Professional Documents
Culture Documents
By:-
By:-
Udayam Kumar Singh
Reg. No.-PGDM B12/55
IFMR, Chennai
IFMR, Chennai
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Declaration
I, Udayam Kumar Singh of IFMR, Chennai have successfully completed the
project on, “Analysis of Steel Sector in India, with special focus on
units in Eastern India” as per the curriculum and that the information
provided is true and to the best of my knowledge.
SIGNATURE OF STUDENT,
(Udayam Kumar Singh)
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Authorization
I ………………………......hereby certify that Udayam Singh of IFMR, Chennai
has successfully completed the project on “Analysis of Steel Sector in
India, with special focus on units in Eastern India” as per the
curriculum and that the information provided is true and the best to my
knowledge.
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Acknowledgement
I would like to thank Mr. Pinaki Paul (AVP, PA&SF, Regional Office,
Kolkata) for being my mentor, without his guidance and persistent help this
dissertation would not have been possible. I would also like to thank Mr.
Aditya Khemka (Dy Manager, PA&SF) who gave me constant motivation
and advice.
I would also like to thank the entire staff of SBI Capital Markets, Kolkata for
providing me their precious time and making this internship a successful
learning experience.
Lastly i would like to thank my parents and colleagues who gave me the
support, co-operation for the completion of this project and god almighty
who gave me the inner strength to withstand all the obstacles that came my
way.
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Abstract
Indian steel production has grown strongly in recent decades and India is
now the world‟s fourth largest steel producer. Nevertheless, India‟s
consumption of steel relative to the size of its economy is very low by
international standards. As the economy develops further, steel consumption
is likely to increase.
The report describes the various steel manufacturing processes, its raw
material requirements and classification of steel and alloys.
The primary objective of this report is to analyze the steel sector and its
performance. Various steel manufacturing companies‟ production
performance, their raw material requirement.
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Contents
Declaration .......................................................................................... 3
Authorization ....................................................................................... 4
Acknowledgement ................................................................................ 5
Abstract .............................................................................................. 6
1. Introduction ............................................................................... 10
2. Steel manufacturing process ........................................................ 11
2.1. Blast Furnace method ............................................................. 11
2.2. Electric Arc Furnace(EAF) ........................................................ 12
2.3. COREX or Cipcor Process ........................................................ 13
2.4. Induction Arc Furnace (IAF) .................................................... 14
3. Raw Materials ............................................................................. 16
4. Classification of iron ore............................................................... 19
5. Classification of Steel and Alloys ................................................... 21
6. Steel Producers .......................................................................... 28
6.1. Main Producers ...................................................................... 29
6.1.1. Steel Authority of India(SAIL) ............................................ 29
6.1.2. Rashtria Ispat Nigam Ltd (RINL)/Vizag Steel ........................... 37
6.1.3. Tata Iron and Steel Company (TISCO) (Jharkhand) ................. 40
6.2. Major Producers..................................................................... 45
6.2.1. JSW Steel Ltd. .................................................................... 45
6.2.2. Ispat Industries Ltd. (IIL) / JSW Ispat Steel Ltd.(JSPL) ............ 48
6.2.3. ESSAR Steel Ltd. ................................................................. 51
6.2.4. Jindal Steel & Power Ltd. (JSPL) ............................................ 55
6.2.5. Bhusan Steel Ltd. ................................................................ 57
6.3. Other Producers .................................................................... 60
6.3.1. Shyam Steel Industries Ltd................................................... 60
6.3.2. Jai Balaji Industries Ltd. ....................................................... 61
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6.3.3. Electrosteel Casting Ltd. ....................................................... 63
6.3.4. Usha Martin Ltd................................................................... 66
6.3.5. Adhunik Metaliks Limited ...................................................... 68
7. Profile of the industry .................................................................. 70
7.1. Global Scenario ..................................................................... 71
7.2. Domestic Scenario ................................................................. 72
7.2.1. Production ....................................................................... 73
7.2.2. Demand - Availability Projection ......................................... 74
7.2.3. Steel Prices ...................................................................... 75
7.2.4. Imports of Iron & Steel...................................................... 75
7.2.5. Exports of Iron & Steel ...................................................... 76
7.2.6. Levies on Iron & Steel ....................................................... 77
7.2.7. Opportunities for growth of Iron and Steel in Private Sector ... 78
8. Competitive advantage of the steel industry in East India ................ 81
9. Trends in International Trade in Iron & Steel .................................. 87
10. Trend in prices of steel and raw materials during the 11th Plan......... 89
10.1. Iron ore, coking coal prices not to see big movement in 2013 ..... 91
10.2. Mining tax in Australia ............................................................ 92
10.3. Impact of Coal India Ltd‟s New pricing system for thermal coal .... 93
11. Issues in Indian Steel Industries ................................................... 94
11.1. Raw Materials ........................................................................ 94
11.2. Infrastructure ........................................................................ 95
11.3. Investment ........................................................................... 96
11.4. Technology and Research & Development ................................. 96
11.5. Environmental Management and Pollution Control ..................... 98
11.6. Safety Measures .................................................................... 99
12. Five trends in India's steel industry ............................................. 100
12.1. Consolidation ...................................................................... 100
12.2. Doggedness of foreign firms .................................................. 100
12.3. Relocation, smaller plants ..................................................... 101
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12.4. Use of low grade raw materials .............................................. 101
12.5. Environmental awareness ..................................................... 101
13. Analysis of capital structure trend in the Indian steel sector ........... 102
13.1. Total Debt/Equity Ratio & EPS effect on Indian steel industry .... 102
13.2. Financial coverage Ratio & EPS effect on Indian steel industry ... 105
14. Understanding the Steel industry using Michael Porter‟s Five Forces
Model .............................................................................................. 109
14.1. Entry barriers: High ............................................................. 109
14.2. Competition: High ................................................................ 110
14.3. Bargaining power of suppliers: High ....................................... 110
14.4. Threat of substitutes: Low .................................................... 111
14.5. Bargaining power of Consumers: Mixed .................................. 111
15. The SWOT Analysis on Indian Steel Industry ................................ 113
16. SWOT Analysis of main steel producers of India ............................ 118
16.1. SWOT Analysis of Steel Authority of India (SAIL) ..................... 118
16.2. SWOT Analysis of Tata Iron & Steel Company .......................... 118
16.3. SWOT Analysis of RINL/Vizag Steel ........................................ 119
17. Conclusion & Recommendations .................................................. 120
18. References ............................................................................... 125
Appendix A ...................................................................................... 126
Appendix B ...................................................................................... 128
Appendix C ...................................................................................... 134
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1. Introduction
Iron is one of the oldest inventions in the world with its first usage
reportedly dating back to 4000 BC. Steel is crucial to the development of
any modern economy and is considered to be the backbone of the human
civilization. Today Steel (the carbon alloy of Iron) finds application in every
imaginable facet of our life. The global steel industry has been witnessing
many interesting events that have influenced market dynamics in the last
ten years.
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2. Steel manufacturing process
Steel is one of the most important and widely used products in the world.
Currently, the steel industry is undergoing a process of change. As a result
of ongoing technical and economic developments, the production and use of
electric arc furnace steel is, beneath the steel production in a blast furnace,
becoming increasingly important, continuously gaining share of world-wide
steel production over the past 30 years.
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Major reducing agent in the BF is the carbon monoxide gas(CO) generated
by the oxidation of the carbon(C) in coke. Consequently, carburization takes
place at the same time as reduction, producing hot metal(molten iron)
containing about 4% carbon. The hot metal is decarburized to the required
carbon content in the BOF. The main reaction in this process is the
oxidization of the carbon in the hot metal by both pure oxygen gas (O2) and
iron oxide (Fe2O3). The residual oxygen, after contributing to this
decarburization reaction, remains in the molten steel. This oxygen is fixed
and removed by deoxidizing reagents such as silicon and aluminum as
SiO2 and Al2O3 or is removed as carbon monoxide gas in the subsequent
vacuum degassing process.
The molten steel from the BOF and EAF is then deoxidized and alloying
elements are added in the prescribed amounts. The molten steel is then held
at the target temperature and continuously cast, and the castings obtained
are cut to the prescribed length. After heating to the rolling temperature in a
reheating furnace, these castings are hot-worked to the required products.
Steel shapes, bars, and wire rods are worked on section and bar mills and
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wire-rod mills equipped with caliber rolls, plates are worked on reversing
mills, and hot-rolled steel sheets are worked on hot strip mills. After pickling
to remove scale from the surface, the hot-rolled steel sheets are worked to
cold-rolled steel sheets on reversing mills or tandem rolling mills, and the
cold-rolled steel sheets are tinned or galvanized as required to produce
various surface-treated steel sheet products. Steel pipe is produced by
forming and welding steel sheets or plates, or by piercing a billet and rolling
to the final dimensions without a seam.
Presently, there are 38 Electric Arc Furnace based steel plants working in the
country with an aggregate capacity of 18.041 million tonnes per annum.
Apart from the working units, there is one unit, which is closed. Production
of Ingots/Concast Billets by EAF units, which have been reporting their
production to Joint Plant Committee, during 2009-10 (prov.) was 15.48
million tonnes as compared to 14.15 million tonnes during 2008-09,
registering a growth of 9.4%. This sector continued to be under constraint of
rising cost of inputs, increasing power tariffs, shortage of power & resource
crunch.
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efficient fuel and purpose of sinter plant is purify lump ore or pellets for
further processing. Basic inputs to COREX are iron-ore and coal. Jindal Iron
& Steel Company (JISCO) uses COREX technology to produce finished steel.
Players using the BOF route enjoy higher profitability as compared to players
using the IF route, as steel made in a blast furnace is more refined and
fetches higher realizations. Higher profitability and economies of scale in the
BOF route help players earn better returns on investments. Cash accruals
and debt-servicing indicators are also better as compared to steelmakers
who use the IF route. However, the BF-BOF process entails higher
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investments and only large players are present in this category. On the
other hand, in the IF route, investment requirements are lower.
EAF allows steel to be made from a 100% scrap metal feedstock. This
greatly reduces the energy required to make steel when compared with
primary steelmaking from ores. Another benefit is flexibility: while blast
furnaces cannot vary their production by much and are never stopped for
years at a time, EAFs can be rapidly started and stopped, allowing the steel
mill to vary production according to demand. Although steelmaking arc
furnaces generally use scrap as their primary feedstock, if hot metal from a
blast furnace or direct-reduced iron is available economically, these can also
be used as furnace feed.
A typical steelmaking arc furnace is the source of steel for a mini-mill, which
may make bars or strip product. Mini-mills can be sited relatively near to the
markets for steel products, and the transport requirements are less than for
an integrated mill, which would commonly be sited near a harbor for access
to shipping.
Steel capacity additions in India have risen at a CAGR of 10 per cent over
2005-06 to 2009-10. Of the major steelmaking routes (Basic Oxygen
Furnace (BOF), electric arc furnace (EAF) and induction furnace (IF))
capacity additions have been the most in the IF route. The dependence of
producers using the IF route on non-coking coal -- whose prices have been
stable so far -- gives them a cost advantage over players using the BOF
route.
However, this trend is expected to change in 2012-13 as non-coking coal
prices increase. Meanwhile, a fall in coking coal prices has reduced costs for
players using the BOF route.
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3. Raw Materials
Coal
Coal is a family name for a variety of solid organic fuels and refers to a
range of combustible sedimentary rock materials spanning a continuous
quality range. For convenience, this continuous series is divided into four
categories:
1) Anthracite,
2) Bituminous coal (metallurgical coal),
3) Sub-bituminous coal,
4) Lignite.
Coal is the primary fuel used by integrated iron and steel producers.
Coke
A solid carbon based product derived from baking bituminous coal at high
temperature to remove volatile constituents.
Metallurgical coke ('met coke') is used as the main fuel in the smelting of
iron ore in a blast furnace. The quality of coke has a significant influence on
furnace productivity and iron production costs.
Iron Ore
Iron ore is formed of rocks, minerals or meteorites from which metallic iron
can be extracted. Typically, the iron is in the form of iron oxide, which varies
in colour from dark grey, bright yellow and deep purple to rusty red. Iron ore
can have up to 65% ferrous content, but is often lower and needs to be
refined before use.
Iron ore is the raw material used to make pig iron, which is one of the main
raw materials for making steel. 98% of mined iron ore is used to make steel.
Pig Iron
A key intermediate material in the integrated (converter-based) steelmaking
process, pig iron is the product of smelting iron ore, coke and limestone in a
blast furnace.
Pig Iron is used directly in the manufacture of steel. Merchant pig iron is
sometimes used as a substitute for scrap in EAF steelmaking, when there is
a need to control residuals.
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DRI
Direct Reduced Iron (DRI) – or sponge iron – is processed iron ore that is
iron-rich enough to be used as a scrap substitute in electric furnace
steelmaking. It is made by the reduction (removal of oxygen) of iron oxide
(iron ore) at temperatures below the fusion point of iron.
As mini-mills expand their product abilities to sheet steel, they require much
higher grades of scrap to approach the quality of output from integrated
mills. DRI enables mini-mills to use iron ore without having a blast furnace.
It serves as a low residual raw material and alleviates the mini-mills‟
dependence on cleaner, higher priced scrap.
HBI
Hot Briquetted Iron (HBI) is Direct Reduced Iron that has been processed
into briquettes. Instead of using a blast furnace, the oxygen is removed from
the ore using natural gas and results in a substance that is 91%–94% iron.
Because DRI may spontaneously combust during transportation, HBI is
preferred when the metallic material must be stored or moved.
Because of its high iron content and low residual levels, HBI can be used in
almost every type of steelmaking operation. It has advantages over steel
scrap due to its high bulk density and the very low content of undesirable
chemical elements.
Ferro-Alloys
Alloys of iron, with a high proportion of added elements - such as silicon,
nickel, chromium, molybdenum, vanadium and manganese – are used to
improve properties in the production of special steels.
As part of the steel production process, ferro-alloys are added to the usual
mix of raw materials to alter the chemistry as required for certain specific
end uses. The added elements determine whether the steel will end up as
paper clips, a car body, the undercarriage of a jumbo jet, or a beam in a
high-rise building.
Scrap
Steel can be recycled almost indefinitely without losing its properties.
Obsolete ferrous scrap is derived from steel-containing goods at the end of
their useful lives (e.g. a drinks can, a 15-year-old car, a 50-year-old
building). Revert scrap is steel waste produced and recycled within a
steelworks. New production scrap is generated when steel is cut and formed
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during the manufacturing of finished products or components. The scrap is
returned to steelworks and foundries.
Ferrous scrap is mainly used in electric arc furnace steelmaking. About 500
million tonnes of scrap are melted each year.
Manganese
Manganese is used in steel alloys to increase many favourable characteristics
such as strength, hardness and durability. In fact steel cannot be produced
without manganese; it is an essential ingredient in the process.
Steel becomes harder when it is alloyed with manganese. It has similar
applications when alloyed with aluminium and copper. Hardened steel is
important in the manufacture of construction materials like L-beams (24% of
manganese consumption), machinery (14% of manganese consumption) and
transportation products (13% of manganese consumption).
Iron ore
DRI(Sponge iron)
Coal
Coke
Ferro-alloys
Scrap
Manganese
Oxygen
Electricity
Scrap and DRI (Sponge iron) move in opposite direction as they can be used
as substitute for other.
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4. Classification of iron ore
Magnetite: A kind of iron oxide ore, the main ingredients are Fe3O4, and is
the compounds of Fe2O3 and FeO, dark gray, the density about 5.15, with
Fe72.4%, O 27.6%, and of magnetism, after a long period weathering it
become hematite.
Hematite: Fe2O3, Is a kind of iron oxide ore, the main ingredients is Fe 2O3,
dark red, the density about 5.26, with Fe70%, O 30%, is the most
important iron ore. Due to the its structural condition, it can be divided into
many different categories, such as red hematite, SPE cularhematite, mica
iron ore (Micaceous hematite), Red Ocher and so on.
Iron sulfide: This Kind of ore containing FeS2, with Fe only 46.6% while
the content S reached 53.4%, appears sallow, the density about 4.95 ~
5.10. Because this ore often contains many other precious metal such as
Copper, Nickel , Zinc, Gold, Silver , so they are often used as raw materials
for other metal smelting; also because it contains a large amount of sulfur,
so is often used to distill the sulfur, thus rendered iron a by-product, and so
it cannot be classified as iron ore.
Commercially, the iron ore are available in five different product categories:
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1. Calibrated Iron Ore
2. Iron Ore
3. Iron Ore Pellets
4. Iron Ore Fines
5. Iron Ore Lump
Process of allocation of captive iron ore mines has been discussed in detail in
appendix B.
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5. Classification of Steel and Alloys
Pig iron is the main primary product of the iron and steel industry, it can
be:
Ferro-alloys generally:
contain 4 per cent or more of the element iron and other elements
contain less iron than in pig iron
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Ferrous products obtained by direct reduction of iron ore and other spongy
ferrous products. Iron and steel products of this heading are produced by
reducing the ore without fusion - known as direct reduction. They are
obtained from ore in lumps, granules, or from concentrated ore in briquette
or pellet form and contain more than 80 per cent by weight of metallic iron.
They also have a spongy structure (sponge iron) and can be used in the
production of steel.
Ferrous waste and scrap are generally used for the recovery of metal by
re-melting or for the manufacture of chemicals. Waste and scrap are a result
of the manufacture or mechanical workings of metals, and metal
goods definitely not usable due to breakage, cutting up, wear or other
reasons. They take the form of:
Granules (of pig iron, spiegeleisen, iron or steel) are products of which
less than 90 per cent by weight passes through a sieve with a mesh aperture
of 1 millimetre and of which 90 per cent or more by weight passes through
a sieve with a mesh aperture of 5 millimetres.
Granules include shot (more or less round in shape) and angular grits. Shots
and grit are used for:
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Powders (of pig iron, spiegeleisen, iron or steel) are products of which
90 per cent or more by weight passes through a sieve with a mesh aperture
of 1 millimeter. They are suitable for compacting or agglomeration.
These powders (including sponge iron powder) can be sintered into various
items such as electromagnetic coils in telephony or magnetos, and used in
the manufacture of welding electrodes and welding powders, reducing
agents and pharmaceutical products.
Ingots are blocks of metal made by casting the liquid metallic contents of a
furnace or crucible into open metallic moulds. Ingots are the raw material for
the metal working process.
Blooms - are larger than billets and are used for re-rolling to bars, rods,
angles, shapes and sections or for the manufacture of forgings.
Billets - are used for re-rolling to bars, rods, angles, shapes and sections
or for the manufacture of forgings.
Rounds - have a circular or polygon cross-section of more than four
sides. They are used as intermediate products for the manufacture of
seamless-steel tubes. They differ from bars and rods in that they are
usually supplied in lengths of 1 to 2 metres and their ends are often cut
by a blow lamp (bars/rods are normally more accurately cut).
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Slabs/sheet bars - are rectangular (not square) in section and their
widths are greater than their thickness.
Cold rolled - this is a process which is carried out on products that have not
been heated immediately prior to the cold-rolling operation in which they are
reduced to final thickness. The objectives of cold rolling are to improve the
surface finish and to obtain smaller and more uniform thickness than is
possible in hot rolling. Cold-worked products tend to be very hard and
possess great tensile strength.
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or in the molten bath near the end of the finishing period, in the ladle, or in
the moulds.
ferro-manganese
ferro-silicon
ferro-silico-manganese
ferro-chromium
ferro-silico-chromium
ferro-nickel
ferro-molybdenum
ferro-tungsten (ferro-wolfram)
ferro-silico-tungsten
ferro-titanium
ferro-silico-titanium
ferro-vanadium
ferro-niobium
ferro-silico-magnesium
ferro-silico-calcium
Stainless steel is defined as alloy steel containing, by weight, 1.2 per cent
or less of carbon and 10.5 per cent or more of chromium, with or without
other elements.
Cast iron is iron mixed with other metals. The iron must predominate by
weight over these additional metals. These additional metals must not be in
the quantities stated for the chemical composition of steel.
Malleable cast iron is cast iron that under pressure or hammering can
easily spread and flatten.
Forging is a process where the metal is formed into a shape by heat and
pressure.
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Wire drawing is a cold process in which bars or rods in irregularly wound
coils are drawn through one or more dies at high speed to obtain coiled wire
of a smaller diameter.
Wrought iron is an iron alloy with a very low carbon content, in comparison
to steel, and has fibrous inclusions, known as slag. This is what gives it a
"grain" resembling wood, which is visible when it is etched or bent to the
point of failure. Wrought iron is tough, malleable, ductile and easily welded.
Historically, it was known as "commercially pure iron"; however, it no longer
qualifies because current standards for commercially pure iron require a
carbon content of less than 0.008 wt%.
Cold extrusion is a process similar to hot extrusion above except that the
metal is at room temperature.
Dies are metallic or other permanent devices that provide a given shape to
a piece of metal. The word in metallurgy covers a range of meanings and
includes dies that are used to shape solid metal in presses and those for
making die casting from.
Hot drawing is a process in which metal is heated and passed through a die
to produce the finished shape.
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Closed-die forging is where hot metal is shaped within the walls of two
dies that come together to enclose the work piece on all sides. The process
starts with a rod or bar cut to the length required to fill the die.
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6. Steel Producers
Broadly there are two types of producers in India viz. integrated producers
and secondary producers.
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2. Major
JSWL 2.64 3.15 3.22 5.26 5.85
ISPAT 2.76 2.83 2.20 2.69 2.38
ESSAR 3.01 3.56 3.34 3.47 3.37
JSPL - - 1.46 1.96 2.27
TOTAL 8.41 9.54 10.22 13.38 13.87
3. Other Producer
EAF Units/ 4.84 5.28 8.15 9.36 9.79
COREX-
BOF *
INDUCTION 15.39 16.93 18.05 19.82 22.07
FURNACE*
TOTAL 20.23 22.21 26.20 29.18 31.86
The following table highlights the total as also the contribution of the private
and public sector in crude steel production in the country:
The management of the Indian Iron and Steel was taken over by the
Government on 14th July, 1976. SAIL also took over Maharashtra
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Elektrosmelt Limited, a mini steel plant, in January 1986. Visweswaraya Iron
and Steel Limited were also taken over by SAIL in August 1989.
Major Units
SAIL Integrated Steel Plants
The Centre is at the confluence of rivers Sankya and the Koel which later
merge to form the Brahmani River. The following geographical and economic
factors have favoured the development of the plant:
The iron-ore of Bonai (Barsua and Gua Iron ore mines) is close by.
Coal is brought from Jharia, Bokaro and Kargali fields of Jharkhand
State.
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Limestone is obtained from Hathibari and Birmitrapur situated at a
distance of about 25 km.
Water is supplied by the Mahanadi and the Sankya rivers.
Hirakud multi-purpose river valley project supplies water-power.
Rourkela is well-connected by rail and road with other centres of India.
Labour is locally available.
The annual production of this plant is 30,000 tonnes of pig iron, 11 lakh
tonnes of crude steel and 10 lakh tonnes of saleable steel. Other important
items manufactured here are slabs, plates, pipes etc.
Bhilai was a silent village in the Durg district of Chhattisgarh state. The
availability of extensive flat land facilitated the setting up of the plant.
Iron-ore comes from Dhali, Rajhara mines situated at a distance of about
45 km from the plant.
Coal is brought from Bokaro of Jharkhand state and Korba of
Chhattisgarh state.
Limestone is obtained from the Nandini quarries.
Tandula and Maroda tanks provide water to the steel paint.
The Korba thermal plant supplies electricity.
Labour is locally available. Tribals serve as labour at low wages.
The plant produced steel to its full capacity in 1961. The annual production is
over 5 lakh tonnes of pig iron, 23 lakh tonnes of crude steel and 20 lakh
tonnes of saleable steel.
This plant is known for its special items of sleeper bars, heavy structural,
merchant bars and billets for re-rolling.
This plant has been established with British collaboration. It was completed
in 1960. It is situated on river Damodar and on Kolkata-Delhi railway line at
a distance of 175 kilometres from Kolkata. The following factors have
favoured the growth of this plant:
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Iron ore is obtained from Gua mines of Jharkhand.
Coal is brought from Jharia and Barakar coal fields.
Limestone is brought from Rourkela and Bisra area of Orissa.
Water is provided by the Damodar River.
Hydel power is supplied by D.VC.
The plant enjoys excellent transport facilities.
Labour comes from adjoining areas.
The annual production of this steel plant is 6 lakh tonnes of pig iron, 8-7
lakh tonnes of crude steel and 7 lakh tonnes of saleable steel. Durgapur
Steel Plant specialises in the manufacture of light rails, beams, and fish
plates, railway items of wheel, axils and sleepers. Its other products arc
construction material.
Bokaro Steel Plant was set up in 1965 with the help of erstwhile U.S.S.R.
This plant was set up because the other plants could not meet the growing
demand of the country. Its capacity was over 30% of the total installed
capacity of integrated plants of India.
It is the largest steel plant in India. It is also called Swadeshi Steel Plant.
Almost all the structural steel, electrical equipment, mechanical equipment
etc. of this plant was manufactured in India.
Coal is available locally from Bokaro, Kargali and Jharia coal fields.
Iron ore is obtained from Berjmada belt in Southern Jharkhand.
Limestone is brought from Bhagwant Pur and Daltonganj quarries in
Palamau district of Jharkhand.
Water is obtained from the Damodar River.
Cheap labour is available from the densely populated areas of Jharkhand,
West Bengal, U.P and Bihar.
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The annual production of this plant is over 50 lakh tonnes of pig iron, 20
lakh tonnes of crude steel and 17 lakh tonnes of saleable steel. Various
items of production are rolled light plates, cold rolled coils, rolled sheets etc.
The plants of this company are the oldest in India. The plants are located at
Kulti, Burnpur and Hirapur in West Bengal (about 225 kilometres from
Kolkata).
The plants are located near coal fields of Raniganj and Jharia.
Iron ore is obtained from Singhbhum and Mayurbhanj districts which are
not far away.
Limestone is obtained from nearby quarries of Paraghat, Baradhar and
Bisia.
Kolkata industrial region serves as the main market. Kolkata serves as a
port.
Power is available from Damodar Valley Corporation Project.
Water is obtained from the Damodar River.
These plants are located very near (6-10 kilometres) to railway junction
of Asansol.
This plant was established in 1923 with the help of an American Company
under the name of Mysore Iron and Steel Works Limited. It is now a state
owned plant. It was taken over by the state government in 1962. The
following factors are responsible for its growth:
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The rich forest wealth of Shimoga and Kadur districts supplied charcoal to
the plant. Now the plant is served by hydro-electricity from Jog falls.
Water is available from the Bhadra River.
Bhadravati is served by Southern Railway.
Shimoga and Chitradurga supply manganese.
Bhadravati is a wide valley thus enough land is available.
Production performance
The detail of the actual production is given below:
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value-added products has been continuously growing, the company is
planning to change its product-mix accordingly.
SAIL total saleable steel reached its maximum volume of 13044 thousand
tonnes in 2007-08 which was contributed by hot metal production volume of
14981 thousand tonnes. There was a huge dip in the total saleable steel
produced from 2007-08 to 2008-09 due to global slowdown. Thereafter,
there has been constant increase in the total saleable steel volume.
For the M & E plant, the company has planned CAPEX outlay of around Rs.
700bn of which around Rs. 366bn has already been incurred. As of H1FY12,
SAIL had huge cash of Rs. 157bn on the balance sheet, which may be
utilized to fund the CAPEX without over leveraging the balance sheet.
Page | 35
Raw materials
SAIL has fulfilled the requirement of iron ore from its captive mines of its
steel plants by producing about 23.44 million tonnes during 2009-10. The
production of fluxes from captive mines was 2.31 million tonnes. During
2009-10, continued thrust on production of Coal from SAIL's captive
collieries resulted in record annual production of over 1.36 million tonnes,
registering a growth of 34%.
Page | 36
Raw Materials ------------------- in Rs. Cr. ------------------- Mar 2011
Product Name Unit Quantity Value
Coal Metric Tonnes 13,937,602 15,359.98
Iron Ore Metric Tonnes 23,069,987 2,337.79
Others Not Reported NA 1,090.34
Silico Manganese Metric Tonnes 125,553 700.45
Limestone Metric Tonnes 3,215,608 666.70
Ferro Manganese Metric Tonnes 73,819 533.34
Coke Metric Tonnes 225,536 525.02
Dolomite Metric Tonnes 3,089,311 325.16
Aluminium Metric Tonnes 16,795 197.99
Ferro Silicon Metric Tonnes 25,233 171.39
Hot Rolled Stainless Steel Coils Metric Tonnes 16,913 92.36
Zinc Metric Tonnes 6,749 75.51
Intermediary Products Metric Tonnes 57 0.37
Total 22076.4
The table above shows the cost and quantity of raw materials used for
production.
Within a short period of time since its commissioning, the plant achieved
high levels of performance in production and technological norms. Right
from the year of its integrated operation, VSP established its presence both
in the domestic and international markets with its superior quality of
products. VSP has been awarded all the three international standards
certificates, namely, ISO 9001:2000, ISO 14001:1996 and OHSAS
18001:1999. RINL-VSP is the first Indian steel plant to get the 'Capability
Maturity Model Integrated (CMMI) - Level 3' certification issued by 'Software
Page | 37
Engineering Institute (SEI) of Carnegie Mellon University', USA for
implementation of IT systems in VSP. RINL-VSP is the first PSE & first in
Steel sector in India to get BS EN 16001 (Energy Management system)
certification on 28.12.10, a recent feather in it's cap. The company has
emerged as a good corporate citizen and has contributed substantially for
the development of the region.
Production performance
The physical performance in terms of production and percentage
achievement of rated capacities along with financial/marketing performance
for the year 2010-11 (Actual upto Dec '10 and forecast for the period Jan-
Mar '11) is given below:
The company has drawn its Corporate Plan aiming to reach 20 Million Tonnes by 2019-
20 in phases and is presently executing its first phase of expansion of liquid steel
production to 6.3 Million tonnes from 3.0 Million tonnes.
Raw materials
RINL is the only Public Sector integrated steel producer without captive
linkage for major raw materials such as Coking Coal and Iron Ore. RINL
faces challenges, during 2010-11, on multiple accounts:
Page | 38
Quarterly pricing mechanism introduced by international coking coal
suppliers.
Ensure wider vendor base for adequate availability of raw materials to
meet the requirements after 6.3 MT expansions.
Ensure availability of coking coal during Q4 when Force Majeure was
declared by Australian suppliers.
Page | 39
is 50,000 per annum. Loading, transportation and unloading is carried by
contractual agency. Only one Junior Officer is posted to look after the mining
activities of Saripalli sand Mine. The total reserve of sand is 3,20,000
tonnes.
All these factors have attributed to the development of TISCO the installed
capacity of the plant is 2 million tonnes of steel ingots per annum. In
addition to steel, various types of items like bars, rails, billets, tin plates, tin
sheets, railway wheels, steel wires etc. are manufactured.
TISCO also runs another steel plant set up in Orissa at Gopalpur, 170 km SE
of Bhubaneswar.
Coastal location
Nearness to iron ore
Cheap land
Page | 40
Fresh water from streams
Production performance
1. Steel division:
The production and sales figures of the Steel division of the Company are
shown in the following table:
Sales
• Overall sales at 6.42 million tonnes grew by 4% over last year (6.17
million tonnes in FY 10).
Flat Products
sales performance in Skin Panel (0.49 MT) and Galvanised Annealed (0.83
MT).
Page | 41
Long Products
The trend of production and sales volume of Ferro Alloys & Minerals Division
is shown below:
Page | 42
3. Tubes division:
The trend of production and sales volume of Tubes Division is shown below:
4. Bearings division:
Raw materials
The raw materials division of the steel company raises over 14 million
tonnes of ores from its captive collieries, iron ore mines and quarries spread
over the states of Jharkhand and Orissa. Coal, iron ore, manganese ore,
Page | 43
chrome and dolomite are produced at various mines and quarries. The
Company's steel plant in Jamshedpur and its customers consume the high-
grade raw materials from these units.
Tata Steel Limited has two collieries in West Bokaro and Jharia, in the
state of Jharkhand. While West Bokaro unit is an open cast mine, the
Jharia unit is underground. The coal mines are about 150 kms from the
steel plant at Jamshedpur and produce superior grades of clean coal.
The iron ore units are located in Noamundi, Joda and Katamandi in the
states of Jharkhand and Orissa. The Steel Company's iron ore units
produce 9 million tonnes per annum of various grades of high quality iron
ore including rich blue dust ore.
Tata Steel Limited also has a manganese mines and dolomite quarries
in Orissa.
To enrich its raw material supply Tata Steel Limited has also set up
joint ventures outside India in Queensland, Australia and
Thailand.
Page | 44
Iron Ore Metric Tonnes 11,737,116 896.84
Dolomite & Limestone Metric Tonnes 2,392,355 495.67
Zinc & Alloy Zinc Metric Tonnes 21,231 234.31
Ferro Manganese Metric Tonnes 23,836 103.82
Total 7665.15
The table above shows the cost and quantity of raw materials used for
production.
JSW Steel offers the entire gamut of steel products – Hot Rolled, Cold
Rolled, Galvanized, Galvalume, Pre-painted Galvanised, Pre-painted
Galvalume, TMT Rebars, Wire Rods & Special Steel Bars, Rounds & Blooms.
By 2020, the Company aims to produce 34 million tons of steel annually with
Greenfield integrated steel plants coming up in West Bengal near Salboni
about 35 km from Kharagpur and Barenda in Ranchi district of Jharkhand.
Page | 45
Production performance
Raw materials
Iron ore: The Company has been allotted iron ore mines for its captive
requirement, which are at various stages of clearance. Of these, the mine at
Page | 46
Hadimmapade in Karnataka (with 36mn tons reserves of 63% Fe grade) is
likely to begin operations in FY12. JSW
has received environmental clearance for the same and expects the pending
forest clearance to come shortly. The estimated landed cost is Rs600/ton.
With the commissioning of the mine, JSW‟s captive iron ore would rise from
the current 16% to 40%, thereby saving Rs2,000/ton on steel cost.
However, our estimates do not factor in any benefit from the same. We
believe that the clearance for the mine will be a major positive trigger for
the company over the next six months.
Coal: The Company has been allotted Rohne coal block in Jharkhand, which
has geological reserves worth 250mn tons of mineral reserves of medium
and high grade coking coal. The mine is held jointly by JSW and two other
companies in the ratio of 69%, 24% and 7% respectively. The annual
capacity of the mine would be ~8mn tons and JSW‟s share of the mine
comes at 5.6mn tons per year. On JSW‟s expanded steel manufacturing
capacity, output from this mine will be able to meet more than 50% of
coking coal requirement.
Power: JSW currently has a power capacity to produce 230MW from waste
heat gases at Vijay Nagar, 30MW at Tarapur and 30MW at Salem. The
current power generation is not enough to meet JSW‟s complete power
requirement. The company is now setting up a 300MW power plant at
Vijaynagar other than the 300MW power plant associated with the 3.2MTPA
expansion plan to meet its rising demand from the rolling mill. The first
300MW power plant associated with the 3.2MTPA expansion plan is expected
to be operational by October ‟10 and the second 300MW power plant would
be operational by June ‟11. With the commissioning of both the power
plants, JSW would be self-sufficient for its complete power requirement on
Page | 47
the expanded capacity of 3.2MTPA. The company has been allotted the Utkal
thermal coal block (11% share in the JV) for its thermal coal requirement.
The table above shows the cost and quantity of raw materials used for
production.
Manufacturing Facilities:
DRI - Sponge Iron Plant
Blast Furnace
Compact Strip Production
2. Integrated Steel Plant at Kalmeshwar, Maharashtra The integrated steel
plant at Kalmeshwar uses the latest steel manufacturing technology to
produce galvanized sheets and products, apart from cold rolled coils. The
Page | 48
Kalmeshwar complex houses a total of three advanced plants - a 0.325
million tonnes Galvanized Plain/Galvanized Corrugated plant, a 0.33 million
tonne Cold Rolled Coils plant and a 60,000 tonne Colour Coated Sheets
plant.
Manufacturing Facilities
Cold rolling mill
Galvanizing line
Colour coating line
Production performance
Page | 49
Restriction in availability of Natural Gas had cascading effect on input prices
and also severely impacted production of Direct Reduced Iron.
Raw materials
Ispat is the only steel maker in India and among a few in the world to have
total flexibility in choice of steel making route, be it the conventional blast
furnace route or the electric arc furnace route. Its dual technology allows
Ispat the freedom to choose its raw material feed, be it pig iron, sponge
iron, iron ore, scrap or any combination of various feeds. It also has total
flexibility in choosing its energy source, be it electricity, coal or gas.
Page | 50
Coke Metric Tonnes 1,076,900 1,798.64
Iron Ore Pellets Metric Tonnes 1,781,007 1,273.34
Sintered Products Metric Tonnes 2,767,726 1,223.89
Coils (Hot Rolled) Metric Tonnes 348,721 1,034.14
Iron Ore Lumps Metric Tonnes 1,619,714 913.93
Coils (Cold Rolled) Metric Tonnes 243,182 791.45
Iron Ore Fines Metric Tonnes 2,125,272 743.44
Others Not Reported NA 332.20
Scrap (Melting) Metric Tonnes 171,671 291.63
Ferro Alloys Not Reported NA 256.90
Coils Galvanised Metric Tonnes 61,275 227.55
Coal Metric Tonnes 319,386 222.17
Galvanised Products Metric Tonnes 20,370 84.48
Zinc & Zinc Aluminium Alloy Metric Tonnes 7,137 73.41
Pig iron Metric Tonnes 22,179 38.44
Hot Briquetted Iron Metric Tonnes 18,003 20.70
Total 15344.99
The table above shows the cost and quantity of raw materials used for
production.
Essar Steel has built an 8 MTPA iron ore pellet plant in Visakhapatnam,
Andhra Pradesh, to cater to the pellet requirements of the HBI plant in
Hazira, Gujarat. The plant has an assured supply of high-quality iron ore
from the beneficiation plant at Bailadilla, Chhattisgarh. The pellets produced
at the plant are DRI grade. The plant is located strategically near a deep
draft, all-weather port that ensures the movement of large vessels to supply
pellets throughout the year to the Hazira steel-making facility.
Page | 51
Hazira facility
Steel complex at Hazira, Gujarat, houses a 6.8 MTPA sponge iron plant, the
world's largest gas-based sponge iron plant in single location. The plant
provides raw materials for our state-of-the-art 7.5 MTPA hot rolled coil
(HRC) plant, the first and largest of India's new generation steel mills. This
plant is fed with inputs from four electric arc furnaces and three casters. The
complex's sophisticated infrastructure includes independent water supply
and power, oxygen and lime plants, a township and a captive port capable of
handling up to 8 MTPA of cargo with modern handling equipment like barges
and floating cranes.
Our steel complex at Hazira (Gujarat, India), houses a 10 MTPA steel plant,
which is the largest single-location flat steel producer in India and the
fourth-largest single-location flat steel producer globally. . The plant is
supported by a complete infrastructure setup, including a captive port,
power plant, lime plant and oxygen plant.
Plate Mill
Essar Steel has a state-of-the-art plate mill at Hazira, Gujarat with a
capacity of 1.5 MTPA, making it one of the widest plate mills in the world.
Essar plates undergo close process metallurgy and chemistry, keeping in
mind the specific requirements of different application segments The state-
of-the art plant is not only capable of producing high-quality plates but also
conforms to clean steel norms prescribed by all leading international
standards agencies.
Pipe Mill
The Pipe Mill, located at Hazira, Gujarat, has a combined capacity of 0.6
MTPA of helical submerged arc welded (HSAW) and longitudinal submerged
arc welded (LSAW) steel pipes along with internal and external coating
facilities of up to 2 million square meters annually. This pipe making facility
is backed by external and internal anti-corrosion coating facilities.
Page | 52
reversing mill and a 1.2 MTPA tandem mill, two galvanizing lines of an
aggregate capacity of 0.5 MTPA, a batch annealing furnace of 0.7 MTPA, and
a skin pass mill of 1.0 MTPA. This enables us to get into the genre of
products that are tailor-made for the automotive, white goods, shipbuilding,
agriculture and construction industries - segments that had been the
exclusive domain of a few international manufacturers. Essar now holds the
leadership position in the cold rolling, galvanizing and pre-coated segments.
The Essar Steel Pune facility is strategically located near Pune, Maharashtra,
which is one of the largest industrial hubs in India. The facility comprises a
0.6 MTPA Pickling line, a 0.6 MTPA Cold Rolling mill, a 0.5 MTPA Galvanising
line and a 0.4 MTPA Colour Coating mill.
Essar Steel commissioned a six million tonnes per annum (mtpa) pellet-
making facility at Paradip in Odisha in April 2012. This is the first phase of
the 12 mtpa pellet plant to be commissioned by 2013.
The plant has an assured supply of high-quality iron ore from the
beneficiation plant at Dabuna, Orissa. Its close proximity to the Paradip port
ensures that the pellets are quickly shipped to the steel plant in Hazira in
Gujarat.
Production performance
Essar Steel has a total iron making capacity of 10.2 MTPA using three
technologies – HBI/DRI, Corex and Blast Furnace. These technologies
provide flexibility in terms of raw material inputs, be it iron ore or energy.
The Hot Briquetted Iron (HBI) plant at Hazira is one of the world's largest
gas-based plant with a production capacity of 6.8 MTPA, while the Corex and
Blast Furnace facility has a production capacity of 1.7 MTPA each. The plant
is supported by a captive power plant of 32 MW and is equipped with state-
of-the-art technology to optimize raw material costs.
Page | 53
Essar has emerged as the largest pellet producer in India with a capacity of
14 mtpa.
The CONARC and EAF facilities provide liquid steel for the 8.6 MTPA hot
rolled coil (HRC) plant, the first and the largest of India's new generation
steel mills, and the most modern 3.5 MTPA Compact Strip Mill.
Essar Steel is the only Indian steelmaker with a 1.2 MTPA hot skin pass mill
that enhances the steel's surface quality to match international standards.
Pickling
Two pickling lines with a combined capacity of 1.4 MTPA and turbulence
technology ensure the production of a perfect steel strip with clean, scale-
free surfaces without over-pickling the steel strip.
Cold Rolling
A sophisticated 2 MTPA Cold Rolling plant adds further muscle to the steel-
making facilities. Equipped with a reversing mill, a 1.2 MTPA tandem mill
and a batch annealing furnace of 0.7 MTPA, the plant manufactures the
finest cold rolled product.
Galvanising
The Essar Steel Hazira complex has two galvanising lines with an aggregate
capacity of 1 MTPA. By applying a coating of molten Zinc to the surface of a
Cold Rolled product, the lines manufacture galvanised coils that have
excellent corrosion resistance and are used extensively in various industries.
Raw materials
Page | 54
Dabuna: Beneficiation plant
Patratu, Jharkhand
Page | 55
Angul, Orissa
Expanding its reach in the domestic market, JSPL has gone ahead to make
considerable investments in various parts of Orissa. The company would be
investing US $10.00 billion in the state for steel production and power
generation. The proposed steel plant to be set up in Orissa will produce 12.5
MTPA steel in phases and generate 2600 MW of power in phases.
In the first phase, the company is setting up a 6.0 million TPA integrated
steel plant at Angul along with a 900 MW of captive power generation
facility.
Production performance
JSPL products cater to diverse Industry needs, Widening visibility and brand
recall.
Sponge Iron
Steel
The production of steel products during the year under report, compared to
previous year is given below:
Page | 56
Ferro Chrome
Raw materials
The mines at Tensa meet a part of the company‟s iron ore requirement
for the sponge iron plant. Equipped with fully mechanized techniques, it
currently produces about 9,00,000 MT of sponge grade iron ore. An
additional mobile screening unit has been installed to ensure the
availability of high-grade iron ore / fines for its sinter plant at Raigarh
(Chhattisgarh).
Spread over 705 hectares, Tanmar coal mine is well connected to JSPL's
Raigarh plant by a metal road built exclusively for this purpose. The
working faces and the haul roads are regularly sprinkled with water to
keep them dust free. The production capacity of the mines is 6 million
MTPA and the entire coal is used for steel making and power generation.
The table above shows the cost and quantity of raw materials used for
production.
Page | 57
The Khopoli plant, commissioned in 2004 has been playing a remarkable role
not only in the growth of exports, but in the production of a much wider
variety of value added steel like Colour Coated Sheets, High Tensile Steel
Strappings, Hardened and Tempered Strips and Precision Tubes. In addition
to these, the Khopoli plant has recently launched the Value Added Product
such as “Galume” added steel (Aluminium & Zinc Coated Sheet) for the first
time in the country.
Production performance
Bhushan Steel Limited has a portfolio of flat products, which are
manufactured at steel processing facilities at Sahibabad, Uttar Pradesh. The
Company is producing cold rolled close annealed coils (CRCA), galvanized
sheets, precision tubes, high tensile steel, hardened and tempered steel strip
(H&T strips), wire-rods, color-coated sheets and galume. The Company also
produces, sponge iron, pig iron, billets, slabs, HRC and power. During the
fiscal year ended March 31, 2011, the Company partially installed the Phase
II of the integrated steel plant at Orissa with the production facility of hot
roll coil mill (1.90 million tons per annum). During fiscal 2011, the Company
Page | 58
manufactured 1191,415 million tons of cold-rolled steel strips/sheets/coils;
545,196 million tons of cold-rolled galvanized steel strips/sheets/coils;
118,691 million tons of color coated galvanized steel strips/sheets/coils, and
126,642 million tons of precision tubes.
Raw materials
Iron Ore: The company has been allotted iron mines at Barbli Orissa to the
tune of 60MT. BSL is in the process of obtaining necessary environmental
clearance, the mines are expected to be operational by the end of FY13.
Coking Coal Mines: BSL has been allotted the Utran coking coal mine,
which has grades of soft coking coal with reserves of 55MT. This mine will
55MT reduce the company‟s coking coal dependence as the coal from these
mines will be blended with hard coking coal from Australia.
Thermal Coal Mines: BSL has been allotted coal mines in New Patrapara,
Orissa, in a joint venture with Visa Steel, SMC Power Generation Ltd, Orissa
Sponge Iron and Steel, Deepak Steel and Power, Sri Metaliks and Adhunik
Corp. The company holds majority chunk (50% stake) in the joint he (
venture. Total reserves are estimated to the tune of 650MT, of which BSL‟s
share will be 325MT, the mines are expected to be operational by Q2 of
FY13.
Bowen Energy: As a strategic move, the company has acquired 60% stake
in Bowen Energy Australia through its subsidiary Bhushan Steel (Australia)
for Rs70cr, with an aim to ensure long term supply of quality coking coal.
Bowen Energy has licenses to explore 3 coking coal blocks in Bowen basin
coal in Queensland, Australia.
Page | 59
Raw Materials ------------------- in Rs. Cr. ------------------- Mar 2011
Product Name Unit Quantity Value
CR/HR Coils/Strips/Skelp Metric Tonnes 1,035,128 2,509.96
Coal Metric Tonnes 2,303,283 753.41
Iron Ore Metric Tonnes 2,162,496 505.26
Zinc & Alloy Zinc Metric Tonnes 39,432 426.79
Paints Metric Tonnes 3,765 59.62
Dolomite Metric Tonnes 157,971 21.85
Total 4276.89
The table above shows the cost and quantity of raw materials used for
production.
Today, apart from its three speciality rolling mills at Howrah, the company is
proud to have two integrated steel plants at Durgapur and Barbil in Orissa
state.
Page | 60
(i) DRI Unit
(ii) The Steel Melting Shop equipped with Electric Arc Furnace
(iii) Continuous Billet Casting Plant, and
(iv) Rolling Mill
Shyam Steel Industries Ltd. is the only company in the private sector
offering the widest range of construction steel. Its range of TMT Re-Bars
suffices the rarest need of a civil engineer.
The range of Structural Steel offered by the company meets the demands of
the engineering sector. The products offered are:
Production performance
The hot rolled steel production saw a jump from 211,190MT in 2009 to
258,756MT in 2010.An increase of 22.52%.
Jai Balaji Group is one of the largest manufacturers of steel in the private
sector in Eastern India. We have integrated facilities for producing steel in
Page | 61
our eight manufacturing units spread across the states of West Bengal,
Chhattisgarh, Orissa and Jharkhand in India.
Our Group has a chain of value-added products which include DRI, Pig Iron,
Ferro Alloys, Alloy and Mild Steel Billets, Reinforcement Steel TMT Bars, Wire
Rods, Ductile Iron Pipes and Alloy and Mild Steel Heavy Rounds. We draw
our strength from an old tradition of reliable customer service and quality
products.
With vibrant and dedicated employees forming the core of our Group, we
have grown from strength to strength under the dynamic leadership of our
promoters and directors. Our combined experience has propelled our Group
into the league of formidable steel players in Eastern India, which has not
only diversified into power generation in West Bengal and Chhattisgarh but
has progressed work in allied industries like cement as well.
Jai Balaji is an integrated steel manufacturer with five units in three mineral-rich states
Production performance
Power 116.80 MW
Page | 62
Jai Balaji industries ltd. has to reduce the volume of product mainly due to
high cost of raw materials (i.e. coke & iron ore). It introduced a line of
product „Ductile Iron Pipe‟. Although it reduced the steel products, it
produced more power over last year.
Page | 63
In 2005, the company was allotted coking coal mines in the state of
Jharkhand and is in process of developing it. As the Indian coal has a higher
percentage of ash, it has also set up a Washery of 2 million TPA to reduce
the ash from coking coal.
The company has also been allotted an Iron Ore mine at Kodolibad in state
of Jharkhand. Once this mine is developed, it would help in reducing the
production cost further.
Production performance
The production of DI pipes increased during the year from 2,35,463 MT last
year to2,70,327 MT i.e. by 14.81%.
2008-09 2,51,823 MT
2009-10 2,35,463 MT
2010-11 2,70,327 MT
Page | 64
Production of DI Fittings increased during the year from 4,683 MT last year
to 5,038MT. Company improved the performance of the division by targeting
more value added products and higher exports to niche markets.
Page | 65
6.3.4. Usha Martin Ltd.
The company set up a steel plant with wire rod rolling mill at Jamshedpur, to
benefit from business integration. This ensured a steady supply of steel for
the manufacture of value added products. Today, the Jamshedpur unit has a
truly integrated speciality steel manufacturing facility of 700,000 MT per
annum. Out of which, about 35% is consumed internally by its plant in
Ranchi, Hoshiarpur & Bangkok, producing steel wire, steel strand, steel
cords, bright bar and steel wire ropes.
Factory/plant
Production performance
Finished Products
PRODUCT INSTALLED PRODUCTION SALES
UNITS
NAME CAPACITY QUANTITY QUANTITY
Wire Ropes,
Strands & Metric
129708.00 104004.00 99759.00
Locked Coil Tonnes
Wire Ropes
Metric
Bars 323000.00 173048.00 152586.00
Tonnes
Metric
Wire Rods 400000.00 318567.00 128117.00
Tonnes
Metric
Wires 111060.00 80087.00 72330.00
Tonnes
Metric
Rolled Product 72300.00 42581.00 42164.00
Tonnes
Metric
Bright Bars 25480.00 19278.00 15812.00
Tonnes
Page | 66
Metric
Billets 1000000.00 500140.00 6589.00
Tonnes
Metric
Conveyor Cord 3600.00 1786.00 1766.00
Tonnes
Metric
Pig iron 570000.00 292994.00 5177.00
Tonnes
Equipment &
Material for
Prestressed Pieces 6500000.00 1892326.00 1874096.00
concrete
System
Ferrules,
Stings, Fitting Pieces 700000.00 116057.00 123976.00
& Accessories
Hydraulic
Mach. &
Presses Proof Pieces 100.00 60.00 60.00
Load. Mach.&
Accesories
Jointing
Pieces 100000.00 20637.00 20637.00
Products
Metric
Sponge Iron 300000.00 237209.00 0.00
Tonnes
Usha Martin has been producing under capacity. Billets is being produced at
50% capacity, pig iron is being produced at 51.4%. The maximum capacity
utilization is in case of sponge iron at 79%.
The table above shows the cost and quantity of raw materials used for
production.
Page | 67
6.3.5. Adhunik Metaliks Limited
Adhunik Metaliks Limited (AML), the flagship of the Group, has emerged
as one of the fastest growing alloy, special and construction steel
manufacturing companies in the country with significant presence in the
mining and power sectors through its subsidiaries. It has completed almost
all major capital expenditure for both backward and forward integration and
emerged as an integrated manufacturer of special steel with downstream
utilization of products.
It has been allotted a captive iron ore mine at Keonjhar and captive coal
mines at Talcher and Angul in Orissa.
Page | 68
Products
Auto Steel
Bearing Steel
Spring Steel
Carbon Heading Steel
Cold Heading Steel
Shape Steel
Free Cutting Steel
Stainless Steel
Production performance
There has been considerable decrease in the amount of ferro alloys & billets
produced.
There has negligible change in the amount of rolled steel produced during
the Q4 10 to Q3 12.
There has been an increase of pig/hot iron produces from 9478 tonnes to
15789 tonnes.
The above table shows quantity and cost of raw materials used.
Page | 69
7. Profile of the industry
Indian Steel industry is almost 100 years old now. Till 1990, the Indian
steel industry operated under a regulated environment with insulated
markets and large scale capacities reserved for the public sector. Production
and prices were determined and regulated by the Government, while SAIL
and Tata Steel were the main producers, the latter being the only private
player. In 1990, the Indian steel Industry had a production capacity of 23
MT. 1992 saw the onset of liberalization and the Indian economy was
opened to the world. Indian steel sector also witnessed the entry of several
domestic private players and large private investments flowed into the
sector to add fresh capacities.
The last decade saw the Indian steel industry integrating with the global
economy and evolving considerably to adopt world-class production
technology to produce high quality steel. The total investment in the Indian
steel since 1990 is over Rs 19,000 crores mostly in plant equipments, which
have been installed after 1990. The steel industry also went through a
turbulent phase between 1997 and 2001 when there was a downturn in the
global steel industry. The progress of the industry in terms of capacity
additions, production, consumption, exports and profitability plateaued off
during this phase. But the industry weathered the storm only to recover in
2002 and is beginning to get back on its feet given the strong domestic
economic growth and revival of demand in global markets.
With a current production of 72.2 MT the Indian Steel Industry is the 4th
largest producer of steel in the world. Today, India produces international
standard steel of almost all grades/varieties and has been a net exporter for
the past few years, underlining the growing acceptability of its products in
the global market.
Steel is a highly capital intensive industry and cyclical in nature. Its growth
is intertwined with the growth of the economy at large, and in particular the
steel consuming industries such as manufacturing, housing and
infrastructure. Steel, given its backward and forward linkages, has a large
multiplier effect. It spread over three Business Sessions dealing with issues
confronting the growth of the steel sector.
- Infrastructure Requirements and Environmental Concerns in Steel Projects
- Raw Materials and Energy Inputs to Steel Sector
- Competitiveness & Investment in Indian Steel Sector
India has been recognized as a potential growth centre for the steel
industry the world over. Foreign investors, global steel players, as well as
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Indian entrepreneurs are showing great interest in setting up Greenfield
projects in the country as well as adding to the existing capacity.
Source: WSA
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7.2. Domestic Scenario
The Indian steel industry has entered into a new development stage
from 2007-08, riding high on the resurgent economy and rising
demand for steel.
Rapid rise in production has resulted in India becoming the 4th largest
producer of crude steel and the largest producer of sponge iron or DRI
in the world.
As per the report of the Working Group on Steel for the 12th Plan,
there exist many factors which carry the potential of raising the per
capita steel consumption in the country, currently estimated at 55 kg
(provisional). These include among others, an estimated infrastructure
investment of nearly a trillion dollars, a projected growth of
manufacturing from current 8% to 11-12%, increase in urban
population to 600 million by 2030 from the current level of 400 million,
emergence of the rural market for steel currently consuming around
10 kg per annum buoyed by projects like Bharat Nirman, Pradhan
Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.
At the time of its release, the National Steel Policy 2005 had envisaged
steel production to reach 110 million tonnes by 2019-20. However,
based on the assessment of the current ongoing projects, both in
greenfield and brownfield, the Working Group on Steel for the 12th
Plan has projected that the crude steel steel capacity in the county is
likely to be 140 MT by 2016-17. Further, based on the status of MOUs
signed by the private producers with the various State Governments, it
is expected that India‟s steel capacity would exceed 200 MT by 2020.
The National Steel Policy 2005 is currently being reviewed keeping in
mind the rapid developments in the domestic steel industry (both on
the supply and demand sides) as well as the stable growth of the
Indian economy since the release of the Policy in 2005.
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In spite of being one of the largest producers of steel in the world,
India has been lagging behind other major steel producing countries in
terms of intensity of steel usage in overall economic activities (i.e., per
unit of GDP) or per capita consumption of steel. In 2010 our per capita
consumption of steel was only 51.7 kg as against the world average of
202.70 kgs. There is a tremendous potential for improvement in the
domestic steel consumption given the economy„s large untapped
markets especially in rural areas. This is reflected in the steady rise in
consumption levels over the last few years at a rate faster than the
world average growth rate as seen in the following Table
As for consumption of finished steel, while demand for certain steel products
such as GP/GC, CR & large dia. Pipes etc. was quite robust during the
period, that for others like Railway materials, structural and plates were
relatively much lower as shown
7.2.1. Production
Steel industry was delicensed and decontrolled in 1991 & 1992
respectively.
Today, India is the 4th largest crude steel producer of steel in the
world.
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In 2010-11 (prov), production for sale of total finished steel (alloy +
non alloy) was 66.01 MT.
Production of Pig Iron in 2010-11 (prov), was 5.54 MT.
India is the largest producer of sponge iron in the world with the coal
based route accounting for 78% of total sponge iron production in the
country (27 MT in 2010-11; prov.).
Last five year's production for sale of pig iron, sponge iron and total
finished steel (alloy + non-alloy) are given below:
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7.2.3. Steel Prices
Price regulation of iron & steel was abolished on 16.1.1992. Since then
steel prices are determined by the interplay of market forces.
Domestic steel prices are influenced by trends in raw material prices,
demand – supply conditions in the market, international price trends
among others.
An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel,
under the Chairmanship of Secretary (Steel) to monitor and coordinate
major steel investments in the country.
The Government also took various fiscal and other measures for
stabilizing steel prices like significant reduction in import duties on
steel, major raw materials, including mineral products and ores and
concentrates in last few years. Also, excise duty for steel is currently
at 10%. To ensure sufficient domestic availability and curb the rising
price of hot-rolled coils in the domestic market, its imports have been
freed by the government. The government has also imposed export
duty of 30% on iron ore fines and lumps in order to discourage its
export and conserve the mineral for long term requirement of the
domestic steel industry.
For ensuring quality of steel, several items have been brought under a
quality control order issued by the Government. The matter to bring
more steel items under this order is under examination.
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7.2.5. Exports of Iron & Steel
Iron & Steel are freely exportable.
Exports of finished carbon steel and pig iron during the last five years
and the current year is as :
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CATEGORY-WISE EXPORTS
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6. Cabinet decided that corpus could be recycled for loans to Main
producers
7. Interest on loans to Main Producers be set aside for promotion of R&D
on steel etc.
8. An Empowered Committee has been set up to guide the R&D effort in
this sector.
EGEAF – Was a levy started for reimbursing the price differential cost of
inputs used for engineering exporters. Fund was discontinued on 19.2.96.
The New Industrial policy opened up the Indian iron and steel industry for
private investment by (a) removing it from the list of industries reserved for
public sector and (b) exempting it from compulsory licensing. Imports of
foreign technology as well as foreign direct investment are now freely
permitted up to certain limits under an automatic route. Ministry of Steel
plays the role of a facilitator, providing broad directions and assistance to
new and existing steel plants, in the liberalized scenario.
(i) Steel
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(ii) Pig Iron
India is the world‟s largest producer of sponge iron with a host of coal based
units, located in the mineral-rich states of the country. Over the years, the
coal based route has emerged as a key contributor and accounted for 78%
of total sponge iron production in the country (27 MT; 2010-11; prov.).
Capacity in sponge iron making too has increased over the years and stands
at around 35 MT.
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8. Competitive advantage of the steel industry in East
India
During British rule, Tata Group founder Jamsetji Tata keenly felt that India
should develop heavy industry. He searched all over India for the most
appropriate site. After years of searching, he decided that Jamshedpur in
Jharkhand State was the best place. In 1912, Asia‟s first steelworks was
built there. East India is favorably located for blast furnace steelworks that
melt iron ore and coal to make molten iron. Since independence from
Britain, the government of India has established steelworks one by one in
Orissa, Chhattisgarh, West Bengal, and Jharkhand. As a result, these four
states collectively accounted for almost half of the entire steel production of
India as of 2009, showing that East India is a hub for the Indian steel
industry. With India continuously maintaining an economic growth rate of
about 8%, demand for steel, which is essential for construction,
infrastructure, and manufacturing, is growing by more than 10% each year.
It is no exaggeration that the future of the Indian economy is dependent on
East India‟s ability to increase production of steel, the “rice of industry.”
When it comes to factor conditions in the steel industry, East India has rich
iron ore and mineral reserves: 80% of the country‟s reserves of hematite,
80% of its coal, 95% of its chromite, and 92% of its nickel. The eastern
states have ample manganese ore reserves, too. Based on national mineral
production, India ranks fourth in the world in production of iron ore, third in
coal, second in chromite, and sixth in manganese ore. These high rankings
give an idea of just how rich East India‟s mineral reserves are.
East India‟s iron ore reserves are concentrated in Orissa, Chhattisgarh, and
Jharkhand, but not West Bengal. Much of these reserves is hematite, which
is suitable for steel production and has a high iron content of 62-66%. East
India has highly favorable conditions for steel production compared to South
Indian states such as Karnataka, whose reserves have a high percentage of
magnetite with an iron content of only 35-45%.
India has approximately 267.2 billion tons of coal reserves, but only
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33.4 billion tons are coking coal reserves for steel production, accounting for
only 12.5% of coal reserves. Most Indian steelmakers are dependent on
coking coal imports, because most of the reserves are low-grade coal with
high ash content. To make matters worse, the international coking coal
price, which was USD 55/ton in 2004, has recently exceeded USD 300/ton.
Under these circumstances, India is seeking ways to utilize coking coal
buried in the country. The major coal belts in India are located in Orissa
(24% of total reserves), Jharkhand (29%), Chhattisgarh (16%), West
Bengal (11%), Andhra Pradesh, Madhya Pradesh, and Maharashtra. Coking
coal is mostly found in Jharkhand.
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North India is home to the consumer electronics companies such as LG,
Samsung, Whirlpool, and Hitachi, as well as Indian companies including
Videocon, Voltas, and Godrej. West India has LG, Whirlpool, and Siemens,
and some Indian companies. In South India, there is Samsung, Whirlpool,
Sony Ericsson, and Nokia. On the other hand, there is just one Indian
consumer electronics company in East India. Shipyards are primarily located
in West and South India, and machinery companies are mainly distributed
throughout North and South India.
Steel demand in East India totaled 14.45 million tons, accounting for only
24.1% of the national demand. If high-end steel production increases and
the investment environment improve, many more manufacturing companies
will build plants in East India.
Logistics costs account for a huge proportion of the expenditures of the steel
industry. However, East India does not have a competitive edge in logistics
infrastructure, including roads, railways, power, and ports, compared to
other regions.
There are currently only three major ports in India. However, the deepwater
shore of East India provides favorable conditions for the shipping of steel
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materials and products. In addition, East India is relatively close to
Southeast Asia, a major net importer of steel.
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hindered by backlash from residents, JSW and Bhushan Steel are planning to
construct steel plants in West Bengal, where there are no iron ore reserves.
These companies decided to give up captive mines to more easily secure
steel plant sites. Many of these projects have not been realized, but
competition among steel companies in East India will surely become fiercer
than ever.
In conclusion, East India has all of the factor conditions for development of
the steel industry, but it has limited executive ability. Therefore, unless
central and state governments take innovative measures, the two hundred
MOU‟s are very likely to be cancelled. It is expected that steel production will
be far short of demand, and net imports to reach 40-50 MT by 2020. It
seems that production capacity will likely increase only after all stakeholders
reach consensus. However, it is expected that reaching such a consensus
will take few years.
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Proposed Region-Wise Capacity - 2012
The above figure shows the proposed the region wise capacity-2012. This
shows the dominance of steel industries on the Eastern India. The proposed
capacity is highest in Orissa with 38 MTPA followed by Jharkhand with 34
MTPA. This indicates the strategic advantage of Eastern India for steel
manufactures.
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9. Trends in International Trade in Iron & Steel
Prior to deregulation, imports of steel were permitted under a rigorously
defined Foreign Trade Policy designed to bridge the gap between domestic
demand and domestic availability. Like most other industries the steel
industry was also insulated from foreign competition by high import tariffs
and quantity restrictions via canalization and import licensing. As for
exports- it took place primarily to take care of surplus availability if any.
During the first four years of the 11th plan period (i.e. up to 2010-11),
additions to existing capacities have not been adequate to meet the growing
demand. Further, with the onset of global financial crisis, there was
significant decline in global demand and International Steel Producers had to
substantially scale down their operations. Under such conditions margins on
export sales had also come under pressure and domestic producers had to
opt for domestic sales to contain their losses. As a result finished steel
exports declined from 5.24 million tonnes in 2006-07 to 3.46 million tonnes
in 2010-11. Exports of semis have also showed a similar declining trend
during the period.
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As regards steel Imports –it remained static around the pre-liberalization
level of 1- 2 million tonnes per annum till 2003-04 but thereafter almost
doubled between 2003-04 and 2005-06 i.e., from 1.7 million tonnes to 4.1
million tonnes. This surge has continued during the 11th plan also - primarily
to bridge the gap between domestic demand and availability as well as due
to price considerations. From 4.93 million tonnes in 2006-07 steel imports
peaked to 7.38 million tonnes in 2009-10 before declining marginally to 6.8
million tonnes in 2010-11. An important reason for the high level of imports
during the 11th Plan has been the domestic non-availability or limited
availability of sophisticated/specialized steel products like the following:
i. CR Sheets / Coils for Auto Sector
ii. CRGO and High Grades of CRNO
iii. Over Dimensional Plates, Quenched and Tempered Plates, Special grades
of Boiler Quality Plates, etc.
iv. Organic coated, Vinyl coated sheets.
v. Prime quality Tinplate (OTSC Grade)
vi. API Grade large diameter pipes etc.
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10. Trend in prices of steel and raw materials during
the 11th Plan
Today prospects of the steel industry are primarily determined by market
forces-domestic as well as global, and these signals are transmitted through
the movements in the prices of both raw materials and the finished
products. During the first three quarters of 2007-08, the steel prices after
remaining stable had witnessed sharp increase which was coupled with high
volatility from the last quarter of 2007-08. The rising trend in steel prices
continued till July 2009. Government and large scale integrated producers
both in public and private sectors took following important initiatives to
moderate the impact of rise in steel prices on the general inflation levels:
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USA with adverse implications for investment and manufacturing activities
within the country. Another important factor that contributed to the pressure
on prices during the year specially of core raw materials was the earthquake
and floods in the world„s major producer and exporter i.e. Australia with
adverse impact on global availability. In fact the movement in the Quarterly
Price Index may also confirm that substantial part of increase in steel prices
could be traced to the steep rise in prices of raw materials crucial for steel
making i.e. coking coal, iron ore.
Coking coal accounts for about 45% of the raw material cost for steel
manufacturers in India. Rising coal prices affected the profit margins of steel
producers and support an increase in iron ore prices. The effect of coal
prices had an impact when steel makers sign a contract with mining
companies for Q2 2011. The steel prices in India increase by USD 20-30 per
metric ton in that quarter.
These higher prices drove steel companies' margins down by 400-500 basis
points, compared to the January-March quarter. Fall in margins of steel
companies was reflected in the stock values on the BSE. Shares of JSW
Steel, which had bought 45% in rival Ispat Industries, fell the maximum in
the period, by about 23%, while Tata Steel, India's largest private
steelmaker was down 6%. Other companies including state-run SAIL fell
about 12%, while the stock of Jindal Steel & Power was down about 7%.
Margins of most steel companies, especially those that don't have captive
resources, were under pressure. While steel companies have already raised
prices, twice in January, the cost pressures dented the profitability figures at
two large companies; SAIL and JSW Steel.
SAIL Q3 2011 net profit fell 34% to Rs 1,107 crore due to high coal prices.
This also came as a surprise as integrated steelmakers, who constitute 25-
30% of India's steelmaking capacity, were expected to be insulated from
rise in prices as they source all of their iron ore, and a large part of their
coking coal, from captive mines.
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10.1. Iron ore, coking coal prices not to see big
movement in 2013
The global crude steel production is likely to grow by only two per cent in
2013 and with this, there would not be much movement in the coking coal
and iron ore prices.
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Following the floods, the cost of the coking coal jumped to USD 330 per
tonne in the first quarter of the last fiscal from USD 200 a tonne in the year-
ago period.
Global iron ore prices mostly depend upon demand from China, though the
Chinese economy is expected to grow by eight per cent this year but steel
industry is not expected to show strong growth.
So, if the Chinese steel production comes down, then obviously the demand
for iron ore also comes down. Besides, a lot of iron ore mines have been
developed globally helping China to secure iron ore from diverse sources.
Thereby, its compulsion to get ore from one single country has reduced.
Hence, iron ore prices are also getting settled.
The worst appears to be over for Indian steel makers, at least in the short to
medium term, as domestic steel prices have improved and raw material
costs have come down.
Domestic steel prices, as measured by the Indian Steel Price Index, are
about 7% higher than the year ago period. This is an improvement of about
4% since the October-December 2011 quarter.
Since the tax is levied on profits of mining companies, they are not expected
to pass this on to their consumers, thereby having no impact on export of
coal to Indian steel companies.
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10.3. Impact of Coal India Ltd‟s New pricing system
for thermal coal
Coal India Ltd (CIL) has adopted a new pricing system for non-coking coal
from January 1, 2012, and has also increased the prices of non-coking coal.
The company has benchmarked non-coking coal on the basis of gross
calorific value (GCV) as against the prevalent system of Useful Heat Value
(UHV) benchmarked pricing. The price revision is applicable only for non-
coking coal, with no change to coking coal prices. The revised prices and
pricing mechanism would be reviewed by Coal India at the end of the
quarter.
Sponge iron price to rise due to hike in coal prices; margins to fall
Players to largely pass on cost increase of coal. As coal accounts for 30-35
per cent of the sponge iron manufacturing cost, the increase in coal price will
lead to a further decline in the already poor financials of sponge iron players.
To compound matters, sponge iron players are already grappling with high
iron ore cost.
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11. Issues in Indian Steel Industries
In view of the limited availability of coking coal in the global market and the
fact that its supply is controlled by a few large companies, it will be
extremely important to increase the domestic production of coking coal and
upgrade its quality to meet the requirements of steel making. Technologies
which require less of coking coal and lower grades of it will need to be
encouraged.
Non-coking coal used for production of sponge iron is also increasingly
becoming scarce in the country. With the demand for non-coking coal from
priority sectors like power, Fertilizers etc going up further, its availability for
steel making is likely to be limited during the 12th plan. While sponge iron
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producers may opt for import of coal, the economic viability of this sector
may be under pressure due to higher prices of imported coal. Moreover, the
gas based DRI units face restricted supply of CNG, largely due to priority
allocation of gas to power and fertilizer sectors. Supply of CNG to this sector
is a major concern for its growth and these units may have to depend more
on imported source of fuel supply. Many existing and new producers propose
to create additional capacity manifold under gas based route in Twelfth plan
period.
11.2. Infrastructure
Development and growth of Infrastructure sector is critical for rapid growth
of domestic steel industry in the country. Steel industry is a major user of
infrastructural facilities especially of Railways, roads, power, and ports.
Besides, the competitiveness of domestic steel industry depends heavily on
the expansion and provision of efficient infrastructural facilities. As per the
working group projections, the steel production in the country will nearly
double within the next five years. This requires rapid growth of railways,
roads, ports and power facilities. The existing infrastructural facilities are not
adequate. The domestic steel industry meets 70% of its coking coal
requirement from imported sources and if the same trend is maintained,
nearly 50 million tonnes of coking coal will have to be imported by 2016-17.
There is urgent need for expansion of port capacity to handle the raw
materials and finished goods of steel sector. The steel plants which are likely
to come on stream in Twelfth plan period will need to transport 85 to 90
million tonnes of iron ore from the mines and also deliver 45 to 50 million
tonnes of finished steel from steel plants to distribution centres. Therefore,
there is immediate need for substantial up gradation of infrastructural
facilities to meet the increasing steel requirements of the steel industry.
Investments to the tune of US $ 1 Trillion are proposed in the infrastructure
sector in the 12th plan. An investment of this scale and size is likely to
generate higher domestic demand for steel and at the same time help build
necessary infrastructure required for the steel industry. Large investments of
this nature suffer from gestation lags, constraints in mobilization of financial
resources, land acquisition issues and hurdles in obtaining statutory
clearances in case of mega infrastructural projects. These need to be sorted
out since the development of infrastructure sector has strong forward and
backward linkages and contributes significantly to overall growth and
development of the economy.
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11.3. Investment
Requirement of financial resources to support an additional capacity creation
of about 60 million will be approximately 2.5 lakh crores during the 12th
Plan and securing such large investible funds at reasonable cost will be a
challenging task. FDI in the steel sector has been lagging behind, despite
massive investment intentions by some major global steel majors. In order
to ensure sufficient availability of financial resources for the growth of Indian
steel industry, it is imperative to review steel related sectoral caps of the
banking sector. Government may also consider easing of norms connected
with external borrowings (ECBs). Special purpose long term financing facility
may be created to finance huge investment in new steel plants.
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vi)Large size Blast Furnaces with the state of the facilities have done well in
terms of productivity, consumption norms and hot metal quality. With
installation of such furnaces in future, the need for agglomerated burden
(sinter + pellet) is likely to increase. The improvement in burden quality will
facilitate higher injection of coal fines and thereby reduction in metallurgical
coke requirement and overall fuel rate.
vii) The units that have adopted DRI – HM – EAF and DRI – IF routes for iron
making are suffering due to non availability of hard iron ore lump, high cost
of natural Gas, non availability of good quality coal, absence of good scrap
and rising prices of raw material inputs for BF. To alleviate the shortages of
iron ore lump, there is a need to put up pellet plants. Coal gasification is
believed to be a good option to replace natural gas for the production of
synthesis gas (reducing gas in shaft kiln process).
viii) Large quantity of slag is produced in BOF / EAF. It is not easy to dispose
of the steel making slag due to the presence of free lime and high
percentage of iron oxide. Technologies have been developed (ORP, MURC) in
Japan to reduce the generation of slag and reduce the Phosphorous level
below 0.010%. Some of the technologies for reuse in the form of brick for
pavement / construction of dykes„, flux / iron bearing material in cupola and
construction material after sufficient aging can be adopted to gainfully utilize
the slag. There is also a possibility to recover the iron values through
smelting reduction.
ix) DRI – EIF route suffers from lack of refining capacities. The steel melted
by the process has higher percentages of Phosphorus and Nitrogen. Rotary
kiln DRI-EIF route needs to improve its technology substantially to avoid
obsolescence, market acceptability due to poor quality and to reduce its
adverse impact on the environment. There is a dire need for Technology Up
gradation in Secondary Steel Sector in general and the EIF sector in
particular to make them competitive in terms of Productivity, Quality and
Environment friendliness. .
x) Dynamic soft reduction and Near net shape casting will result in quality
improvement and energy saving respectively and these emerging
technologies are likely to be adopted in the coming years by the Steel
Industry.
xi) Due to increasing demand for High Strength Steel, current BAF (Batch
Annealing Furnace) technology may get replaced with Continuous Annealing
Technology.
xii) Environmental concerns would be a major criterion for the selection /
adoption of new technology in near future. Therefore the steel industry may
have to carry out research in the areas of carbon foot print, CO2 absorption
and sequestration.
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xiii) There is a need to develop sound indigenous capacity to develop
technologies to a) suit indigenous raw materials, b) improve energy input
norms through energy-efficient technologies and c) meet national norms for
emission per ton of products and comply with global responsibilities for
carbon foot print.
xiv) The Research and Development systems should also match the
composite structure of the steel industry in the country. While some large
corporate houses which could afford in-house R&D and acquire plants
overseas could adopt global approaches for developing and acquiring
technologies, R&D and technology needs of several small units engaged in
manufacturing remain unaddressed. Small enterprises are not able to
leverage the benefits of improved technologies and this explains their poor
performance standards when compared to national and international
benchmarks.
xv) Pre-competitive research in steel related technologies for a) energy-
efficiency, b) emission control, c) solid waste minimization, d) more efficient
use of Indian coal resources and e) value addition to indigenous raw
materials in public and private sector R&D would need to be promoted
through a Challenge Award Scheme. International Science & Technology
cooperation in the area of steel making technologies would be necessary
considering that the number of Indian experts engaged in R&D in steel
making is significantly low. Synergies within the country and through
international cooperation may need to be developed for growing industry-
relevant R&D activities.
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but also to harness all waste energy with minimized damage to the
environment.
iii) Since the cost of measures for energy and environment management is
expected to be high, it is imperative that Government evolve suitable
measures in the form of capital subsidy or incentives to promote adoption of
such measures.
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12. Five trends in India's steel industry
Growth for India's steel industry has been hampered by regulatory and
environmental hurdles, land acquisition delays and social opposition.
But players are finding ways to expand capacities as demand for steel races
in one of the fastest growing economies of the world. India targets 120
million tonnes of domestic steel output at the end of 2012 from nearly 70
million tonnes in 2009/10.
Following are five trends seen in the industry:
12.1. Consolidation
Analysts say buyouts could be an easy way of getting hold of land and
regulatory approvals by companies seeking growth.
Over the next couple of years, there could be mergers and acquisitions,
particularly in the sponge iron sector, it refers to the hundreds of small
units, many of which are unviable.
In December, JSW Steel agreed to buy a controlling stake in loss-making
rival Ispat Industries that would push its capacity to the top most position. It
also agreed to buy Bellary Steel.
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12.3. Relocation, smaller plants
ArcelorMittal, POSCO, Bhushan Steel and JSW have chosen Karnataka state
in the south for making new steel plants, away from east India that is
mineral rich, but fraught with social and land-acquisition problems.
If we can't get your steel plant simply because we can't get the land, it
doesn't matter whether we have got an iron ore deposit nearby.
Bristow said investors may even look to the west coast that has less iron
ore, but is closer to Africa from where coking coal is imported.
ArcelorMittal has also spoken about a shift towards smaller modular sites as
against mega projects.
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13. Analysis of capital structure trend in the Indian
steel sector
13.1. Total Debt/Equity Ratio & EPS effect on Indian
steel industry
Saturated category is so named because the EPS has reached the point
where a change in the Debt Equity structure is no way benefit the EPS of the
companies. 56.00% of the total sample falls under this category. Accordingly
in this category a change in the debt equity structure drives the EPS
positive. The reason is reduction in debt and increase in owner‟s equity.
Whenever the owner equity increased there will be the small percentage of
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increase EPS. This suggests that companies should have optimal Debt Equity
to gain over interest tax benefit.
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5. Jai Balaji Industries Ltd.
6. Electrosteel Casting Ltd.
7. Usha Martin Ltd.
8. Adhunik Metalliks Ltd.
9. Rathi Steel And Power Ltd.
Independent category has 4.00% of the total sample. The very obvious
reason for this category is the debt equity component is either zero or
negligible.
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13.2. Financial coverage Ratio & EPS effect on Indian
steel industry
Coverage ratio gives the idea of ability to cover the financial charges of the
firms with the help of corporate profits. Financial charges with the help of
corporate profits. Financial charges include components like debt servicing,
leasing charges etc. if the company having high coverage ratio in completely
equity financed company. The point of discussion here is to make out the
kind of relationship between coverage ratio and EPS of the companies. The
classification of the companies made in the table is the vertical classification
based on regression coefficients calculated between the coverage ratio and
the EPS.
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Number of 17 7 1 25
companies
Percentage 68.00 28.00 4.00 100
(%)
Categorizing the companies based on their “r” values between the
coverage Ratio and EPS
Highly Correlated: The companies in which EPS and coverage Ratio highly
correlated i.e. the interest paid on debt are high. The companies are:
1. Steel Authority of India (SAIL)
2. Rastria Ispat Nigam Ltd.(RINL)
3. Tata Iron And Steel LTd.
4. JSW Steel Ltd.
5. Essar Steel Ltd.
6. Jai Balaji Industries Ltd.
7. Electrosteel Casting Ltd.
8. Usha Martin Ltd.
9. Adhunik Metalliks Ltd
10. Mahindra Ugine Steel Ltd.
11. Steelco Gujrat Ltd.
12. Welspun Corp Ltd.
13. Lloyds Steel Industries Ltd.
14. Orissa Sponge Iron & Steel Ltd.
15. Bihar Sponge Iron Ltd.
16. Tata Metalliks Ltd.
17. Kirloskar Ferrous Industries Ltd.
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Independent:
These are the companies which doesn‟t have any influence on EPS on
interest coverage ratio.
Summary of Findings:
The steel industry has undergone a drastic change in the capital structure
during 2007-12. The changes are due to the high demand for steel both at
the global and domestic arena. This brought changes in the debt equity ratio
and capital structure of the firm. Given below is some companies EPS growth
rate from 2007 to 2011.
The green blocks show an increase in EPS over last year, whereas the
red blocks indicate decrease in EPS from last year.
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Interestingly, some of the small steel industries like Tata Sponge Iron
Ltd., Rathi steel & Power Ltd. maintained their EPS growth due to new
technology of operations and better hedging against increased cost of
production.
Small companies like Bihar sponge iron ltd, Tata metalliks ltd. have
increased their debt component of Capital structure leading to
increase in financial expenses, thus decrease in EPS.
This analysis on the Indian steel industry clearly shows that companies
are paying more corporate taxes. Their lead to reduction in EPS. The
companies are more conscious about covering their debt. This clearly
indicates that Indian steel industry lacks expansion in production
capacity.
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14. Understanding the Steel industry using Michael
Porter‟s Five Forces Model
Backed by robust volumes as well as realizations, steel Industry has
registered a phenomenal growth across the world over the past few years.
The situation in the domestic industry was no exception. In fact, it enjoyed a
double digit growth rate backed by a robust growing economy. However, the
current liquidity crisis seems to have created medium term hiccups. In this
article, we have analyzed the domestic steel sector through Michael Porter’s five force
model so as to understand the competitiveness of the sector.
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Government Policy: The government has a favorable policy for steel
manufacturers. However, there are certain discrepancies involved in
allocation of iron ore mines and land acquisitions. Furthermore, the
regulatory clearances and other issues are some of the major problems
for the new entrants.
Steel, being a commodity it is, branding is not common and there is little
differentiation between competing products.
Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto
supply nearly two-thirds of the processed iron ore to steel mills and
command very high bargaining power. In India too, NMDC is a major
supplier to standalone and non integrated steel mills.
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14.4. Threat of substitutes: Low
Plastics and composites pose a threat to Indian steel in one of its biggest
markets-automotive manufacture. For the automobile industry, the other
material at present with the potential to upstage steel is aluminium.
However, at present the high cost of electricity for extraction and
purification of aluminium in India weighs against viable use of aluminium
for the automobile industry. Steel has already been replaced in some
large volume applications: railway sleepers (RCC sleepers), large
diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and
domestic water tanks (PVC tanks). The substitution is more prevalent in
the manufacture of automobiles and consumer durables.
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Quality of steel produced and distributed.
People
High productivity of labour at its plants/production facilities.
High performance orientation through performance linked compensation
plans for employees.
Dedicated workforce indicated by lower turnover (only 5%) than the
industry average (10%-12%). This could be attributed to the equality
of treatment among workers at the production facilities (same
colour jackets).
Firm level capabilities
Simple and flat organization structure with only about 5 layers.
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15. The SWOT Analysis on Indian Steel Industry
Strengths Weakness
Availability of iron ore Systemic Deficiencies
Availability of labor at low wage Endemic Deficiencies
rates High Cost of Capital
Abundance of quality manpower Low Labor Productivity
High Cost of Basic Inputs and
Services
Dependence on imports for steel
manufacturing equipments &
technology
Slow statutory clearances for
development of mines
Opportunities Threats
Unexplored rural market Slow Industry Growth
Other sectors Technological Change
Export penetration Price Sensitivity and Demand
Increasing interest of foreign steel Volatility
producers in India Dumping of steel by developed
Huge Infrastructure demand countries
Rapid urbanization Substitutes
Slow growth in infrastructure
development
15.1. Strengths
Availability of iron ore: India has rich mineral resources. It has abundance
of iron ore, coal and many other raw materials required for iron and steel
making. It has the fourth largest iron ore reserves (10.3 billion tonnes)
after Russia, Brazil, and Australia. Therefore, many raw materials are
available at comparatively lower costs.
Availability of labor at low wage rates: India has the third largest pool of
technical manpower, next to United States and the erstwhile USSR,
capable of understanding and assimilating new technologies. Considering
quality of workforce, Indian steel industry has low unit labor cost,
commensurate with skill. This gets reflected in the lower production cost
of steel in India compared to many advanced countries. With such
strength of resources, along with vast domestic untapped market, Indian
steel industry has the potential to face challenges successfully.
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Abundance of quality manpower: It has the third largest pool of technical
manpower capable of understanding and assimilating new technology.
Considering the quality of its labour force, the Indian steel industry‟s low
unit labour cost is reflected in the cost of production. (SAIL is one of the
world‟s lowest cost producers of steel).
15.2. Weaknesses
Unavailability of certain key raw materials (such as, coking coal) poses a
challenge for the industry. Major players depend mainly on imports. With
prices peaking in global market, this adds to cost of production. Most of the
weaknesses in India are, however, classified as systemic deficiencies.
Low Labor Productivity: In India the advantage of low cost labor gets
offset by low labor productivity; e.g., at comparable capacities labor
productivity of SAIL and TISCO is 75 t/man year and 100 t/man year, for
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POSCO, Korea and NIPPON, Japan the values are 1345 t/man year and
980 t/man year.
15.3. Opportunities
The biggest opportunity before Indian steel sector is that there is enormous
scope for increasing consumption of steel in almost all sectors in India.
There is untapped potential of increasing steel consumption in India; eg,
even to reach the comparable developing and lately developed economies
like China and European nations, a quantum jump in steel consumption will
be required.
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identified as a potential area of significant steel consumption way back in
the year 1976 itself. However, forceful steps were not taken to penetrate
this segment. Enhancing applications in rural areas assumes a much
greater significance now for increasing per capital consumption of steel.
The usage of steel in cost effective manner is possible in the area of
housing, fencing, structures and other possible applications where steel
can substitute other materials which not only could bring about
advantages to users but is also desirable for conservation of forest
resources.
15.4. Threats
Slow Industry Growth: The linkage between the economic growth of a
country and the growth of its steel industry is strong. The Indian steel
industry is no exception. The growth of the domestic steel industry
between 1970 and 1990 was similar to the growth of the economy,
which as a whole was sluggish. This sluggish growth in the steel
industry has resulted in enhanced rivalry among existing firms. As the
industry is not growing the only other way to grow is by increasing
one‟s market share. Consequently, the Indian steel industry has
witnessed spurts of price wars and heavy trade discounts, which has
done Indian steel industry no good as a whole.
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Technological Change: Technological changes often force the industry
structure to change. For a developing country like India where capital
itself is costly, technological obsolescence is a major threat.
Price Sensitivity and Demand Volatility: The demand for steel is a derived
demand and the purchase quantity depends on the end-user
requirements. The traders tend to exhibit price sensitivity and buy when
there are discounts. This volatility of demand often affects the integrated
steel manufacturers because of their inability to tune their production in
line with the market demand fluctuations.
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16. SWOT Analysis of main steel producers of India
Strengths Weakness
Staff Staff
Customer base Profit margin to low
Market position Competitive Vulnerable
Financial Resources Lack of new products/services
Sales channels Corruption & Mismanagement
Products/Services
Profitability
Availability of Captive mines
Opportunities Threats
Expansion & Growth New Govt. Regulations
Strategic Alliance Economy
Funding Increases Competition
Merger/Acquisition Decreasing profit & sales
Products/Services Lose key staffs
New Technology
Strengths Weakness
Low cost production Non availability of latest R&D
Easy access to raw materials facility
Low debt to equity ratio Transportation cost increasing day
Vast experience by day
Investment
Opportunities Threats
To become a world leader in low To compete with other big global
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cost and high quality steel players
Opportunities with acquired Global slowdown
companies Resources & safeguarding of the
environment
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17. Conclusion & Recommendations
Higher profitability and economies of scale in the BOF route help players
earn better returns on investments. However, the BF-BOF process entails
higher investments and only large players are present in this category.
On the other hand, in the IF route, investment requirements are lower.
Of the major steelmaking routes (basic oxygen furnace (BOF), electric arc
furnace (EAF) and induction furnace (IF)) capacity additions have been
the most in the IF route. The dependence of producers using the IF route
on non-coking coal -- whose prices have been stable so far -- gives them
a cost advantage over players using the BOF route. However, this trend is
expected to change in 2012-13 as non-coking coal prices increase.
Meanwhile, a fall in coking coal prices has reduced costs for players using
the BOF route.
East India has all of the factor conditions for development of the steel
industry, but it has limited executive ability. Therefore, unless central and
state governments take innovative measures, the two hundred MOU‟s are
very likely to be cancelled. It is expected that steel production will be far
short of demand, and net imports to reach 40-50 MT by 2020. It seems
that production capacity will likely increase only after all stakeholders
reaches consensus.
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to fully utilize their potentials. India should start working on devising
various strategies on how to popularize steel in the rural sector, as
the present consumption of steel in the rural sector is only 10 kgs
as per the per capita GDP of India where, rural sector represents
majority of Indian population.
Currently, the per capita consumption of steel in India is only around 55
kg against the world average of 206 kg and china‟s 427 kg. A study was
commissioned through the joint plant committee (JPC) during the 2010-
11 to estimate the per capita demand for iron and steel in the rural sector
of India and to determine the factors that can contribute to its
enhancement. The emergence of the rural market for steel currently
consumes around 10 kg per capita buoyed by projects like Bharat
Nirman, Pradhan mantri gram sadak yojana, Rajiv Gandhi Awaas Yojana
among others.
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Domestic crude steel production grew at a compounded annual growth
rate of 8.4% in the last few years.
Crude steel production capacity of the country is projected to be
around 110 million tonne by 2012-13.
222 Memorandum of Understandings (MOU) have been signed with
various states for planned capacity of around 276 million tonnes by
2019-20.
Investments at stake are to the tune of $187 billion in the Steel
sector.
Increase in the demand of steel in India is expected to be 14% against
the global average of 5-6% due to its strong domestic economy,
massive infrastructure needs and expansion of industrial production.
Demand of steel in the major industries like infrastructure,
construction, housing, automotive, steel tubes and pipes, consumer
durables, packaging and ground transportation.
Target for $ 1 trillion of investments in infrastructure during the 12th
Five Year Plan.
Infrastructure projects (like Golden Quadrilateral and Dedicated
Freight Corridor) will give boost to the demand in the steel sector in
near future.
Projected New Greenfield & up-gradation of existing Airport shall keep
the momentum up.
Increased demand of specialized steel in hi-tech engineering industries
such as power generation, automotive petrochemicals, fertilizers etc.
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Recommendations
The steel companies having lower debt equity ratio should undergo
mergers and acquisitions with high debt ratio firms. This can have change
in capital structure and have benefits under sec 72A of Income Tax Act,
1961.
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work towards utilization of low grade iron ore, magnetite ore, iron ore
fines etc.
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18. References
http://www.ey.com/Publication/vwLUAssets/Global_steel_2011_trends_2012
_outlook/$FILE/Global_Steel_Jan_2012.pdf
http://www.fedmin.com/html/competitionpolicy-asfiroz.pdf
http://www.steel.nic.in/
http://jpcindiansteel.nic.in/
http://www.mines.nic.in/
http://www.scribd.com/
http://www.sail.co.in/
http://www.moneycontrol.com/stocksmarketsindia/
http://www.tatasteel.com/
http://www.jsw.in/
http://www.jindalsteelpower.com/
http://bhushan-group.org/
http://www.vizagsteel.com/
http://www.essar.com/section_level1.aspx?cont_id=eLiVfqUiZks=
http://economictimes.indiatimes.com/
http://advisoranalyst.com/glablog/2011/07/08/india%E2%80%99s-
demand-for-iron-ore-made-of-steel/
http://www.worldsteel.org/media-centre/press-releases/2012/2011-world-
crude-steel-production.html
http://www.beroe-inc.com/
http://www.wikipedia.org/
http://www.icra.in/
http://www.careratings.com/
http://www.crisil.com/index.jsp
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Appendix A
Share price movement of major steel producers in India from July 2011 to
May 2012.
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Bhushan Steel Ltd.
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Appendix B
Procedures for Grant of Mineral Concessions as per Existing
Legislation
Reconnaissance Permit
An application for grant of reconnaissance permit in respect of any land in
which the minerals vest in the Government shall be made to the Director,
Mines and Geology, of the State Government concerned along with fees as
prescribed. The State Government shall acknowledge receipt of the
application and shall grant the reconnaissance permit to every applicant who
is eligible in terms of the MMDR Act, 1957 and the Rules made
thereunder.
A Reconnaissance permit entitles the holder to undertake operations for
preliminary prospecting of mineral(s) through regional, aerial, geophysical or
geochemical surveys and geological mapping. But, excluding pitting,
trenching, drilling (except drilling of 20-25 boreholes per 100 sq. km. with 4”
diameter) and sub-surface excavations. These permits are granted for a
period upto 3 years which is not extendable. The maximum area over
which a permit can be granted is 5000 sq.km. subject to total ceiling of
10,000 sq. km. in a State. The Reconnaissance Permits are granted as per
the procedure laid down in the Mineral Concession Rules, 1960.
The holder of a Reconnaissance Permit has a preferential right to obtain a
Prospecting Licence in respect of the land remaining under the permit
subject to certain conditions including those relating to minimum
expenditure commitment and specific physical targets. The other conditions
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governing the grant of Reconnaissance Permit require the permit holder to
progressively relinquish the area granted under permit as follows:
i. On completion of two years, the area shall be reduced to 1000 sq. km. or
50% of the area granted, whichever is less; and
ii. The area would be further relinquished to not more than 25 sq. kms. at
the end of the third year.
Prospecting Licence
An application for grant of a Prospecting Licence shall be made to the District
Collector of the State Government concerned along with prescribed fees. The
State Government shall acknowledge the receipt of the application and shall
consider only such applications as are eligible in terms of MMDR Act, 1957
and the Rules made thereunder.
The prospecting licence holder has a preferential right for obtaining a mining
lease in respect of the minerals explored in a particular area. A Prospecting
Licence may contain other conditions relating to compensation for damage to
land, restriction regarding felling of trees, entry on occupied land, etc.
A Prospecting Licence entitles the holder to search and explore the land for
minerals, and permits the removal of limited quantities of substances for
testing. Prospecting Licenses are granted for upto a period of 3 years. These
can be extended, but the total term of the Prospecting License can not
exceed 5 years. Maximum area prescribed for prospecting licences is 25 sq.
km in a State, which can also be relaxed by the Central Government in
the interest of mineral development.
One important right attached to the Prospecting License is the right of pre-
emption. This right gives preferential right to the holder, for obtaining a
Mining Lease in respect of the minerals explored on a particular area of land.
The holder of the Prospecting License has also the right to transfer the
license or any right, title or interest therein to an income tax payee, subject
to the sanction of the State Government. The procedure for obtaining the
licence is given in the Mineral Concession Rules, 1960.
Mining Lease
An application for grant of mining lease in respect of any land in which
minerals vest in the Government shall be made to the District Collector of
the State Government concerned along with prescribed fee. Every such
application shall also include with it the consent of the land owner and any
person having occupation rights over the land.
An acceptance of application for a mining lease and before the execution of
the lease, the applicant shall prepare a mining plan which is to be approved
by the Indian Bureau of Mines(IBM) for the leased area. No mining plan shall
be approved unless it is prepared by a qualified person empanelled in this
behalf in the prescribed manner.
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A Mining Lease allows for the development and production of minerals from
ore bodies discovered by prospecting or exploration operations. Mining
Leases can be held for a period, which may vary from a minimum of 20 to
30 years with rights of renewal. Every person who is holding a mining lease
for a mineral which is used in his own industry shall be entitled for the
renewal of his mining lease for a period not exceeding 20 years, unless he
applies for a lesser period.
A Mining Lease is subject to the ceiling on the area being mined. The ceiling
prescribed is a maximum of 10 sq. kms. in a State. The ceiling may be
relaxed by the Central Government if it deems the relaxation to be in the
interest of mineral development. The mining lease is transferable, subject to
the approval of the State Government.
The holder of a mining lease is liable to pay a dead rent till any mineral is
removed or consumed. On removal or consumption of the mineral, the
holder of a Mining Lease has to pay royalty or dead rent, whichever is
higher. The royalty rates and dead rent for various minerals are specified in
the second and third schedule to the MMDR Act. The Government has the
right to revise the rates. However, the MMDR Act, restricts the Government
from enhancing the rates before a period of 3 years have elapsed, from the
date of last increase. The procedure for obtaining a mining lease is
prescribed in the Mineral Concession Rules, 1960.
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The procedure in grant of mineral concessions for a mining lease is depicted
in the chart given below.
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available for re-grant to both public and private sector. The permission of
the Government is required in case of transfer of mining lease.
• Time limits have been prescribed for conveying a decision on applications
for grant of mineral concessions, and for approval of mining plans.
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Appendix C
Coal Blocks Allocation
The allocation is made to meet the coal requirement of the permitted end
use project. The block may be allotted to an End User Company, JV or a
Mining Company which has firm back-to back tie up with specified End User
Company (ies). The Mining Company should have a legally binding and
enforceable supply contract/ agreement for the life of the mine. The coal
produced from the block shall not replace any coal linkage given to the
applicant by the Coal India Limited/its subsidiary companies and/or by the
Singareni Collieries Company limited, without prior permission of this
Ministry.
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additions for such sector. Independent government or other reputed
institutions may also be engaged to ascertain coal requirements of the
applicant in the event that there are no prevailing norms for such sector.
Application for Prospecting License
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Recently, the government has finalized three models - auction, tariff-based
competitive bidding and government dispensation route -- for grant of mines
to various categories of firms. The ministry had earlier notified the Auction
by Competitive Bidding of Coal Mines Rules, 2012 and the MMDR Act, 2010.
Grant of mines to companies for specified end-uses other than power will be
done by auction through competitive bidding process...Government
companies can also participate in the process, though allotment to
government companies for end- use can also be made under Government
dispensation route", the letter said On allocation of blocks for power
generation through competitive bidding. The identified blocks earmarked for
allocation to the power sector would be earmarked to Ministry of
Power/State Government for carrying out the tariff based bidding.
The Ministry is against allocation of coal block outside the rules framed for
the purpose of allocation of coal blocks, and has already identified 54 blocks
for grant through competitive bidding and government dispensation route.
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