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CHAPTER 1: INTRODUCTION

1.1 Introduction
Steel has enabled our modern way of life. It has helped lift societies out of poverty, spurring

economic growth, and continues to do so around the world today (World Steel Association,

2012). This industry has long been regarded as a symbol of national strength in many countries

(ITIS Program Office, 2007). The Steel industries act as a feeder to many important industries

by providing different types of deliberate materials, like rods, bars, sheets, plates, etc. These

materials are used as vital inputs to many strategic industries, like infrastructure, housing,

marine, power, mechanized transportation, agriculture, etc.

The steel sector of Bangladesh is considered as one of the strongest emerging sectors. It

has been growing steadily over the last few of years, despite lacking experience, technology, and

human resources (Uddinet. al., 2007) and at the other side the steel industry has been getting

continuous investment due to steady demands in the domestic market (Hossain, 2009). It

consists of small up to the largest scale of steel melting and re-rolling factories across the country

that mostly produce deformed bar rod of different grade (40, 60, 500), angel, channel and coil for

the construction industry.

1.2 History of the Steel Industry


Predominantly based in the port city of Chittagong, the industry has emerged as a major contributor

to the national economy. According to the experts, the growth of steel industry in Bangladesh is

mainly induced by the rapid expansion of the country's shipbuilding and real estate sector, as well

as the major investments in various infrastructure projects throughout the country. The domestic

consumers of steel products include contractors, property developers, export processing zones,

road and bridge construction companies, shipbuilding companies etc. The steel exporters of
Bangladesh have ensured strong foothold especially in the African markets (The Bangladesh

Journal of Political Economy, 2011). As a result, Bangladesh is now considered as a major

emerging player in the global stage.

The first ever steel mill was established in 1952 by the H Akber Ali Group of Industries as the

"Bangladesh Steel Re-rolling Mills (BSRM)". Located at Nasirabad, Chittagong, the plant formed

re-enforcing bars and structural sections. By this time, KSRM Steel Plant Ltd emerged. Very

recently, they have established Billet Plant at Chittagong. Their factory situated at Ghoramara,

Sitakunda at Chittagong. Moreover, several other steel companies emerged in the country, most

notably GPH Ispat, RRM (The Rani Re-rolling Mills LTD, Kabir Steel Re-rolling Mills, AKS,

Anwar Ispat, HKG Steel Mills Ltd., Rahim Steel Mills LTD, Seema Steel Re-rolling Mills LTD,

Bashundhara Steels etc.

Though the history of Steel Industry is not older one but it can make a glorious future. Before 1971

Bangladesh did not have any steel mill and even after the liberation there were only a few steel

factories in the country. In 1990s the actual development began in this sector through a revolution.

During that period the building constructing agencies or developer companies came forward to

build modern infrastructure. Then with the increasing demand, new investors started investing in

steel or rod production. In 2012 we have almost 400 mills across the country including Dhaka,

Chittagong. Although most of them are manual steel plants, 30 mills among them are automated.

1.3 Present Position of Steel Industry


Bangladesh is one of Asia's leading emerging steel markets and has a growing need for raw

materials and steelmaking technologies. The World Bank forecasts that average GDP growth in
Bangladesh in the period from 2016 to 2018 will be 6.8%, which is significantly higher than that

of many other emerging markets. The movement towards a progressive national economy strongly

depends on the how construction materials specially steels related industries has evolved and such

products are readily available. Fortunately, the country has a proud heritage for the art of steel

making and shaping for a long time.(EBLsecurities)

Bangladesh consumes 4 million tons of steels per annum and per capita consumption is 25

kg. At present, more than 400 steel mills of different categories and sizes currently operate

in the country (Hasan, 2013). According to the statement of the Bangladesh Automatic Re-

rolling and Steel Mills Association (BARSMA), 38 re-rolling mills have been supplying 80

percent of the national demand of MS Rods and with the government patronage to the

sector; they will be able to export MS Rods after meeting the domestic demand (Asia Pulse, 2011).

Steel is one of the core inputs of the fastest growing construction industries in Bangladesh

with a yearly consumption of steel rod of around 250,0000 tons at a value of 10

billion BDT (Hossain, 2009). At present, a good number of steel industries, like Bangladesh

Steel Rerolling Mills (BSRM), Kabir Steel Rerolling Mills (KSRM), Ratanpur Steel Rerolling

Mills (RSRM), GPH Steels, KDS steels, Abul Kahir Steels (AKS), etc., are doing aggressive

branding and launching of innovative value added steel products like Billets –MS Angle, 40 – 60

grade deformed bar, 500 W extreme bar, TMT bar, etc. The aforementioned facts and figures

depict the degree of domestic demand for steel products in the Bangladeshi market. Bangladesh is

deemed to be a labor-intensive industrial economy. According to the survey of the Bangladesh

Bureau of Statistics (BBS), a total 293,011 male workers and 178 female workers is

currently employed in this sector, and there is a potential to double that in the upcoming

years .
1.3.1 Market size

The demand for steel industry is mainly driven by two factor; one is the implementation of the

government’s ADP plans and government's infrastructure building activities and the other is from

the industrial and individual level demand especially for the real estate sector. Currently, the

government projects account for nearly 40% of total steel consumption. According to the local

industry leaders, present per capita steel rebar consumption in Bangladesh is only 25 kg and this

is expected to grow to 50 kg by 2022 (EBL securities) .

According to the World Steel Association, apparent steel consumption of the country was 2.7

million MT in the FY 2014 compared to 2.4 million MT in the FY 2013, posting 10.4% YoY

growth. However, According to the industry insiders, the annual steel consumption of steel (both

graded and non-graded) products now stands at roughly 4.0 million MT for long products and 0.7

million MT for CR/GP sheet.


1.3.2 Production Capacity
In terms of production capacity for both finished and semi-finished (billet) steels Bangladesh is

now self-sufficient. Presently, in Bangladesh, the combined annual production capacity for steel

is more than 8.0 million MT. Moreover, major industry players are injecting fresh investment in

this sector to enhance their production capacity to grab the potential of huge demand for the

implementation of government’s gigantic infrastructure development plans. For the semi-finished

steel melting production, only three big players in the industry Abul Khair (AKS), BSRM and

Kabir Steel (KSRM) has more than 3 million MT of billet producing capacity now and total

industry as a whole have the capacity to produce roughly 3.6 million MT of billet, representing

90% of total requirements.

1.4 History of RSRM


Ratanpur Group started its operation in 1984 with its flagship company Ratanpur Steel Re-Rolling

Mills Ltd. (RSRM) to meet the growing demand for high quality deformed bars in the market. The

population boom created a housing crisis which led to numerous public and private construction

projects, creating a greater demand for their products. The success and goodwill created by this

company encouraged them to spread their wings into other markets and confront some of the many

problems that plagued the economy.

Today, RSRM is widely recognized as one of the leading steel manufactures in the country and

has embarked upon a series of initiatives aimed at increasing its production capacity to1000 tons

per day and yearly capacity of 300000 tons of world class products. To keep up with the demand

of the current world market our facilities have come to include induction melting furnaces a ladle
refining furnace, a continuous casting plant and rolling mills with the latest automated features.

Other necessary ancillaries like main power sub-station, water complex for primary, secondary

and emergency water supply, natural gas supply station, machine shop with CNC machine,

pollution control system, well equipped quality control unit, cranes of different capacities

including crawler cranes for material handling etc.

1.5 Recent Position of RSRM


Ratanpur Steel Re-Rolling Mills Limited was incorporated as a private limited company on 22nd

April,1986 under the Companies Act 1913 and subsequently converted into a public limited

company along with the subdivision of face value of shares from TK. 100 to TK. 10 each. RSRM

strives to be the trend setter and product enhancement to achieve organizational goals. The

company’s present production capacity is 187,200 MT and in its FY2014-15 the company utilized

55.23% of its production capacity.

1.5.1 MARKET POSTION AND MARKET SHARE


The steel industry in Bangladesh is oligopoly in nature. Steel Industry has a phenomenal presence

in the capital market of Bangladesh. There are 6 steel manufacturing company, listed in

Bangladesh capital market our of which, RSRM is one. The financial comparison between RSRM

and other leading steel companies is-


Even though there are currently over 400 active firms in the industry, three big steelmakers --

BSRM, Abul Khair Steel and KSRM supply more than 50% of the country's annual need of steel

whereas RSRM has the market share of 2.6%. According to the market players, presently 65% of

the country's annual need is met by the graded millers. Even though nongraded millers held 50%
of the total market share three years ago, it has now dropped to 35%. RSRM‘s market share in

comparison to its competitors-

RSRM is expecting to increase the production capacity to 357,200 MT per year (90.8%

enhancement), which is expected to be completed by December 2018.RSRM Possess a huge

amount of unutilized capacity (44.76%). Any upsurge in demand of MS Rods can be

responded quickly with production increase. It sas a lower D/E ratio compared to other rod

makers in the market.


1.5.2 PRODUCTS
RSRM basically offers two kind of products

1. Deformed bar x-power tmt 500w

2. 60 PREMIUM (grade-400)

According to RSRM’s website these are product variation (among those two) they are offering as

of now-

Product Name Product Size

Deformed Bar X-Power TMT-500W 8mm

Deformed Bar X-Power TMT-500W 10mm to 25mm(10,12,16,20,22,25)

Deformed Bar X-Power TMT-500W 28mm to 32mm(28, 32)

Deformed Bar 60 Premium –(Gr ade400) 8mm

Deformed Bar 60 Premium –(Grade 400) 10mm to 25mm(10,12,16,20,22,25)

Deformed Bar 60 Premium –(Grade 400) 28mm to 32mm(28, 32)

1.5.3 RSRM and HUMAN RESOURCE


MANAGEMENT
Almost every sector in Bangladesh whether it is public, private, or autonomous Human Resource

Management is practiced. Human Resource Management is that part of management concerned

with people at work and with their relationship with in an enterprise. Its aim is to bring together

and develop into and active organization. Stephen P. Robbins says, “Human Resource
Management is concerned with the ‘people’ dimension in management. “Our people are our most

important asset”. Many organizations of Bangladesh are using this phrase, or sometimes close to

it.And with the expanding business RSRM is also targeting to improve and develop its human

capital .

1.5.4 Objective
CHAPTER 2: OBJECTIVES

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