Team Real Steel |Section A |Group 3

Suhas Shah 139278026 Shilpi Sharma 139278030 Kaustubh Kirti 139278054 Anubhav Sood 139278056 Rakesh D 139278069

Management of Technology Project Abstract

Research Objective: Study the current research and development spend of TATA Steel and analyse,
its technology management, research and initiatives to achieve sustainable business growth

Industry Overview:
The global steel industry has been growing with leaps and bounds since the last few decades. Though the technologies used for steel production are becoming saturated there is a lot of scope for technology development in these industries to produce green steel. Green steel as the name signifies uses raw materials more efficiently and uses technology to contain harm done to the environment during steel production.

Why Steel Industry:

Steel industry is directly related to the growth of any economy. Steel is the basic raw material used in construction and automotive sectors. Since 1970 the international steel production has seen major changes. China has emerged as a major producer of steel in the world producing nearly half of the world consumption yearly. India has also emerged as a major producer of steel. Better cost effective methods to produce steel and renewable technology used while producing steel gives an edge to these which is directly reflected in growth. Therefore the current steel industry would be a good example to study technologies that are being used to produce steel in a more cost effective and clean way. The steel industry believes that sustainable development must meet the needs of the present without compromising the ability of future generations to meet their own needs. Within this, a green economy delivers prosperity for all nations, wealthy and poor alike, while preserving and enhancing the planets resources. The transition to a green economy is already underway and presents countless opportunities for positive change. Steel has an essential role to play in this transition and in sustaining a green economy. Steel is critical to the sectors and technologies that will enable and drive a green economy. Renewable energy, resource and energy efcient buildings, low-carbon transport, infrastructure for fuel efcient and clean energy vehicles and recycling facilities all depend on steel. These sectors will also provide employment opportunities, as does the steel sector itself.

Key Issues in the Steel Industry:

The steel industry employs more than 2 million people directly around the world, with a further 2 million contractors and 4 million in supporting industries. Considering steels position as the key product supplier to industries such as automotive, construction, transport, power and machine goods, the steel industry is at the source of employment for many more millions of people. Global steel use has grown more than seven-fold since 1950. By 2050, steel use is projected to increase by 1.5 times that of present levels, to meet the needs of our growing global population.

Team Real Steel |Section A |Group 3

Suhas Shah 139278026 Shilpi Sharma 139278030 Kaustubh Kirti 139278054 Anubhav Sood 139278056 Rakesh D 139278069

Further reducing the environmental footprint of steelmaking ensuring world-class safety performance Supporting the application of steel in products that reduce life cycle CO2 emissions, such as AHSS in vehicles Promoting life-cycle thinking and intelligent product design to allow for dematerialisation and expanded reuse Further improving end-of-life steel product recovery and recycling rates

TATA Steel:
TATA Steel has been producing steel since 1912 since its conception. Since 1990 the company has seen a major growth and emerged as the twelfth largest steel producer of the world. The company focuses on continuous improvement strategies and cutting edge Research and Development to stay ahead. It has almost a century of experience in mining raw material safely, efficiently and sustainably. It is one of the first integrated steel plants in Asia and the worlds most diversified steel producer. TATA Steel spends nearly 0.27% of its sales turnover on research and development (annual report 10-11). Some of the basic strategies that are part of its R&D spend includes: A pioneer in prospecting, discovering and extracting iron ore, coal and other minerals required for steelmaking, Tata Steel has almost a century of experience in mining raw materials safely, efficiently and sustainably. The companys long-term strategy is to have as much control as possible over its raw material resources and to ensure security of supply for its operations globally. Specific areas of research includes: raw materials, cost and productivity, new products & energy and environment. Technology installation/ absorption to enable efficient plant production and a cost effective method to produce steel Energy and environment technologies to ensure reduction of carbon footprint and better utilisation of resources. Currently the company is considering reduction in CO2 emissions an important part of its corporate Strategy as given in the Annual report.

TATA Steel has recently launched new initiatives/Starter References in the following areas: Hlsarna pilot plant at TATA Steel has recently released a new technology to convert iron ore fines and coal directly into liquid iron. It is a path breaking technology because most of CO2 pollution occurs during liquid iron production. Therefore this new technology would reduce CO2 emission by nearly 20 per cent. TATA Steel has also recently launched SIlentTrack, a new cost effective solution to reduce the noise produces on railway tracks. After the launch many companies have started adopting this product in the rail production

Team Real Steel |Section A |Group 3

Suhas Shah 139278026 Shilpi Sharma 139278030 Kaustubh Kirti 139278054 Anubhav Sood 139278056 Rakesh D 139278069

Focus Areas/ Key Questions to be addressed:

Analyse the growth rate of the steel industry and new innovative technologies that have been utilised over the years for sustainable growth Analyse the R&D spend of TATA Steel and find out what kind of new technologies the company is using to counter raw material scarcity and reducing carbon footprint To study technologies used in steel production to produce high strength steel To study technologies used at downstream facilities for better utilisation of raw material and more efficient and clean business processes

Methodology/Approach:
The above research can be carried out at the following levels: Research regarding the current trends in the steel industry and what kind of technologies TATA Steel is developing to make a difference. The energy spend of the company can be analysed over the years to study the impact of using new technologies. Research company reports to find out what kind of research and development projects the company undertook in the past Onsite visit at TATA Steel EPA, downstream facility to study the current technologies used on site to ensure efficient and clean business processes.

Financial Analysis and Benchmarking:

Tata Steel (TSL) is world's 12th and India's largest private sector steel company with a capacity of 24 m tons. It is among the lowest cost producers of steel in the world. TSL is world's second most geographically diversified steel producer, with operations in 26 countries and commercial presence in over 50 countries. ArcelorMittal is the worlds leading steel and mining company with a presence in more than 60 countries. It operates a balanced portfolio of cost competitive steel plants across both the developed and developing world. The companys products are used in all the major sectors like automotive, household appliances, packaging and construction. It is the worlds 4th largest producer of iron ore with a global portfolio of 16 mines under the operations or development processes. (Annexure 1, 2) TATA Steel produces nearly 24 m tons per year as against ArcelorMittal which produces around 94 m tons per year Sales of ArcelorMittal in the last financial year has been four times than that of TATA Steel Sales per tonnage of TATA Steel is however more than ArcelorMittal indicating TATA Steel sells at a better price Both these companies hold long term debt as compared to other similar companies Sales to fixed asset ratio for TATA Steel is much higher than ArcelorMittal which shows better utilisation of available resources by TATA Steel Raw material cost is increasing constantly so the business focus of TATA Steel is on developing new technologies to optimize the consumption of raw materials

Team Real Steel |Section A |Group 3

Suhas Shah 139278026 Shilpi Sharma 139278030 Kaustubh Kirti 139278054 Anubhav Sood 139278056 Rakesh D 139278069

Power and Fuel charges to sales ratio is declining from past five years. It implies better utilisation of the power and fuel sources.

Through the acquisitions of Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Asia, Singapore, Tata Steel has created a manufacturing and marketing network in Europe, South East Asia and the Pacific-rim countries. What give the company a competitive edge is its captive raw material resources and the state-of-the-art 6 mtpa plant at Jamshedpur, in Jharkhand. TATA Steel is a pioneer in steel making and is currently producing clean and sustainable steel production technology and is carrying out many more projects for green steel production.

Starter reference:
Source: TATA Steel Sustainability Report Energy and Environment Tata Steels R&D centres conduct many programmes to improve the life cycle and sustainability of the Companys products. These include projects to reduce energy consumption, CO2 and other emissions. One current example is the construction of a pilot plant to trial the new HIsarna iron making process at Corus IJmuiden in the Netherlands. This new process, which was developed jointly with partners in the ULCOS consortium (www.ulcos.org), is expected to drastically reduce the energy consumption and CO2 emissions associated with the production of iron from iron ore. New Generation High Strength Steels This area comprises of projects to develop new metallurgical options to enable the Group to meet future demands for high strength steels. Hydrogen Harvesting The slag granulation or quenching processes commonly used for slag cooling are not environmentally friendly and the heat contained in the molten slag is wasted. Tata Steel has developed a novel process to generate hydrogen-rich gas by utilising the heat of molten slag. This process was demonstrated on a pilot project basis using a set up with 10 tonnes slag capacity, designed and developed in-house with the help of Tata Growth Shop, producing gas that contains over 70% hydrogen. International and Indian patent applications have been filed and work is now in progress to optimise the process for commercialisation at the Ferro Alloys plant.

Team Real Steel |Section A |Group 3

Suhas Shah 139278026 Shilpi Sharma 139278030 Kaustubh Kirti 139278054 Anubhav Sood 139278056 Rakesh D 139278069

Annexure 1 - Financial Benchmarking (Source: EquityMaster.com) Global Steel Benchmarking ARCELOR MITTAL 2012-2013 1711872.00 245.00 NIPPON STEEL 2012-2013 834479.00 60.50

TATA STEEL (in Rs. Cr) Avg Mkt Cap No. of employees INCOME DATA Net Sales Total revenues Gross profit Gross profit margin Net profit margin BALANCE SHEET DATA Current assets Current liabilities Net working cap to sales Current ratio Net fixed assets Sales to assets ratio Share capital Net worth Long term debt Return on capital 5,42,442 5,22,791 1.5 1 6,92,132 0.9 9,714 3,41,722 4,68,576 0.2 13,47,115 13,51,907 1,24,114 9.2 -5.2 2012-2013 379747.00 80.50

BAOSTEEL 2012-2013 798227.00 32.60

GERDAU 2012-2013 769621.00 41.30

52,47,312 52,59,400 6,73,010 12.8 -4.6

19,64,878 20,01,526 1,60,008 8.1 5.4

24,95,471 25,45,171 51,437 2.1 1.4

9,82,587 9,86,827 1,08,028 11 3.8

19,81,084 14,84,100 9.5 1.3 33,54,397 0.7 17,49,104 32,22,860 13,68,639 -4.1

7,13,237 8,45,294 -6.7 0.8 9,20,245 0.9 1,76,014 11,45,058 1,29,189 10.8

10,39,144 8,15,089 9 1.3 11,07,678 0.9 2,55,910 11,15,631 6,09,475 4.5

4,24,537 2,02,386 22.6 2.1 5,09,385 0.7 4,97,977 7,04,844 3,12,670 6.2

Capacity in Tonnage (MT) Sales per tonnage

23.00 585702.17

93.60 560610.26

42.70 460158.78

47.90 520975.16

19.80 496256.06