01 8.41

3.15 2.83 3.56 9.54

3.22 2.20 3.34 1.46 10.22

5.26 2.69 3.47 1.96 13.38

5.85 2.38 3.37 2.27 13.87

19.82 29.18 65.84

22.07 31.86 69.58

6.1. Main Producers 6.1.1. Steel Authority of India(SAIL)

6.1.2. Rashtria Ispat Nigam Ltd (RINL)/Vizag Steel

6.1.3. Tata Iron (Jharkhand)

Production performance 1. Steel division:

Metric Tonnes Metric Tonnes Metric Tonnes Metric Tonnes

11,737,116 2,392,355 21,231 23,836

896.84 495.67 234.31 103.82 7665.15

6.2. Major Producers 6.2.1. JSW Steel Ltd.

The production performance during FY 2010-11 was as under:

6.2.2. Ispat Industries Ltd. (IIL) / JSW Ispat Steel Ltd.(JSPL)

DRI - Sponge Iron Plant Blast Furnace Compact Strip Production

Cold rolling mill Galvanizing line Colour coating line

6.2.3. ESSAR Steel Ltd.

6.2.4. Jindal Steel & Power Ltd. (JSPL)

6.2.5. Bhusan Steel Ltd.

6.3. Other Producers 6.3.1. Shyam Steel Industries Ltd.

(i) (ii) (iii) (iv)

6.3.2. Jai Balaji Industries Ltd.

16,500 tonnes per annum 2,40,000 tonnes per annum 116.80 MW

Ductile Iron Pipes Power

6.3.3. Electrosteel Casting Ltd.

6.3.4. Usha Martin Ltd.

323000.00 400000.00 111060.00 72300.00 25480.00

173048.00 318567.00 80087.00 42581.00 19278.00

152586.00 128117.00 72330.00 42164.00 15812.00

Quantity 245,066 686,739 NA 14,355

6.3.5. Adhunik Metaliks Limited

Profile of the industry

7.1. Global Scenario

7.2. Domestic Scenario

7.2.2. Demand - Availability Projection

7.2.3. Steel Prices

7.2.4. Imports of Iron & Steel

7.2.5. Exports of Iron & Steel

Total Finished Steel (alloy + non alloy) 5.24

Source: Joint Plant Committee; *provisional