SUMMER PROJECT

ON

Indian Steel Market

Acknowledgement
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There are certain quarters without whose guidance and support this project would not seen the light of the day. My sincere thanks are to due to all of them. First of all, I am immensely grateful to acd, who has been a constant source of inspiration and motivation for me. She has always been the guiding force in holistic development of her students in all walks of life. While undergoing this project work, I have drawn immensely from her able guidance and leadership. She has always provided considerable flexibility and freedom to her students in successful and timely completion of their dissertation / research projects. I am also thankful to my project guide Mr.ff for his unstinting guidance and support throughout the project. My sincere thanks are also due to the Library staff of Amity School of Business for their constant support during my occasional visits to the departmental library for consulting related literature on the subject. My special thanks are also to all other members of faculty, and staff of Amity School of Business, my friends and batchmates for extending their helping hand whenever I needed it the most.

Guide Certificate
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This is to certify that Mr avs student of Amity Bussiness school in BBA General has carried out the work presented in the project of the Term paper entitle " Indian Steel

Market
" as a part of First year programme

RESEARCH METHODOLOGY
A research is done whenever we try to analyse a particular trend, or to study the impact of a new policy on various socio-economic variables in the society. At times it is also undertaken to analyse the effects of some happenings in the past. The way in which such a research is done is called Research Methodology. A research work consists of an objective which tells us what we want to establish or co-relate with the help of our research. RESEARCH METHODOLOGY ADOPTED The research methodology being adopted in this project is to extract and analyse information and secondary data available in the public domain from credible sources such as, Ministry of India etc. Information has also been sought from the related literaure (books, business newspapers, and magazines) available in the departmental library. The information thus obtained has been edited and condensed accordingly keeping in mind the scope of the project. Time-series data has been analyzed by plotting charts using MS-Excel software. Keeping in mind the nature of topic chosen, primary data / research has not been conducted or included in this research project. CONCLUSIVE RESEARCH A conclusive research is meant to provide information that is useful in researching conclusion of decision making. It tends to be quantitative in nature which is to say in the form of numbers that can be quantified and summarized. It relies on both secondary data, particularly existing database that are analyzed to shed light on different problems than the original one for which they were constituted and primary research or data specifically gathered for the current study

Data Collected : Secondary Data For analysis of data graphs have been used.

Secondary Data Methodology: Secondary data was collected from the web, various repots published on the internet, books, newspapers (Economic Times, Business Standard, Financial Express) and business magazines.

Various websites those were visited and data / information collected from: www.wikipedia.com www.google.com

CONTENTS

1. Abstract

2. Introduction

3. Structure of Indian steel industry

4.

SWOT Analysis

5. Logistics in Indian steel industry

6. Public Sector Enterprises

7. Private Sector Enterprises

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8. Future outlook for the Indian steel industry

9. Conclusion

10.

References

ABSTRACT

The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth. The government is backing the industry through favorable industrial reforms, while the private sector is supporting it with investments worth billions of dollars. Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors. With an impressive track record, the country has become a reputed name in the world steel industry. In this report a brief overview on the Indian steel industry is given. Its current position and future outlook is also discussed. Also the Indian steel industry with respect to logistics is also discussed
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to certain extent. SWOT analysis for the Indian steel industry is done to find out the strengths, weaknesses, opportunities and treats faced by the industry. Logistics and supply chain is one of the key drawbacks for the Indian steel industry. In this report the current scenario of handling and transportation of steel is discussed briefly. Finally some measures which are to be taken by the industry to be competent in the global market are analyzed and discussed.

INTRODUCTION

Iron and steel represents one of the most energy intensive sectors in any economy and therefore this industry has such a prominent role. Steel industry in India has dominated the other energy intensive industries such as aluminum, cement, fertilizers, glass and paper etc. With the improvement in production technologies and transport means, demand for steel production is increasing. Due to many reasons such as the infrastructure development in developing countries, improvements in automobile industry, increasing industrial capacity etc, demand for steel is increasing drastically. Industries which are closely related to steel industry and helping the growth of Indian steel industry are power generation, infrastructure, urban and rural infrastructure and real estates. There have been almost revolutionary changes in the global steel scene with fierce competitive pressures on performance, productivity, price reduction and customer satisfaction. National
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boundaries have melted to encompass an ever increasing world market. Trade in steel products has been on the upswing with the production facilities of both the developed and the developing countries complementing each other in the making of steel of different grades and specialty for the world market. Also with increasing concerns such as eco friendly production, reduction in carbon emissions, safe and hygienic transportation etc made global steel manufacturers to concentrate on production and supply processes. The steel industry is also highly material intensive. Generally, 1 tons of steel output requires handling and transportation of around 4 tons of bulk materials. Therefore, logistics play a critical role in determining the operational efficiency and cost structure of a steel producer. According to industry estimates, these costs account for over 15% of the total costs of Indian producers of steel. In addition, the specific investment (rupees per ton of capacity) requirement for a steel project is high and therefore the capital outlay for a typical steel project is quite large. Consequently, success or failure in executing projects may impact the financial health of steel companies quite significantly.

Structure of Indian steel industry:

India has emerged as the 3rd largest exporter of iron ore behind Brazil and Australia. India stands in top 10 countries in producing steel in the world. But its global trade only accounts for only 2% of the global steel trade. The domestic steel industry reported rapid growth during the period between 2003-04 and 2007-08, and steel producers responded positively to this by announcing large Greenfield or Brownfield expansion projects. Almost all domestic steel companies, along with some international majors, have announced large expansion projects. While some of the projects are likely to be deferred or shelved, the capital expenditure for the industry would still be large, given the high capital intensity of steel projects. The last decade of the twentieth century will go down as one of the most turbulent phases for Indian steel industry. The period witnessed sweeping changes in the steel arena, transformation of self contained national markets into linked global markets and consequent fierce competition; oversupply of most kinds of steel resulting in no real appreciation of steel prices and
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simultaneous rise in input cost; and most importantly, rise in customer expectations. The profitability of Indian steel companies has improved in 2009-10 on a quarter-on-quarter basis. Besides a somewhat improving steel price scenario, a significant softening of iron ore and coking coal prices has also contributed to this improvement. India with its abundant availability of high grade iron ore, the requisite technical base and cheap skilled labor is thus well placed for the development of steel industry and to provide a strong manufacturing base for the metallurgical industries. Companies in more mature industrial countries like India are increasingly forced to look to assets (and growth) by setting up production operations (steel factories) in key developing economies that places then close to natural resource supplies (both in terms of inputs and energy). Recent years have witnessed unprecedented turmoil in the global steel market. The crisis in the international steel market might be attributed to the misbalance between capacity, demand and production and consequent drop in prices. Availability of iron ore was and is not an issue, as the domestic production of iron ore is sufficient to meet demand. Secondary steel producers require closely sized lumps (CLO) which generate fines. In addition, at the time of mining 60% of the ore comes as fines and balance 40% as lumps (including big boulders). Thus, in the total production of iron ore 70-72% are fines either at the time of mining or while crushing into CLO or handling (loading/unloading) operations at mines, railway stations or at ports. India is 5th largest producer of steel with total production of 53.08 MT in 2007. The crude steel production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6 Million Metric Tons. On the other side, some Asian countries such as Japan and South Korea saw significant decline in their production levels. In 2008, per capita finished steel consumption stood at an estimated volume of around 44 Kg, which represents tremendous growth potential for coming years. This further signifies the resilience and strength of the Indian steel industry against external risk factors. Indian steel industry mainly consists of three distinct groups. The first group comprises the integrated steel producers which produces greater than 1MT and includes Steel Authority of India Ltd (SAIL), Tata Steel (capacity 3 Mt) and Rashtriya Ispat Nigam Ltd (RINL) (3 Mt). SAIL has four integrated steel plants at Bhilai (4 Mt), Bokaro (4 Mt), Durgapur (2 Mt) and Rourkela (1.8 Mt). The group of secondary majors consists of the Ispat
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Group, Jindal Group, Lloyds and Essar. Their capacities range between 1 Mt and 2 Mt using a mix of technologies, with much lesser degree of backward integration. These two strategic groups together hold around 70% of the mild steel capacity in the Indian steel industry. The third groups of tertiary producers are mini-steel plants, using electric arc or induction furnaces and are very small in size. There have been almost revolutionary changes in the global steel scene with fierce competitive pressures on performance, productivity, price reduction and customer satisfaction. National boundaries have melted to encompass an ever increasing world market. Trade in steel products has been on the upswing with the production facilities of both the developed and the developing countries complementing each other in the making of steel of different grades and specialty for the world market. The Indian steel industry comprises of the producers of finished steel, semifinished steel, stainless steel and pig iron. Indian steel industry, having participation from both public sector and private sector enterprises, is one of the fastest growing markets for steel and is also increasingly looking towards exports as driving the growth of the industry. The Endeavour is not only in tandem with India's National Steel Policy of achieving a production level of 110 Mt of crude steel by the year 2020. The timely completion of the projects for new forthcoming steel plants is of great challenge in the present Indian scenario. Factors which influenced growth of Indian steel industry: Factors which were favorable for the growth of Indian steel industry are:

Global steel consumption: The global steel consumption due to many reasons is increasing consistently year by year. The main cause is the development of infrastructure in the developing countries, also with the other growth of other complementary industries such as automobiles; construction, urban infrastructure etc helped the steel industry to grow at a rapid pace.

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Implementing latest technologies for improving the quality and productivity also helped the industry. This led the manufacturers to focus on improving the customer delivery times and also decrease the costs of production and transportation.

Making strategic alliances: The manufacturers started making strategic alliances with the other OEM (original equipment manufacturers) in long term which helped them in mitigating demand risks and uncertainties, high product take off and better capacity utilization.

Government initiatives: The government policies and initiatives helped the domestic steel manufacturers to a great extent. This is also key for the growth of the Indian steel industry. Also, increased infrastructure spending by the Government of India and development of roads could generate significant savings in freight and transportation cost, making Indian steel companies and other industries globally competitive.

Impact of liberalization: The economic reforms initiated by the government in 1991 have added new dimensions to the industrial growth in general, and steel industry in particular. Automatic approval granted for foreign equity investment in steel has been increased up to 74% [Government of India 1999]. Restrictions on external trade, both in import and export, have been removed. Import tariff reduced from 105% in 1992/93, to 30% in 1996-97.

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Other policy measures like convertibility of rupee on trade account, permission to mobilize resources from overseas financial markets, and rationalization of existing tax structure.

Cost competitiveness of Indian steel industry:

The cost of major raw materials like iron ore, coking coal, and other raw materials is less in India among the countries mentioned. The labor cost is low, but it is neutralized by its low level of productivity. The financial cost and the cost of power, oil and some other materials are high. Energy accounts for about 35 - 40% of the cost of steel production in 13 India, whereas it is about 28% in the developed countries. All these make the pre-tax cost of steelmaking in India higher than that of South Korea, Australia, Mexico, and CIS countries. India has a definite advantage of having low wage rates compared to all the other countries. The wage rates and other related costs accounts to 15% of the total costs for production of steel, it is almost half compared with other countries which is 30% of the total costs.

Current projects under progress:

Bhushan Steel plans to invest US$ 5.72 billion for building 12 million ton-capacity in the states of West Bengal, Jharkhand and Orissa.

Non-ferrous metals giant, Vedanta Resources, plans to invest around US$ 4.79 billion in a 5 million ton steel plant in Keonjhar district of Orissa and envisages its commissioning by 201213.

Tata Steel is also planning to build a 5 million ton plant in Chhattisgarh with an investment of around US$ 3.59 billion. The steel major is setting up Greenfield projects in Jharkhand, Orissa and Chhattisgarh. While in Jharkhand it is likely to invest about US$ 8.38 billion for a 12 million ton integrated steel plant, in Orissa it plans to pour in almost US$ 4.39 billion for a six million ton capacity plant.

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Mesco Steel plans to invest US$ 2.20 billion for expansion of two of its steel plants in Orissa.

Reliance Infrastructure, (part of the Reliance Anil Dhirubhai Ambani Group) plans to build a 12-million ton steel plant in Jharkhand, which is likely to be completed by 2012.

Indian Railways plans to invest around US$ 437.25 million per annum to raise its consumption of stainless steel for adding new alloy-made wagons and coaches to its portfolio.

Welspun Gujarat Stahl Rohren, (one of the largest steel pipe makers in India), plans to increase the capacity of its pipe plant by 75 per cent to 1.75 million tons with an investment of US$ 222.52 million.

The JSW group plans an outlay of US$ 40 billion for steel and power projects. These projects will be completed by 2020.

Visa Steel has lined up a US$ 1.51 billion US$ 2.02 billion integrated steel project in Chhattisgarh.

Sarralle India, a subsidiary of Sarralle Equipos of Spain and one of the largest designers of steel plant equipment, has decided to set up a manufacturing base in Uluberia in West Bengal.

Interarch Building Products Private, (the largest player in pre-engineered steel buildings space) plans to set up its Greenfield manufacturing facility in Gujarat by 200910.

Also, the Confederation of Indian Industry (CII) plans to start six new small and medium enterprises clusters for steel companies in Visakhapatnam. It will also set up a steel task force to propel growth in the steel clusters.

SWOT ANALYSIS Strengths:

Abundant supply of iron ore
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Low cost and reasonable efficient labor force Strong man power capability and improving productivity History in steel making and acquired skill Strongly globalised Industry and emerging global competitiveness Increases in productivity through the adoption of more efficient and cleaner technologies in the manufacturing sector will be effective in merging economic, environmental, and social development objectives.

Strong steel production base and achieved productivity levels High degree of entrepreneurship Availability of investments and capital back up Support from government which helped in growth of the steel industry The biggest boost to efficiency in the steel industry has come from the increased use of continuous casting an indicator of the modernity of the production process.

Availability of good rail way network for domestic shipping

Weaknesses:

Limited availability of coking coal High transportation and handling costs. Mining costs are also high. Implementing latest technology has become a concern for the Indian steel industry. Steel industry in India did not attain self sufficiency in constructing and efficiently maintain steel plants. It still relies on the countries like Russia, Ukraine, and Kazakhstan etc. for installing new steel plant in India.

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Although India has modernized its steelmaking considerably over the past decades, nearly 6% of its crude steel is nevertheless still produced using the outdated open-hearth process

Quality is also one of the drawbacks India is focusing. Quality of either flat steel or long steel is becoming an issue for reaching international quality standards.

Logistics for steel industry is one of the constraints for the competing in the global markets. Industry has to concentrate on the supply of the raw materials and reaching the customers delivery times. The loading and unloading rates at ports, container handling, in plant logistics were also weak in terms of Indian steel industry.

With 1 ton of finished steel requiring handling and transportation of around 4 tonnes of bulk material, the anticipated expansion of steel capacity, even accounting for delays, would exert tremendous pressure on Indias logistics infrastructure post-commissioning of projects. The problem would get aggravated if the future capacities show regional concentration, which is likely.

Opportunities:
Increase in steel consumption hugely will result in tremendous growth in steel industry in coming years India has all the resources and capabilities to become a global supplier of quality steel Low steel prices smooth the way for imports from Russia, Ukraine and Kazakhstan. The geographical proximity of Japan, South Korea and China makes them important suppliers as well. With the decreased potential for steel in developed countries, India have opportunities for becoming the world leader in production and supply of steel and iron ore

Concurrently industries like automobiles and urban infrastructure are also growing simultaneously

Threats:
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Infrastructure is becoming a major threat for the steel industry. Insufficient infrastructure in terms of transportation and logistics is becoming concern for Indian steel industry. Government is also planning to increase its share of infrastructure in GDP from 2.5% currently

Huge competition in the global markets. In the Indian markets also, with the entry of the foreign players the domestic steel producers are facing high market competition.

Increasing concern for the global climate change is becoming a threat to the industry. With the concern over the climate change countries are focusing on the reduction in carbon emissions particularly with respect to the energy intense industries like steel, cement etc. The steel industry accounts for between 5 and 6% of total man-made CO 2 emissions. This is less than accounted for by transport or power use by the general public, it does mean that the steel industry is in the frontline in making a contribution to fight global warming.

Future energy use and carbon emissions depend on the level of production and the technologies employed. Furthermore, different economic and policy settings affect structures and efficiencies within the sector.

Issues with dumping of low priced steel products from the Chinese and companies of other countries is also becoming a barrier for the growth of Indian steel industry.

Infrastructure with respect to steel plants and logistics of steel industry is also one of the key challenges for the Indian steel industry.

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LOGISTICS IN INDIAN STEEL INDUSTRY

There is a growing concern for the macro and micro level logistics of Indian steel industry. The customer delivery times, inventory management, cargo handling at ports, procurement of iron ore and other raw materials are some of the areas in which steel manufacturers are focusing at micro level. Some of the concerns of logistics for the steel industry at macro level are:

High transportation costs: This is one of the major concerns which is affecting the growth of the industry. Due to the problems in infrastructure and also with low levels of productivity in terms of handling and transporting cargo, the costs of transportation were soaring day by day.

Lack of connectivity to the ports with sufficient rail and road networks is also one of the causes for high transportation costs.

Along with the transportation costs, the costs of order placement and transactions costs are also increasing. Industry should look for the efficient flow of information from end to end in the supply chain. Implementation of technologies like EDI (electronic data interchange) and ERP (enterprise resource planning) will help to improve reliability of the information flow and also reduce the costs to a greater extent. The implementation of these technologies and also the other strategies like BPR (business process reengineering) are at the initial stages in the industry. Apart from some major producers of steel like Tata, JSW, ISPAT etc were able to successfully implement them in their steel plants which helped them in reducing the inventory lead times and also improved the information flow. These technologies must be implemented in a large scale at a macro
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level so as to increase the growth of Indian steel industry. Creating the virtual information networks from end to end will not only save in terms of costs but also the time for order placing and procurement can be done. Lead times and delivery schedules can be improved much better than ever before. The advantage of a proper IT-based information system is that accurate information can be obtained at a much faster rate, reducing downtime and speeding up decision making process. Since, time is more than money; it would have direct impact on cost. The objective would be to implement IT in all operations and to integrate these with day-today decision-making process. IT applications will help in streamlining both process chain and supply chain and would thereby result in cost reduction and increase in productivity.

Proximity and access to raw materials. Infrastructure development requires the transport of raw materials for steel production for achieving the goal of 75 million ton of additional capacity by 2019-20 will require the movement of an additional 300 million ton of raw material

Freight movements are further delayed by onerous transport regulations, which include restrictions in the hours of the day that heavy vehicles can operate, interstate border crossing closures and lengthy trans- border crossing procedures, frequent tolls and inspections, and road closures at night due to the risk of attacks by insurgents or bandits.

The efficiency of Indian ports is affected by shallow draught, low productivity, high costs, long vessel 60 turnaround times, poor governance, and lengthy customs delays. Shipping costs are consequently high a shipment from India to the United States can cost 20 per cent more than from Thailand and 35 per cent more than from China

Unlike international ports like Singapore and Rotterdam, the shortage of storage space in the major ports in India had further compounded the problem of speedy evacuation of cargo from port premises.

Performance of logistics in Indian steel industry: Some of the key performance indicators of logistics in Indian steel industry are:

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Performance attribute Reliability

Factors

India

International standards 85% 97.5% 14 days Less than 3 hours 15 days

responsiveness

Flexibility

Forecast accuracy Delivery performance to customer request dates Order fulfillment lead times Response time to enquires Re-plan cycle times Inventory turns

50- 70% 40 65% 20 30 days 1day 1 month 1 3 months

Assets

3 5 times

7 times

From the above table it can be observed that the performance of India in terms of logistics is poor and has to improve drastically to be in the global competition. Though Indian companies are excelling in terms of production they are lagging far behind in terms of supply and distribution of the finished product which affects the industry considerably. Some of the other factors which influence the performance of logistics in steel industry are:

Out bound logistics costs: due to the problems with inefficient maintenance of cargo, the out bound costs of the logistics are increasing considerably. Out bound logistics costs includes costs of idle freight, detention, in plant logistics, transaction costs, handling and storage costs, lashing and bracing costs etc.

In plant logistics: In plant logistics includes the activities such as Real time location visibility levels, In plant wagon turn around, In plant truck turn around, Dispatch spread, Transit inventory, In plant route network, No of handlings etc. these are the activities
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which are to be carefully taken care and also the efficient operations of these activities will also reduce the costs considerably.

Selection of and planning for transport minimizes transportation costs in accordance with company documentation.

Planning for the availability of personnel and plant conforms to plant production schedule.

Scheduling of on-line product to customers enables the plant production schedule to be achieved. Load sequencing of on-line and ex-stock product enables the plant production schedule to be achieved

Destination sequencing prevents multiple handling of the product en route. Documentation enables transportation of product to required destinations.

Handling and transportation of steel and iron ore:

Increase there is an increase in use of multi modal transportation for the shipment of cargo. Since, steel and iron ore comes under the dry bulk cargo, handling and maintenance would be a challenge. Though containerization solved the problems of handling cargo to a greater extent, there must be focus on the improvement of handling capacities and dispatch of cargo. More than 98% of the steel and iron ore are exported and imported using the seaways. Also for the domestic shipments rail and road networks are the major means of transportation. Cargo handling at Ports: Global sea trade in iron ore is dominated by the countries such as Brazil, China, Australia etc. though India is also a key player in the global steel trade, huge competition in terms of sea trade is given by these countries. Major iron ore exporting countries: Country Exports of iron ore in the year 2007 (in MT)

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Brazil Australia India

269.40 266.80 90.70

Major iron ore importing countries: Country China Japan South Korea Germany Imports of iron ore in 2007 (in MT) 383.10 138.90 46.20 46.20

From the exports and imports of some of the top countries in the global steel trade, it can be observed that India is one of the largest exporters of iron ore in the world. Though India is in such a dominating position in the exports of iron ore and steel production in India, its share to GDP is comparatively low with less than 2%. China seems to be dominating the global steel industry with 47% of the iron ore imports and stood as world leader in the production of steel with 36% of the global production. China have very limited mineral resources compared to India, but its the market leader in the steel production. India, being one of the largest manufacturer of iron ore and major producer of steel
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has huge opportunities for increasing its exports and become a dominant player in global industry. Also the domestic consumption of steel for India is very little with per capita of only about 48 KG where as the per capita of steel consumption for other major countries is 340 KG in EU, 1200 KG in Singapore, 420 KG in north America, 635 KG in Taiwan etc. There are 12 Major Ports, 185 nos. of Minor and Intermediate Ports Cargo basket moving away from being bulk cargo Centric. Minor ports market share increased from 9.9% in 1997 to 28.8% in 2007. Major sea ports accounted for traffic of steel and iron ore cargo are JNPT, Mumbai, VPT, Visakhapatnam, ports of Chennai, Mangalore etc. In almost all the ports iron ore loading is a mixture of mechanical loading systems which consists of conveyors, stack reclaimers and ship loaders and manual loading process using shore cranes and ships gears and grabs. The existing mechanical loading systems are becoming old and obsolete and there is an immediate requirement for upgrading the infrastructure in the ports particularly with respect to loading and unloading of cargo. Also poor infrastructure at ports leads to high through put times, high turnaround times for ships, slower loading rates, delays due to break downs etc. This in turn results in higher incidents of demurrage costs and over all high costs for loading and unloading cargo. Rail connectivity: Rail networks are the most preferred means of transportation of steel and iron ore for domestic shipping. It is also the most commonly used mode of transportation. As per the statistics of 2007, iron ore is the second largest commodity moved by rail accounting for 16% of the total traffic, coal being the first with 43% of the share. About 116 MT of iron ore is moved out of ports using rail of which 38.84 MT were for exports. Iron is moved from mines to steel plants, sponge iron and pig iron plants. Keeping in view the significance of port connectivity for efficient evacuation of cargo from the ports and its impact on international trade, the Committee on Infrastructure recommended (2006) minimum double-line rail connectivity for major ports, which was to be achieved within the stipulated time frame of three years.

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JNPT, Kandla, Mumbai, and Paradip ports had double lines in parts of their rail networks whereas the ports at Chennai, Cochin, Goa, Haldia, Kolkata, Tuticorin and Visakhapatnam continued to have single-line connectivity, resulting in slower movement and inefficient cargo dispersal. Although NMDP envisaged taking up 16 railway schemes for laying of new lines, no specific scheme for conversion of single lines to double lines had been mooted. Despite the emphasis on exclusive freight corridors by the Government, passenger and freight systems shared the same railway networks outside the port areas. Rail networks at ports other than Mormugao were not connected to the hook points and the cargo had to be inter-carted74 to the sidings using dumpers, trucks and trailers. Such multiple handling of cargo could only add to increase in the handling time and the cost of handling. Port users at Chennai felt that the long distances between railway sidings and the berths needed to be addressed by laying railway tracks just along the berths which would result in quicker, easier and cheaper loading / unloading operations. The sidings at JNPT, Haldia, and New Mangalore could handle full rakes of 59 wagons, while only some sidings at Chennai (two sidings), Paradip (21 out of 41) and Visakhapatnam (eight out of 15) could handle full rakes. Out of 18 sidings at Mumbai, only two had the length to accommodate 40 wagons whereas the other sidings could accommodate 20 or less wagons. At other ports, the sidings could not accommodate even half rakes. At Mumbai, even the two sidings having capacity of 40 wagons each could not be optimally utilized as the low capacity locomotives used for hauling could not handle rakes having more than 20 wagons. Users at Kolkata port stated that full rakes could not be handled at the berths at Netaji Dock and Kidderpore Dock due to which longer time was required for handling the rakes, resulting in increased detention charges for wagons. International railway systems carry more than 100 wagons per rake with the Australian system carrying over 300 wagons per rake. Compared to this, a rake in India handles 58 BOX wagons as the length of the loops in the yards and stations in India is only 686 m, limiting the length of the trains. Even rakes of 58 wagons cannot be handled at sidings of some ports. The space envelope82 in India does not permit the movement of double stack container wagons. Since stations, platforms, roofs and bridges had been constructed according to the previously designed space envelopes, the envelopes of existing railway lines cannot be increased, thereby limiting the
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carrying capacity of the rakes. Load carrying capacity expressed as the ratio of a loaded wagon to an empty one ranges from 4-7 internationally as against 2.5 in India. NMDP envisaged undertaking 11 projects under Phase-I and three projects under Phase-II for improvement of port railways. The scheduled date of completion of the projects under Phase-I was March 2009, whereas the projects under Phase-II were to be completed by 2012. Some of the other challenges with rail connectivity are:

Iron ore miners are forced to move out by road due to the lack of proper rail connectivity Sharing of rail way lines for both passenger and goods is creating a problem resulting in priority of passengers and thereby delays and congestions of good traffic.

Low average speed of freight traffic leads to longer lead time and reduced through put. Lower haulage capacity leading to higher lead time. Frequent changes in freight charges. Freight charges for iron ore are being targeted for frequent hikes leading to increase in costs for rail than by road.

Roads connectivity: About 28 per cent of cargo dealt with by the major ports during 2007-08 was transported through roads. Except for Haldia, Mormugao, Paradip and Visakhapatnam where rail was the preferred mode for dispersal of cargo, the movement at other ports was by roads. most of the major ports except Princess Dock in Mumbai had two to three common entry and exit gates for movement of cargo. JNPT had only one access point to the port. In all the ports, the exit points opened to roads common to general traffic as well and there were no exclusive port roads except for short ones in Kandla and Visakhapatnam. This restricted the free and speedy movement of cargo from the port premises, which was further delayed due to restrictions imposed on cargo movement during working hours. At Chennai, the movement of cargo during the daytime was restricted due to the absence of exclusive approach roads. At Mormugao port, entry for heavy vehicles in the city was restricted during daytime. At Kolkata port, Customs clearances were given from 10 am to 4 pm whereas
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from 6 am to 6 pm, trucks were not allowed on the roads. The waiting period for trucks to enter the port was thus very long. Due to non-availability of data, the waiting time could not be measured in respect of Kolkata port but the feedback of users disclosed that it was more than a day. Thus the lack of exclusive approach roads as well as access restrictions on common roads resulted not only in delays in the movement of cargo but also led to congestion. Ports such as Haldia, Kandla, Mormugao and Visakhapatnam, were connected to one national highway whereas the other ports had connectivity with more than one highway. The National Maritime Development Programme envisaged 22 road connectivity projects under Phase-I and five projects under Phase-II. The projects under Phase-I were to be completed by March 2009 whereas the stipulated date of completion of the projects under Phase II was 2012. Some of the other challenges for road connectivity are:

Width of the highways is not sufficient for both passenger and goods to go comfortably. Maintenance of high ways is also poor. Much of the highway maintenance is underfunded.

Lack of organized fleet owners is resulting in reduced quality and professionalism. Improper road connectivity resulting in longer lead times Reliability and cargo integrity with other modes of transportation are becoming an issue

Iron ore transportation through inland water ways: The riverine system of Goa consisting of Zuari, Mondovi Rivers and Cumbarjua canal is the only water way used for iron ore transportation. Mormugao and Panjim ports in Goa state receive iron ore barges from mines and loading jetties on this riverine system. Almost all the iron ore of the Goan origin is transported to ships by barges. This quantity is approximately 33.5 MT in the year 2007. Non Goan iron ore is first transported to nearest rail head or by road to nearest jetty and then moved by barges to the two ports. Any movement of iron ore through water ways in the rest of the country is almost nonexistent. Since water ways is the cheapest and most

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reliable means for transportation of cargo, government has to take steps to improve the status of national water ways. Other than this only water way system existing in the country for transporting iron ore, many of the major companies uses coastal mode of transportation for iron ore shipments. Companies like ISPAT and ESSAR steel dont have captive mines and thus ships them through coastal shipping. But, the feasibility of coastal shipping is only limited to large sized mills with large requirement of iron ore. Pipeline transportation of iron ore: KIOCL and Hy-Grade pallets of ESSAR group is using pipeline mode of transportation. These pipe lines are privately owned and of captive use. This is the cheapest mode of transportation compared to all modes of transportation irrespective of size of mines and amount of cargo transported. But the small sized mines and dispersed steel mills are becoming barriers for use of this mode of transportation. However, movement of cargo to ports will be a feasible option. However, the only drawback of this pipeline is the requirements of huge initial investments. KIOCL in 1982 has constructed a 67 KM length of pipe line from Malleshwara (Kudremukh) to Panambur near Mangalore. Capacity of this pipe line is 7.5 MT. But, this pipe line is not operational since 2006. KIOCL has stopped using as mines in Kudremukh have been banned on mining due to environmental considerations. In early March 2006, Essar Steel commissioned the world's second longest iron ore slurry pipeline. The length of this pipe line is 267 KM long. The pipeline will connect Essar's iron ore beneficiation plant at Bailadila in Chhattisgarh to its pelletization plant at Visakhapatnam in Andhra Pradesh. The pipeline will traverse Chhattisgarh en route. The Bailadila pipeline, built by Essar Steel, is designed to carry 8 million TPA of slurry and is expected to reduce Essar Steel's transportation cost from Rs.550 per ton to about Rs.80 per ton. The pipeline will help the company save at least Rs.200 crore every year, with its capacity set to increase to 4.6 million tpa from the present 3 million tpa. The pipeline infrastructure includes two pumping stations and a valve choking station, apart from terminalling facilities at Visakhapatnam and Bailadila. The pumping operation from Bailadila to Visakhapatnam is monitored and controlled by a

26

computerized supervisory system. The slurry pumps were supplied by Geho, Netherlands and a consortium of JSC Stroytransgaz and Essar Constructions executed the project.

LIST OF PUBLIC SECTOR UNDERTAKINGS AND COMPANIES UNDER THE ADMINISTRATIVE CONTROL OF THE MINISTRY OF STEEL

SL. No.

Name of the company

Headquarters

Subsidiaries

1.

Steel Authority of India Ltd.

Ispat Bhawan, Lodi Road, New Delhi - 110003

Maharashtra Elektrosmelt Ltd., Chandamul Road, Chandrapur-442401 (Maharashtra)

2.

Rashtriya Ispat Nigam Ltd.

Administrative Building, Visakhapatnam - 530031 (Andhra Pradesh) Khanij Bhawan, 10-3 -311/A, Castle Hills, Masab Tank, Hyderabad-500028

3.

NMDC Ltd.

J&K Mineral Development Corporation Ltd. 33 B/ B IInd Extn

27

(Andhra Pradesh)

Gandhi Nagar, Jammu-180004 (J&K)

4.

Maganese Ore (India) Ltd.

MOIL Bhawan, 1-A, Katol Road, Nagpur440013 (Maharashtra) 225-C, Acharya Jagdish Chandra Bose Road, Kolkata-700020 (West Bengal) Ferro Scrap Nigam Ltd., FSNL Bhawan, Equipment Chowk, Central Avenue, Bhilai-490001 (Chhattisgarh)

5.

MSTC Ltd.

6.

Hindustan Steelworks Construction Ltd.

5/1, Commissariat Road, (Hastings), Kolkata 700022 (West Bengal) MECON Building, Ranchi-834002 (Jharkhand) Khanij Bhawan, 10-3311/A, Castle Hills, Masab Tank, Hyderabad-500028, (Andhra Pradesh) II Block, Koramangala Bengaluru-560034 (Karnataka) FD-350, Sector-III, Salt Lake City, Kolkata-700106 (West Bengal)

7.

MECON Ltd.

8.

Sponge Iron India Ltd.

9.

KIOCL Ltd.

10.

Govt. Managed Companies - Bird Group of Companies

PUBLIC SECTOR
The companies under the Ministry of Steel have performed well in the last five years. Profit After Tax (PAT) of the Companies was around Rs. 7,772 crore during the year 2009-10 (up to December 2009). The contribution to Central and State Government exchequer by way of excise duty, customs duty, dividend, corporate tax, sales tax, royalty etc. was around Rs. 11,298 crore during the year 2009-10 (upto December 2009).

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

28

The Steel Authority of India Limited (SAIL) is a company registered under the Indian Companies Act, 1956 and is an enterprise of the Government of India. It has five integrated steel plants at Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand), and Burnpur (West Bengal). SAIL has three special and alloy steels plants Alloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamil Nadu) and Visveswaraya Iron and Steel Plant at Bhadravati (Karnataka). In addition to these, a Ferro Alloy producing plant at Chandrapur is owned by Maharashtra Elektrosmelt Limited which is a subsidiary of SAIL. SAIL has seven central units viz. Research and Development Centre for Iron and Steel (RDCIS), Centre for Engineering and Technology (CET) and Management Training Institute (MTI), all located at Ranchi, Central Coal Supply Organisation (CCSO) located at Dhanbad, and Raw Materials Division (RMD) and Environment Management Division (EMD), located at Kolkata During the year, pursuant to the Order of amalgamation issued by the Ministry of Corporate Affairs under Section 396 of the Companies Act, 1956 on 28th July, 2009, the Bharat Refractories Limited (BRL) has been amalgamated with SAIL with effect from 1st April, 2007. The BRL has four plants in the states of Jharkhand and Chhatisgarh and is engaged in the business of manufacturing, trading and otherwise dealing in assorted types of refractories. Consequent to amalgamation, it has become a unit of SAIL and renamed as SAIL Refractory Unit (SRU). The Central Marketing Organisation (CMO), with its headquarters at Kolkata, coordinates the countrywide marketing and distribution network. The SAIL Consultancy Division (SAILCON) functions from New Delhi.

A panoramic view of the Blast Furnaces that form the skyline of SAILs Bhilai Steel Plant.

29

Capital structure The authorised capital of SAIL is Rs. 5000 crore. The paid-up capital of the company was Rs. 4130.40 crore as on 31st March, 2009, out of which 85.82% is held by the Government of India and the balance 14.18% by the financial institutions/GDR holders/banks/employees/individuals etc. Financial performance The company recorded turnover of Rs.48,681 crore in the financial year 2008-09. The post-tax net profit for the year was Rs. 6,175 crore. The company has paid dividend @ 26 % of paid up equity capital for the year 2008-09. The sales turnover and net profit after tax for nine months ended 31st December, 2009 were Rs. 30928.82 crore and Rs. 4669.47 crore respectively. Production performance The details of the actual production are given below:
000 tonne Items Hot Metal Crude Steel Saleable Steel 2008-2009 14442 13411 12494 2009-10 (upto December 2009) 10908 10175 9366

Raw materials During the year 2008-09, the total iron ore production from captive mines of the company was 24.43 million tonne as against 26.37 million tonne in the year 2007-08. The flux (limestone/dolomite) production of captive mines during the year was 2.4 million tonne in comparison to 2.6 million tonne in the year 2007-08. The production of iron ore and fluxes during the period April-December '09 was 17.3 million tonne and 1.5 million tonne respectively. Manpower The manpower strength of SAIL as on 31st March, 2009 was 121295. The reduction in manpower achieved during the year stood at 7,509. The manpower strength of SAIL as on 1.1.2010 was 119105 (including MEL and SRU), achieving reduction of 4499 manpower during the year 2009-10 (upto December, 2009). Honble Union Minister of Steel, Shri Virbhadra Singh, dedicating the 0.8 million tonne Slab Caster Complex in SMS-II at Bhilai Steel Plant (SAIL).

30

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 authorised and paid-up share capital of the company as on March 31, 2009 were Rs. 30 crore and Rs. 24 crore respectively. SAIL's holding is approximately 99.12% of the paid-up capital. Financial performance During the year 2008-09, the company recorded a turnover of Rs. 425.06 crore and made a net profit of Rs. 40.88 crore. The turnover and net profit after tax of the Company during April 2009 to December 2009 are Rs. 283.65 crore and Rs. 33.03 crore respectively. Production performance The production of all grades of ferro alloys during 2009-10 is as under: (tonne)
(tonne) Material High Carbon Ferro Manganese Silico Manganese Medium Carbon Ferro Manganese 2008-09 68789 35640 1763 2009-10 (upto December 2009) 45322 37982 899

RASHTRIYA ISPAT NIGAM LTD. (RINL)

31

A view of the Sinter Plant at Visakhapatnam Steel Plant (RINL). RINL is the first shore based integrated steel plant in the country located at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August 1992 with a capacity to produce 3 million tonne 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. RINL has an excellent layout capable of expanding upto 16 Mtpa. RINL 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 2010-11. 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, RINL established its presence both in the domestic and international markets with its superior quality of products. RINL has been awarded all the three international standards certificates, namely, ISO 9001:2000, ISO 14001:1996 and OHSAS 18001:1999. RINL is the first Indian steel plant to get the 'Capability Maturity Model Integrated (CMMI) - Level 3' certification issued by 'Software Engineering Institute (SEI) of Carnegie Mellon University', USA for implementation of IT systems in RINL. 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 2008-09 and 200910 (April-December 2009) is given below:

Item

2008-09

AprilDecember 2009

32

Production (in million tonne); Capacity utilisation (%) Hot Metal Liquid Steel Saleable Steel Financial and Marketing performance (Rs. in crore) Gross Turnover Profit After Tax Net worth

3.55 (104%) 3.15 (105%) 2.70 (102%)

2.9 (113%) 2.4 (108%) 2.3 (114%)

10411 1336 12420

7543 464 12884

Value Added steel production of 17.18 lakh tonne during Apr-Dec 09 was 8% more than the levels achieved in the corresponding period last year. Value Added steel production was 76% of the saleable steel produced.

NMDC LTD.
NMDC was incorporated on November 15, 1958, as a Government of India Enterprise. It is a Navratna Company engaged in the business of developing and exploiting mineral resources of the country (other than coal, oil, natural gas and atomic minerals). Presently its activities are concentrated on mining of iron ore and diamonds. NMDC operates the large mechanized iron ore mines in the Country at Bailadila (Chhattisgarh) and Donimalai (Karnataka). The Diamond Mine is situated at Panna (Madhya Pradesh). The mining activities at Diamond Mine, Panna were stopped w.e.f. 22.08.2005 due to environmental reasons. Subsequently several developments took place. Madhya Pradesh State Authorities issued formal orders on 19.06.2009 for restarting the mining activities. Production has resumed w.e.f 20.06.2009 after a gap of around 4 years. All the iron ore production units have been accredited with ISO 9001:2000 and ISO 14001:2004 certifications and also R&D Centre of NMDC was accredited with ISO 9001:2000 certification. Finance Capital Structure The Authorized share capital of the company is Rs. 400 crore. The paid up equity share capital is Rs. 396.47 crore.Outstanding loans from Government of India are Nil. Financial Performance The financial performance of the company for the year 2009-10 as against previous year 2008-09 is as below:

Financial Performance

33

The financial performance of the company for the year 2009-10 as against previous year 2008-09 is as below: (Rs. in crore) Item Sales/Turnover Gross Margin Profit before tax 2009-10 (upto December) 4255.76 3693.90 3642.64 2008-09 7564.03 6725.25 6648.23

MANGANESE ORE (INDIA) LTD. (MOIL)

Manganese Ore (India) Limited (MOIL) was established in 1962. It is the largest producer of Manganese ore in India. At the time of inception, the Central Province Manganese Ore Co. Ltd. (CPMO) held 49% of shares and the remaining 51% were held in equal proportion by Government of India and the State Government of Madhya Pradesh and Maharashtra. Subsequently, in 1977, Government of India acquired the shares held by CPMO in MOIL and it became a wholly owned Govt. Company with effect from October, 1977. As on 31st March, 2009, the paid up capital of the Company was Rs. 28 crore, which has been increased to Rs. 168 crore as on 31.12.2009. Government of India hold 81.57% shares in MOIL while the State Governments of Maharashtra and Madhya Pradesh are holding 9.62% and 8.81% shares respectively. MOIL produces and sells different grades of Manganese ore as below: High grade ores for production of Ferro manganese Medium grade ore for production of Silico manganese Blast furnace grade ore required for production of hot metal and Dioxide for dry battery cells and chemical industries.

MOIL has set up a plant based on indigenous technology to manufacture Electrolytic Manganese Dioxide (EMD). This product is used for the manufacture of dry battery cells. EMD produced by the Company is of good quality and well accepted by the market. A Ferro manganese plant having a capacity of 10,000 Tonne per annum was also set up in 1998 by MOIL for value addition. Finance Authorised Capital of the Company was Rs. 100 crore and paid-up Capital was Rs. 28 crore as on 31st March, 2009. Subsequently, the Authorised Capital of MOIL has been increased to Rs. 250 crore and paid up capital to Rs. 168 crore as on 31.12.2009. Operational and Financial Results
34

The physical and financial performance of the Company for the last 3 year i.e. 2006-07, 2007-08 and 2008-09 and for 2009-10 (upto December, 2009) are given below: (Rs. in crore) 2009-10 (up to December 2009)

S. No. Item Production a) Manganese Ore ('000 tonne) b) Electrolytic Manganese Dioxide (tonne) c) Ferro Manganese (Tonne) Total Income (Rs. in crore) Profit before tax (Rs. in crore) Profit After tax (Rs. in crore) Reserves (Rs. in crore) Net Worth* (Rs. in crore) Book value per share (Rs.) Earning per share (Rs.) Total Income (Rs. in crore) Profit before tax (Rs. in crore) Profit After tax (Rs. in crore) Reserves (Rs. in crore) Net Worth* (Rs. in crore) Book value per share (Rs.) Earning per share (Rs.)

200607

200708

2008-09

1047 1312 10200 451.82 210.21 134.20 433.49 455.81 1604.46 479.31 451.82 210.21 134.20 433.49 455.81 1604.46 479.31

1365 1122 11130 1030.04 734.91 479.82 784.68 812.68 2902.16 1713.63 1030.04 734.91 479.82 784.68 812.68 2902.16 1713.63

1175 1240 10120 1407.99 1006.76 663.79 1292.87 1320.87 4717.40 2370.69 1407.99 1006.76 663.79 1292.87 1320.87 4717.40 2370.69

794 807 6895 746.08 424.09 279.94 1323.37 1491.37 88.77** 16.66** 746.08 424.09 279.94 1323.37 1491.37 88.77** 16.66**

2. 3. 4. 5. 6. 7. 8. 2. 3. 4. 5. 6. 7. 8.

(*) As on 31st March of the year. (**) MOIL has issued bonus shares in the ratio of 1:5 and also the face value of the shares has been changed from Rs. 100/- to Rs. 10/- each. Consequent upon this, the number of shares has increased from 28 lakh to 16.80 crore and paid up share capital has increased from Rs. 28 crore to Rs. 168 crore. Accordingly, the book value of shares and Earning per shares have also change.

35

Marketing About 95% of manganese ore is used in steel industries. The year 2008-09 has been a roller-coaster ride for most of the industries all over the world and same was continuing especially in first half of the year 2009. During the first half of the current year 2009-10, the demand and prices of manganese ore, Ferro manganese and Silico manganese were very sluggish, however, since second half of the year, the economy is improving slowly. The prices and demand of steel as well as manganese ore are improving and it is expected that the same will continue in coming times. The total income and profit after tax of the Company during the year 2008-09 were Rs. 1407.99 crore and Rs. 663.79 crore respectively. The sales performance achieved during 2008-09 and 2009-10, is as under: Sl. No. Details Sales 1 Manganese Ore Domestic Export Total 2 Electrolite Manganese Dioxide Ferro Manganese Other income* Grand Total 2008-09 Quantity (tonne) 1023486 1023486 1419 Value (Rs. in crore) 1187.28 1187.28 9.28 2009-10 (upto December 2009) (Provisional) Quantity Value (Rs. (tonne) in crore) 867139 867139 625 609.49 609.49 4.24

3 4 5

9425 -

80.03 131.40 1407.99

6388 -

33.42 106.75 753.90

* including sale of eletricity Cost Reduction Plans The Company has introduced following cost reduction measures: Proper manpower planning and introduction of Voluntary Retirement Scheme to reduce surplus manpower. Judicious machanization of various mining operation to improve the overall production and productivity thereby reducing cost per ton ultimately. implementation of benchmarks so fixed for consumption of major consumables such as Steel, Cement, Explosives, Spares, POL etc.

36

MSTC LTD.
MSTC Ltd. (formerly Metal Scrap Trade Corporation Ltd,) a Government of India enterprise, under Ministry of Steel was set up on 9th September 1964 as a canalising agency for export of scrap from the country. With the passage of time, the company emerged as the canalising agency for the import of scrap into the country. Import of scrap was decanalised by the government in 1991-92. Presently, the company undertakes trading activities, ecommerce, disposal of ferrous and non-ferrous scrap, surplus stores and other secondary arising generated mostly from Public Sector Undertakings and Govt. Departments, including Ministry of Defence. The Company also undertakes import of raw materials in bulk required by large industrial houses on back-to-back basis. The items of import include petroleum products, LAM Coke, Coking Coal, DR Pellets, HR Coils and Melting Scrap etc. It also undertakes trading in items within the country in competition with any other private trader. Financial Performance The financial performance of the company for the last three years is given below: (Rs. in crore) 2007-08 2008-09 2009-10 (Provisional) A.Physical (i) Agency (including eprocurement) (ii) Marketing (iii) Total Volume of Business B. Financial (i) Income (ii) Operating Profit (iii) Interest, Depreciation and Provision (iv) Profit before Tax (v) Profit after Tax * Provisional

5,579 6,345 11,924 5,197 138.33 3.863 134.47 92.20

11,121 8,881 20,002 7,082 132.09 2.56 129.53 85.05

3,901 3,382 7,283 2,209 72.06 1.64 70.42 43.48

37

FERRO SCRAP NIGAM LTD. (FSNL)

FSNL is a wholly owned subsidiary of MSTC Ltd. with a paid up capital of Rs. 200 lakh. The Company undertakes the recovery and processing of scrap from slag and refuse dumps in the nine steel plants at Rourkela, Burnpur, Bhilai, Bokaro, Durgapur, Visakhapatnam, Dolvi, Duburi and Raigarh. The scrap recovered is returned to the steel plants for Processing of Mill rejects through gas cutting operations by FSNL, at Bhilai Steel Plant. recycling/disposal and the Company is paid processing charges on the quantity recovered at varying rates depending on the category of scrap. Scrap is generated during iron and steel making and also in the Rolling Mills. In addition, the Company is also providing steel mill services such as scarfing of slabs, handling of BOF slag, etc. Physical performance The production performance of FSNL for the last two years and for the year 2009-10 (upto December 2009) is given below: Item 2007-08 2008-09 2009-10* (upto 31.12.2009) 17.39 765.05

Recovery of scrap (lakh metric tonne) Market Value of Production (Rs. in crore) * Provisional Financial performance (Rs. in lakhs) Item Total Turnover i.e, Service charge realised including misc. Income,etc. Gross Margin Before Interest & Depeciation Interest & Depeciation Profit Before Tax

23.77 1045.88

22.63 995.82

2007-08

2008-09

2009-10* (upto 31.12.2009) 100.93 1576.30 1181.25 395.05

12822.32 1586.00 1385.11 200.89

13730.33 1683.17 1251.96 431.21

38

HINDUSTAN STEELWORKS CONSTRUCTION LIMITED (HSCL)

Hindustan Steelworks Construction Limited (HSCL) was established in 1964, as a construction agency of the Government of India under the Ministry of Steel, to mobilise indigenous capability for putting up integrated steel plants in the country. The young organisation rose to the occasion and successfully met the challenge by bringing together competent human resources and mobilising a fleet of updated construction equipment. Since then, there has been no looking back. In the years that followed, almost every major steel plant in India was constructed by HSCL. As the company grew in resources and expertise, it diversified in other areas like power plants, mining projects, irrigation projects including dams and barrages, oil refineries, railways, airports, buildings and commercial complexes, rural roads, highways, flyovers, minor and major bridges for railways and road traffic, infrastructure for educational institutions, health centres and hospitals etc. The company undertook and successfully completed a number of turnkey projects also for various clients. Today, HSCL is an ISO 9001-2000 company and its capabilities cover almost every field of construction activities. Starting with a modest Rs. 5 crore in 1965-66, the company achieved a turnover of Rs. 538.48 crore (upto December 2009). The order book also is swelling every year. The order book stood at a healthy Rs. 691 crore at the end of 2009. Turnover and order booking registered CAGR of 25% and 26% respectively during the last four years; much more than the envisaged industry growth of 2.4% during 2008-09. The company has so far executed orders worth more than Rs. 9335 crore till December 2009 since inception. The financial results also are improving with the company earning an operating profit of Rs. 31.84 crore during 2009-10 (upto December 2009). Being in the public sector, HSCL pledges to comply with the framework of transparent corporate governance and considers it a primary responsibility to participate in the development of remote rural areas of the country under the government's Bharat Nirman Programme. Capital structure The authorised and paid-up share capital are Rs. 150 crore and Rs. 117.10 crore respectively.

39

Financial performance Year

2008-09

2009-10# (April-December)

Turnover Operational Profit (PBIDT) Net Loss

721.26 64.63 6.88*

538.48 31.84 42.48**

*The net loss includes Rs. 2.96 crore, towards voluntary retirement expenditure charged during theyear, and Rs. 63.54 crore towards interest on Government of India (GOI) loan. **The net loss includes Rs. 72.43 crore towards interest on GOI loan. Order booking The order booking position during 2009-10 (upto December 2009) is as below: Rs. 217 crore Steel Units = (25%) Rs. 654 crore Infrastructure Units = (75%) Total = Rs. 871 crore HSCL has secured orders of Rs. 691 crore till 31st December 2009. The break up is as below: Rs. 76 crore Steel Units = (11%) Rs. 615 crore Infrastructure Units = (89%) Total = Rs. 691 crore Manpower position The manpower position as on April 1, 2009 = 1248 The manpower position as on January 1, 2010 = 1089 Separation on Voluntary Retirement Scheme (VRS) Employees separated on VRS during 2009-10 = Employees separated on VRS after restructuring in = 11,485 1999

40

MECON LTD.
Projects Completed Development of continuous NOx monitoring system, funded by Steel Development Fund (SDF), Ministry of Steel. development and implementation of slag detection system for converter and caster, funded by SDF, Ministry of Steel. Supply Successfully completed and received money for the supply of two nos. of "Solid State Microclimate Conditioning Unit [SSMCU]" for MBT Arjun and other armoured vehicles against the order from Defence Institute of Physiology and Allied Sciences (DIPAS), Unit of Defence Research & Development Organisation (DRDO). On-going Projects The project on "Development of thermoelectrically cooled / heated helmet for industrial applications" is sanctioned by Ministry of Steel and fund is yet to be received. Project will start after receiving the 1st installment from SDF, MoS. New R & D Proposal under consideration Submitted new R&D project on "Portable Microclimate Thermoelectric Cooling System for Flight Suit" to Vikram Sarabhai Space Centre, Trivandrum (Department of Space) in September, 2009. Submitted new R&D project on Development of continuous multi-gas monitor to SDF, Ministry of Steel on September 2009. New R&D project on "Infrared Camera based ladle condition monitoring system" will be submitted shortly to funding authority. Other R & D Efforts International Recognition MECON received the certificate of technical excellence for technical presentation on "BOF Slag detection using a long wave Infrared Camera" in INFRAMATION 2009, Las Vagas, Nevada, USA. Patent under process: Patent entitled "Infrared imagery based slag detection system for Basic Oxygen Furnace (BOF) Converter" has been filed on October 13, 2009. Patent entitled "Continuous NOx Monitoring System" has been filed on October 13, 2009. Publication International Journal : One nternational Conference : One Training Two R & D engineers were trained on Autocad. Four R & D engineers were trained on Lab View.
41

 One R & D engineer was trained on Skill Improvement. Seven full time scientists/technologists are engaged in R & D.

SPONGE IRON INDIA LTD. (SIIL)

Sponge Iron Plant of the company was initially established as a demonstration unit with a capacity of 30,000 tonne per annum (tpa) with UNDP/UNIDO assistance to establish the techno-economic feasibility of producing sponge iron (a part substitute for ferrous scrap used by Induction and Electric Arc Furnaces) from lump iron ore and 100% noncoking coal. The unit, based on non-coking coal from Singareni Collieries Company Ltd. (SCCL) and iron ores available at various regions in Andhra Pradesh and neighbouring states, went into regular operations in November 1980. Several improvements and modifications were effected to the Sponge Iron Plant based on Rotary Kiln Process to suit the local raw materials and operating conditions. As a result, it has not only helped developing SIIL technology but also paved way for the development of Sponge Iron Industry in the Country. The Company doubled its capacity from 30,000 tonne per annum to 60,000 tonne per annum in October 1985.

Capital structure The authorised share capital of the Company stood at Rs. 66 crore on 31.12.2009; paid up capital was Rs. 65.10 crore. (Rs.64.27 crore held by Government of India and the balance Rs. 0.83 crore by the Government of Andhra Pradesh) Performance The Production and Financial Performance of the Company during the last two years, together with provisional figures for 2009-10 upto 31.12.2009 is furnished in the table below: 2007-08 Production -Sponge Iron (tonne) -Power Generation (lakh Kwh) -Capacity Utilisation (%) Sales -Sponge Iron (tonne) -Sales Turnover (Net) (Rs. in lakh) -Generation of Internal Resources 2008-09 2009-10 (upto December 09) (Provisional) 24,076 32 40 28,671 3,192

43,331 34 72 44,447 5,573

30,489 34 72 25,203 4,080

42

(Rs. in lakh) -Net Profit (Rs. in lakh) (PBT)

495 647

6 -129

(-) 927 (-) 1,035

KIOCL LTD.
KIOCL Limited (formerly Kudremukh Iron Ore Company Limited), an 100% EOU, ISO 9001-2008, ISO 14001-2004 and ISI 18001-2002 Company was established in April, 1976 to meet the long term requirements of Iran. An Iron Ore Concentrate Plant of 7.5 million tonne capacity was set up at Kudremukh. This project was to be financed in full by Iran. However, as Iran stopped further loan disbursements after paying US $ 255 million, the project was completed as per schedule with the funds provided by Government of India. While the project was commissioned on schedule, consequent upon the political developments in Iran, they did not lift any quantity of Concentrate. As a diversification measure, the Government approved the construction of a 3 million tonne per year capacity Pellet Plant in Mangalore in May, 1981. The capacity of the Pellet Plant was increased to 3.5 million tonne with additions/modifications. The plant went into commercial production in 1987 and is now exporting Iron Ore Pellets to China and also to domestic units such as Ispat Industries Limited and SAL Steel Limited. Consequent upon the Honble Supreme Court's verdict, Mining was stopped at Kudremukh with effect from 31.12.2005 and Pellet Plant is operated with Hematite Iron Ore purchased from NMDC. Production The target set for production during the year 2009-10 is 2.65 million tonne of Pellets. Target set for production upto December 2009 was 1.910 million tonne. Actual production upto December 2009 was 0.573 million tonne which represents 30% target fulfilment. There was shortfall in production of Pellets upto December 2009. The shortfall is due to close down of Pellet plant during first quarter of 2009-10 and upto 17.07.2009, from 19.08.2009 to 19.10.2009 and from 02.12.2009 onwards. The demand for Pellets is less and the prices are picking up from December 2009 onwards. The target set for production of Pig Iron including Auxiliary during 2009-10 is 1,70,000 tonne. Target set for production upto December 2009 was 1,26,000 tonne. Actual production upto December 2009 was 62,041 tonne which represents 49% of the target. There was shortfall in production of Pig Iron upto December 2009. The shortfall was on account of shut down of plant from 05.08.2009 due to depressed market condition. Despatches Budgeted sales for the year 2009-10 is Rs. 1948.10 crore. Targeted sales upto December 2009 was Rs. 1412.25 crore.

43

Actual sales upto December 2009 was Rs. 502.61 crore representing 36% of the target. Shortfall in financial performance upto December 2009 was due to lower despatch of Pellets and Pig Iron and lower price realisation. The Sales revenue during the last five years and upto December 2009 during 2009-10 is as under: (Rs. in lakh) Year 2009-10 (upto December 2009) 2008-09 2007-08 2006-07 2005-06 2004-05 Concentrate Pellets 37681 12091 16050 99410 117385 26744 111137 169327 * Blast Furnace Unit 12581 23488 35626 Total 50261 122898 153011 26744 123228 185377

* The erstwhile Kudremukh Iron and Steel Company Limited merged with the Company with effect from 1st April, 2007, hence information furnished from the year 2007-08 onwards. Financial performance An overview of the performance of KIOCL during the year 2009-10 upto December, 2009 together with actuals for the previous three years, is indicated below: 2009-10 (upto December 2009) (Rs. in lakh) 2006-07

Particulars

2008-09

2007-08

Total value of 50261 122898 153011 26744 Sales Gross Margin (12857) 6767 21174 5181 Profit after Tax (18487) 2201 10816 1377 The erstwhile Kudremukh Iron and Steel Company Limited merged with the Company with effect from 1st April, 2007, hence financial information furnished above includes financial performance of Blast Furnace unit for the year 2007-08 onwards.

BIRD GROUP OF COMPANIES (BGC)

Consequent upon nationalization of the Undertaking of Bird & Company in 1980, the following seven companies came under the administrative control of the Ministry of Steel ,Government of India.
44

The Orissa Minerals Development Company Ltd. (OMDC) The Bisra Stone Lime Company Ltd. (BSLC) The Karanpura Development Company Ltd. (KDCL) Scott & Saxby Ltd. (SSL) Eastern Investment Ltd. (EIL) Burrakar Coal Company Ltd. (Burrakar) Borrea Coal Company Ltd. (Borrea)

At the time when the Bird Group of Companies came under the administrative control of the Ministry of Steel, Government of India, all of them were financially sick and burdened with various problems. With the financial support from the Government of India, outstanding liabilities could be settled to a considerable extent. The status of the companies are as under: Burrakar and Borrea Coal companies become non-operational after nationalization of coal mines. The two companies are under liquidation and the official liquidator has taken over the assets and liabilities of these two companies. The cabinet in its meeting held on 10.09.2009, has approved the Restructuring proposal of Bird Group of Companies (BGC). The proposal envisages converting companies viz. EIL, OMDC and BSLC under BGC, into Government companies/Public Sector Undertakings and vesting their management control to Rashtriya Ispat Nigam Limited (RINL), in a subsidiary cum holding structure in order to make these companies economically viable and sustainable. The commercially unviable companies viz KDCL and SSL are proposed to be wound up and their employees to be adjusted in other sister companies under the Group or would be offered Voluntary Retirement Scheme (VRS). PERFORMANCE OF THE INDIVIDUAL OPERATING COMPANIES. THE ORISSA MINERALS DEVELOPMENT COMPANY LTD. (OMDC) Location of Mines, Activities and Capital Structure The mines of the company are located around Barbil, Keonjhar district, Orissa. The activities relate to mining and marketing of iron ore and manganese ore. The authorized as well as paid up capital of the Company is Rs. 60 lakh. Performance The performance of the company is given below: 2007-08 Production (000 Metric tonne) Sales (Rs. in crore) 1821 246.31 2008-09 1695 271.81 2009-10* (AprilDecember 2009) 575 64.29

45

Gross Margin before Interest on government Loans & Depreciation (Rs. in crore) Net Profit/Loss (Rs. in crore) * Provisional

227.87

289.29

91.83

148.83

181.81

59.22

THE BISRA STONE LIME COMPANY LTD. (BSLC)

The mines of the Company are located around Birmitrapur in the district of Sundargarh, Orissa. The main activities ofthe company are mining and marketing of Limestone and dolomite. The authorized as well as paid up capital of the Company is Rs. 50 lakh. Performance The performance of the company is given below: 2007-08 Production (000 Metric tonne) Sales (Rs. in crore) Gross Margin before Interest on Government Loans & Depreciation (Rs. in crore) Net Profit/Loss (Rs. in crore) * Provisional 1,113 46.31 1.19 2008-09 1,070 48.94 5.43 2009-10* (AprilDec, 2009) 873 40.83 3.04

-81.61

-91.38

2.41

THE KARANPURA DEVELOPMENT COMPANY LTD. (KDCL)

The mines of the Company are located around Sirka, Jharkhand and Bihar. The company produces limestone suitable for cement manufacture. The authorized and paid up capital of the Company is Rs. 40 lakh and Rs. 20 lakh respectively. Performance The performance of the company is given below: 2007-08 Production (000 Metric tonne) 51 2008-09 36 2009-10* (AprilDecember 2009) 29

46

Sales (Rs. in crore) Gross Margin before Interest on Government Loans & Depreciation (Rs. in crore) Net Profit/Loss (Rs. in crore)

1.52 -0.13

1.01 0.38

0.84 -0.22

-2.21

-2.56

-0.22

PRIVATE SECTOR
The private sector of the Steel Industry is currently playing an important role in production and growth of steel industry in the country. The private sector units consist of both major steel producers on one hand and relatively smaller and medium scale units such as Sponge iron plants, Mini Blast Furnace units, Electric Arc Furnaces, Induction Furnaces, Re-rolling Mills, Cold-rolling Mills and Coating units on the other. They not only play an important role in production of primary and secondary steel, but also contribute substantial value addition in terms of quality, innovation and cost effectiveness. A brief report on activities of some of the major steel companies is furnished below, based on the input furnished by the respective companies.

TATA STEEL LTD.

TATA Steel has an integrated steel plant, with an annual crude steel making capacity of 6.8 million tonne, located at Jamshedpur, Jharkhand.The crude steel production of TATA Steel during the period April-December 2009-10 is 4.86 million tonne which is higher by 18.6% over the production of 4.105 million tonne last year. The saleable steel production was at a higher level during the period April-December 2009-10 (3.717 million tonne) compared to the corresponding period last year (3.310 million tonne). As part of the Brownfield expansion project, TATA Steel has commissioned H Blast Furnace in May 2008, Caster #3 in October 2008 at the steel melting shop #1 and upgradation of Hot Strip Mill roughing mill as part of 1.8 million tonne growth plan to reach capacity of 6.8 million tonne. TATA Steel is continuing with its programme of expansion of hot metal and steel making capacity by 3 million tonne to reach 10 million tonne. Crude steel capacity as on March 31, 2009: 6.8 million tonne (Jamshedpur works) Tata Steel has also envisaged massive expansion of its capacities through various greenfield projects at Sarai Kala (Jharkhand), Kalinganagar (Orissa) and Bastar (Chhattisgarh).

JSW STEEL LTD.

JSW Steel, Vijayanagar Works JSW Steel is a 6.9 Million Tonne Per Annum (MTPA) integrated steel plant, having a process route consisting broadly of iron ore beneficiation - pelletisation - sintering - coke making - iron making through blast furnace, as well as Corex process which entails
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steel making through the following process route: BOF-continuous casting of slabs - hot strip rolling - cold rolling mills. JSW Steel has the distinction of being certified ISO-9001:2000 Quality Management System, ISO-14001:2004 Environment Management System and OHSAS 18001:1999 Occupational Health and Safety Management System. The Brownfield expansion plan of the Vijayanagar plant is in progress and is likely to be completed by 2010, with a total installed capacity of 9.6 MTPA. JSW Steel, Tarapur and Vasind Works JSW Steel Tarapur and Vasind Works specialise in down-streaming facilities which include: 1.0 MTPA cold rolling, 0.9 MTPA Hot Dip Galvanising (HDG), 0.1 MTPA colour coating, 0.1 MTPA CRCA products and 0.3 MTPA hot rolled plates capacity. JSW Steel has a distinction of being certified to ISO-9001:2000 Quality Management System.

JINDAL STEEL & POWER LTD.

Jindal Steel & Power Limited is one of the fast growing major steel units in the country. Raigarh plant of JSPL has a present capacity of 1.37 MTPA sponge iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA Plant Mill, 2.30 sinter plant, 0.8 MTPA coke oven and a 330 mega watt captive power plant. Capacity addition plan at Raigarh Enhancement of the present steel capacity from 2.4 million tonne to 6.0 MT in a phased manner by 2011 will incorporate: 2.0 MT gas based Direct Reduced Iron (DRI) producing gas by coal gasification 4000 cubic metre blast furnace n 3 MT steel melting shop with electric arc furnace route and thin slab caster. Hot strip mill (compact strip product technology) Cement plant to consume the blast furnace slag. 4X135 MW power plant increasing the capacity to 840 Mega Watt (MW).
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Jindal Steel and Power Ltd. has plans for expansion of its Raigarh plant to a capacity of 6.0 MTPA. It also has plans for two Greenfield projects in Orissa and Jharkhand with proposed capacity of 6.0 MTPA each, in the first phase. JSPL expanding horizons Jindal Steel & Power Limited is setting up a 10 MTPA Pellet Plant at Barbil, Orissa based on huge stocks of iron ore fines lying with various Iron Ore Mines in Orissa. The first module of 5 MTPA is undergoing trial runs since January, 2010. This project aims to conserve precious iron ore reserves of the country by converting unused fines into pellets for usage in DRI production. The Pellet Plant would be using producer gas derived from coal for its energy requirement to keep its production cost contained and free from fluctuations of petroleum based fuels. The Company has also commenced hot trials of its 0.6 MTPA Wire Rod Mill at Patratu, Jharkhand where work on 1.0 MTPA Bar Mill is progressing fast so as to commission this plant by October, 2010. Also the Company is setting up a 6 MTPA Steel Plant at Patratu.

ESSAR STEEL LTD. (ESL)

Essar Steel Ltd., the Indian company of Essar Steel Holdings Limited, is the largest steel producer in Western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadila, Chattisgarh, which has the world's largest slurry pipeline of 267 km to transport beneficiated iron slurry to the pellet plant, and an 8 MTPA pellet complex at Visakhapatnam. The Essar Steel complex at Hazira in Gujarat houses the world's largest gas-based single location sponge iron plant, with a capacity of 4.6 MTPA. The complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel complex has a complete infrastructure setup, including a captive port, lime plant and oxygen plant. Essar Steel utilises Hot Briquetted Iron-Direct Reduced Iron (HBI-DRI) technology supplied by Midrex Technology, USA along with four 150 tonne DC electric arc furnaces imported from Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5 million tonne per annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric arc furnace, 4.6 MTPA continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA cold rolling mill. During the year 2007-08, Essar was awarded costs ISO/TS 16949 and OHSAS 18000 certification. The brownfield expansion project of Essar Steel, at its Hazira complex is currently at an advanced stage and the first phase (1.6 MTPA) is scheduled to be commissioned in October 2010.

49

ISPAT INDUSTRIES LTD.

Ispat Industries Ltd. (IIL) has set up one of the largest integrated steel plants in the private sector in India at Dolvi in Raigad district, Maharashtra, with a capacity to manufacture 3 million tones per annum of Hot Rolled Steel Coils (HRC). The Dolvi complex also boasts of an ultra modern blast furnace (set up by a group company Ispat Metallics India Limited) capable of producing 2 million tones per annum of hot metal/pig iron, 2 million tonne capacity sinter plant (newly commissioned) and a DRI plant with a capacity of 1.6 MTPA. The integrated steel plant uses the Converter cum Electric Arc Furnace Route (CONARC process) for producing steel. In this project, IIL have uniquely combined the usage of hot metal and DRI (sponge iron) in the electric arc furnace for production of liquid steel for the first time in India. For casting and rolling of liquid steel, IIL has the state-of-the art technology called compact strip production (CSP) process, which has been installed for the first time in India and produces high quality and specifically very thin gauges of Hot Rolled Coil.

MONNET ISPAT & ENERGY LTD. (MIEL)

Monnet Ispat & Energy Limited (MIEL) is Indias second largest sponge iron manufacturing company with an annual production of 1 million tonne per annum.Monnet manafactures and markets 1.6 million tonne per annum of sponge iron, ferro alloys, mild steel billets and rolled products from its integrated plants at Raipur and Raigarh, with dedicated customers and distribution network throughout India. MIEL has plan to integrate the operation and expanding its steel capacities by taking up value-added segments like plates, Thermo Mechanically Treated (TMT) bars, wire rods and forging quality special steel etc.The company is presently operating ISO 9001-2000 certified plants at Raipur and Raigarh in Chattisgarh with production of finished steel and sponge iron.The company is in the advanced stage of capacity of expansion at Raigarh , with blast furnace, EAF, TMT/rebar mill and plate mill under installation along with sintering, palletization plant. The steel making capacity of the group will increase to
50

3 MTPA in 2010- 11. Greenfields units are coming up at Angul, orissa and Bokaro, Jharkhand, that will ramp up the steel making capacity to 5MTPA by 2012.

BHUSHAN POWER & STEEL LTD.

Bhushan Power & Steel Limited (BPSL), formerly Bhushan Limited (BL), is a closely held 36-year-old steel manufacturing and processing company. Presently, the company has five plants in Chandigarh and Derabassi, one plant in Kolkata and is now implementing an integrated steel plant at Sambalpur in Orissa in phases with an ultimate capacity of 2.8 MTPA. The current configuration of the company at its Orissa plant is 1.0 MTPA sinter plant, 0.7 MTPA pig iron, 0.68 MTPA sponge iron, 0.45 MTPA coke oven and billet caster plant of 0.03 MTPA. The company is adding 4 more kilns of 500 tonne per day each and enhancing the production of H.R. Coil. Further capacities for steel making are also being increased up to 2.8 million tonne for which the work is going on.

51

BHUSHAN STEEL LTD.

Bhushan Steel Limited (earlier known as Bhushan Steel and Strips Limited) - "Bhushan Steel" or "BSL", was established in 1989, and is engaged in the business of steel manufacturing, steel processing and allied activities. It is the market leader in the secondary steel sector for cold rolled (CR) products and the third largest player in the CR segment in India. Currently, the company is implementing the integrated steel plant with a capacity of 3 MTPA, of which production of 1.90 MTPA of Hot Rolled (HR) coils shall commence from the September 2009 quarter. The company is enhancing the capacity of the Orissa project from 1.90 MTPA of HR coils to 3.60 MTPA and total steel making from 3.0 MTPA to 6.0 MTPA. The project has been undertaken to ensure optimum utilisation of infrastructure and resources at the existing plant and utilise the full capacity of existing HR mill which has the inherent capacity to produce HR coils up to 3.60 MTPA. Electric Arc Furnace industry Presently, there are 39 Electric Arc Furnace (EAF) based steel plants working in the country with an aggregate capacity of 17.99 million tonne per annum. Apart from the working units there is 1 unit, which is closed. Production of Ingots/Concast Billets by EAF units, which have been reporting their production to Joint Plant Committee, during 2008-09 was 14.15 million tonne as compared to 10.80 million tonne during 2007-08 registering a growth of 31%. This sector continued to be under constraint of rising cost of inputs, increasing power tariffs, shortage of power and resource crunch.

CSP (HR Coil) Mill Stand of Bhushan Steel Limited.

52

INDUCTION FURNACE INDUSTRY (Source: JPC) During 2008-09, it is estimated that 1074 units with a capacity of 22.18 million tonne were in operation. The total production of induction furnace units registered a growth of 6.62% during 2008-09, producing 18.05 million tone against a production of 16.93 million tonne in 2007-08, as reported to the Joint Plant Committee (JPC).

Performance of EAF-based steel plants

Status
(in million tonne) Number Commissioned units Closed units Working units 39 1 38 Capacity 18.041 0.05 17.991

Production
(in million tonne)

The production of electric arc furnace units as reported to the Joint Plant Committee is as under:

Category

2004-05

2005-06

2006-07

200708

200809

2009-10* (AprilDecember 2009)

Mild steel Medium/hig h carbon steel

4.37 1.35

4.31 1.50

5.06 1.76

6.13 2.76

9.03 2.68

7.41 2.2

53

Alloy steel Stainless steel Others Total reported Total estimated Grand total

0.95 0.84 0.05 7.56 0.28 7.84

1.53 0.92 0.04 8.30 0.13 8.43

1.80 1.08 0.05 9.75 0.13 9.88

1.02 0.83 0.06 10.67 0.13 10.80

1.05 0.75 0.64 14.15 14.15

0.86 0.62 0.53 11.62 11.62

*Provisional

Hot rolled long products unit (2008-09)

Status
Number Commissioned units Closed units Working units 2288 568 1720

(in million tonne) Capacity 35.19 4.21 30.98

Production of hot rolled long product manufacturing units as reported to the Joint Plant Committee is as under: (in million tone)
Category 2004-05 2005-06 2006-07 2007-08 200809 2009-10* (April-

Production

54

Bars/rods (incl. squares) Wire rods Structural Hoops Special section Patra/others Total reported Total estimated Grand total

3.98 0.88 1.21 0.03 0.17 0.59 6.86 4.68 11.54

4.97 0.84 1.62 0.03 0.22 1.32 9.00 4.04 13.04

5.70 0.96 1.85 0.05 0.26 1.51 10.33 9.50 19.83

13.33 1.25 1.32 0.08 0.35 0.35 17.68 3.96 21.64

15.46 1.48 4.64 0.73 0.17 0.63 20.55 2.56 23.11

December 2009) 11.94 1.14 3.59 0.56 0.14 0.49 15.94 1.92 17.86

*Provisional

Steel wire drawing units

Status (2008-09)
(in million tonne) Number Total units Closed units Working units 35 0.71 100 65 Capacity 1.44 0.73

Production of steel wire drawing units, as reported to the Joint Plant Committee is as follows: (in million tonne)

Production

55

Category

2004-05

2005-06

2006-07

2007-08

200809

Mild steel Medium/ high carbon Steel Alloy steel Stainless steel Others Total reported Total estimated Grand total

0.16 0.17

0.08 0.20

0.07 0.18

0.13 0.17

0.16 0.19

2009-10* (AprilDecember 2009) 0.12 0.15

0.08 0.01 0.04 0.39 0.03 0.42

0.04 0.17 0.49 0.01 0.50

0.04 0.14 0.43 0.11 0.54

0.04 0.12 0.46 0.10 0.56

0.07 0.17 0.47 0.12 0.59

0.05 0.14 0.37 0.09 0.46

Hot rolled steel sheets/strips/plates units n Status (2008-09)

(in million tonne) Number Commissioned units Closed units Working units 12 14.385 12 Nil Capacity 14.385 Nil

Production
Production of hot rolled steel sheets/strips, as reported to the Joint Plant Committee is as follows: (in million tonne) Category 2005-06 2006-07 20072008 2009-10* 08 -09 (AprilDecember 2009) 56

HR steel sheets/strips Plates Total reported *Provisional

7.45 0.65 8.10

8.56 0.89 9.45

9.43 1.37 10.80

9.48 1.51 10.9 9

7.32 1.17 8.49

Cold rolled steel sheets/strips units

Status (2008-09)
Number Total units Closed units Working units 65 Nil 65 Capa city 9.55 Nil 9.55

(in million tonne)

Production of cold rolled steel sheets/strips units, as reported to the Joint Plant Committee is as follows: (in million tonne) Category 2005-06 2006-07 2007-08 20082009-10* 09 (AprilDecember 2009) Mild steel 4.87 5.48 5.26 5.53 4.28 Medium carbon steel Stainless steel Others Total reported 0.17 0.09 5.13 0.20 0.08 5.76 57 0.30 0.08 5.64 0.07 0.28 0.42 5.80 0.05 0.22 0.32 4.44

Production

Total estimated Grand total

0.03 5.16

0.05 5.81

0.30 5.94

0.50 6.30

0.43 4.87

Galvanised - Plain and Corrugated (GP/GC), PVC/Vinyl coated sheets/strips units

Status (2008-09) Number Commissioned units Closed units 20 Nil Capacity 5.06 Nil (in million tonne)

Production Production of GP/GC sheets/strips units, as reported to the Joint Plant Committee: (in million tonne) Category 2005-06 2006-07 2007-08 200809 3.22 3.22 3.58 3.58 3.65 3.65 3.84 3.84

GP/GC sheets/strips (incl. colour coated) Total reported *Provisional

2009-10* (AprilDecember 2009) 2.97 2.97

Tin plate units

Status (2008-09) (in million tonne) Number Commissioned units Closed units Working units 1 3 2 Capacity 0.21 0.11 0. 1 58

0 Production Production of tin plate units, during the last few years is as under: (in million Category 2005-06 2006-07 2007-08 tonne) 2 0 0 80 9 0. 1 9 0. 1 9 2009-10* (AprilDecember 2009) 0.15 0.15

Oil can size Nonoil can size Total reported *Provisional

0.15 0.15

0.16 0.16

0.17 0.17

FUTURE OUTLOOK FOR THE INDIAN STEEL INDUSTRY

59

The sponge iron has of late come up as a major input material for steel making through electric furnace route both Electric Arc Furnace and Induction Furnace. Due to long gestation period, huge investments, dependence for coke on foreign suppliers, the steel industry is slowly diverting itself from blast furnace route to electric furnace route and the requirement of Sponge Iron is increasing 67 very fast. Another major reason is the global shortage of scrap. The steel making furnaces in the eastern region use average 70% Sponge Iron in the feed material for steelmaking. The future for the Sponge Iron is therefore quite bright. The steel is today considered as the backbone of India economy. The growth of economy has a direct relation with the demand of steel. With the present steel intensity index, considering the GDP projection by the Government of India, growth of steel demand will be around 11% annually. As per the National Steel Policy issued by the Ministry of Steel India will produce 110 million tons of steel by 2020. The requirement of Sponge Iron as metallic will be 30 million tons. The Ministry of Steel has decided to come out with a White Paper on the logistics requirement of the steel industry at a production capacity of 250-300 million tons. The exercise has been prompted by the logistics constraints in the movement of raw materials and end-products faced by the country today when steel production is at 65 million tons. It is expected that India would become the second biggest producer of steel within the year 2016 and the production per year would be 137 million tons. Today India produce 13.9 million tons of sponge iron, out of which 4.2 million ton is gas based and remaining 9.7 million ton is coal based. India has a proven reserve of 410 million ton of high grade iron ore, another 440 million ton of high grade iron ore which will be established. India has total 9992million ton of iron ore reserves (as per IBM report of1995). India has sufficient non-coking coal through of high ash low fixed carbon grade. Coal is used as a reducing for sponge iron making in the furnace. The availability of scrap of required quantum is unlikely and therefore scraps needs to be replaced more and more by DRI.

60

Expanding Indias steel sector depends on lower port costs for handling key inputs such as coking coal which is predominantly imported, as well as servicing potential steel exports as envisaged under the National Steel Policy Some of the measures that the industry has to take in the long term at macro level are:

High freight rates are the major reason for drastic fall in iron ore loading by railways in recent months. Plans must be made to reduce the freight rates to improve the growth rate of the industry.

Rail transportation can become competitive by increasing line capacity, carrying capacity of trains, port connectivity etc.

Road transportation is the most common mode for transport of all goods accounting for 65% of all commodities carried. Measures must be taken so as to improve the infrastructure of the high ways and fund for the maintenance of the highways.

Port infrastructure in India is outdated and inadequate resulting in bottlenecks and high costs. Investments must be invited from domestic and foreign sources to upgrade the infrastructure at ports, also latest technologies must be implemented to reduce costs and loading and unloading times.

Attract FDIs for investing in coastal transportation and pipeline which are the cheapest and most reliable modes of transporting iron ore. This will make steel manufacturers competent enough in the global steel trade.

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CONCLUSION

A multimodal system, which uses the most efficient modes of transport from origin to destination, is a prerequisite for the smooth functioning of any port. With the growth of cargo in the ports by over seven per cent and increase in container traffic by 17 per cent, the Government had laid emphasis on capacity expansion and improvement in infrastructure of the ports for handling these growing volumes of cargo. Unless matched with connectivity infrastructure, the increased cargo would result in congestion and undermine the competitiveness of Indian industry and also affect the economy at large. Though India is technologically forward and advanced in the production of steel and exporting iron ore, problems with infrastructure and logistics are making it to lag behind in the international trade of steel and iron ore. Also India should concentrate on increasing the consumption of steel at the domestic level. The per capita consumption of steel is the indicator of growth for the developing countries.

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REFERENCES

http://ies.lbl.gov/iespubs/41844.pdf http://www.forging-industry.com/bearing_manufacturer.asp?aid=77 http://www.dbresearch.com/PROD/DBR_INTERNET_ENPROD/PROD0000000000202605.pdf

http://www.careratings.com/archive/3/1991.pdf http://www.icra.in/Files/PDF/SpecialComments/2010-February-Steel.pdf http://newsletters.cii.in/newsletters/steelsummit2009/pdf/SESSION_1/RVS_Ra makrishna.pdf

http://www.openpr.com/pdf/68829/Indian-steel-s-long-term-fundamentalsare-intact-Ernst-Young.pdf

http://www.ieindia.org/publish/mm/1003/oct03mm2.pdf http://ppac.org.in/ppac_0809/PIPELINES%20IN%20INDIA.pdf http://www.steelworld.com/proessar.pdf http://121.241.184.234:8000/pdf/PE/pradip_poa_2006.pdf http://www.me.iitb.ac.in/~narayan/transport/multi-modal-supply-chain.pdf

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