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!ron and Steel !ndustries !ron and Steel !

ndustries
By: Abhi Kamdar
Burhanuddin Nakda
Harsh Thakker
!NTRODUCT!ON !NTRODUCT!ON
!ron and steel industry normally is heavy !ron and steel industry normally is heavy
industry all its raw material are heavy and industry all its raw material are heavy and
massive. They need iron ore, coking coal massive. They need iron ore, coking coal
and limestone. Location of this industry is and limestone. Location of this industry is
thus administered by its proximity to raw thus administered by its proximity to raw
materials predominantly coal .the finished materials predominantly coal .the finished
products in tern are also heavy and need products in tern are also heavy and need
efficient transport system for transportation. efficient transport system for transportation.
The Chotanagpur plateau has been the The Chotanagpur plateau has been the
natural centre for this industry light natural centre for this industry light
medium and large industries depend on it as medium and large industries depend on it as
a result of industrialization in our country. a result of industrialization in our country.
The !ndian iron and steel industry is nearly a The !ndian iron and steel industry is nearly a
century old, with Tata !ron S Steel Co (Tata century old, with Tata !ron S Steel Co (Tata
Steel) as the first integrated steel plant to be set Steel) as the first integrated steel plant to be set
up in 1307. up in 1307.
The New !ndustrial policy adopted by the The New !ndustrial policy adopted by the
Covernment of !ndia has opened up the iron and Covernment of !ndia has opened up the iron and
steel sector for private investment by removing it steel sector for private investment by removing it
from the list of industries reserved for from the list of industries reserved for
public sector and exempting it from compulsory public sector and exempting it from compulsory
licensing. licensing.
!mports of foreign technology as !mports of foreign technology as
well as foreign direct investment are freely well as foreign direct investment are freely
permitted up to certain limits under an permitted up to certain limits under an
automatic route. automatic route.
This, along with the other initiatives taken This, along with the other initiatives taken
by the Covernment has given a definite by the Covernment has given a definite
impetus for entry, participation and growth impetus for entry, participation and growth
of the private sector in the steel industry. of the private sector in the steel industry.
!ron and steel industry also needs !ron and steel industry also needs
enormous investment and stable enormous investment and stable
infrastructure. infrastructure.
CONSUNPT!ON CONSUNPT!ON
Already, !ndia's consumption of Already, !ndia's consumption of
stainless steel is much higher at 14 stainless steel is much higher at 14
per cent, compared to the global per cent, compared to the global
consumption of six per cent in the consumption of six per cent in the
last 1S years. Domestic last 1S years. Domestic
consumption of finished (carbon) consumption of finished (carbon)
steel is on the rise, driven by a steel is on the rise, driven by a
boom in the automobile sector boom in the automobile sector
and a nation and a nation··wide thrust on wide thrust on
infrastructure and real estate infrastructure and real estate
H!STORY H!STORY
!ron and steel industry in the country !ron and steel industry in the country
has experienced a sustainable growth has experienced a sustainable growth
since the independence .A humble since the independence .A humble
beginning of the modern steel industry beginning of the modern steel industry
was reached in !ndia at Kulti in west was reached in !ndia at Kulti in west
Bengal in the year 1870. Bengal in the year 1870.
But the establishment of a steel plant in But the establishment of a steel plant in
jamshedpur in bihar in 1307was a jamshedpur in bihar in 1307was a
remarkable step towards the growtrh of remarkable step towards the growtrh of
iron and steel industry in india iron and steel industry in india
This venture was followed by burnpur and This venture was followed by burnpur and
bhadrawati steel plants in 1313and 1323 bhadrawati steel plants in 1313and 1323
respectively. respectively.
!t was however only after the !t was however only after the
independence the steel industry was able to independence the steel industry was able to
find a strong foothold in the country. Excluding find a strong foothold in the country. Excluding
the ]amshedpur plant of the Tatas all are in the ]amshedpur plant of the Tatas all are in
public sector and looked after the steel public sector and looked after the steel
authority of !ndia limited(SA!L). authority of !ndia limited(SA!L).
Bhilai and bokaro steel plants wee set up with Bhilai and bokaro steel plants wee set up with
soviet alliance durgapur and rourkela came up soviet alliance durgapur and rourkela came up
with british and german expertise respectively with british and german expertise respectively
Najor companies Najor companies
TATA IRON AND STEEL INDUSTRY
The Tata Ìron and Steel Company, located
at Jamshedpur is the best known symbol
of Ìndia's industrial growth. The company
has exported products worth more than US
$ 182.3 million in 1996-97. Tata Steel
remains Ìndia's largest single exporter of
high quality, value added steel products. Ìt
is a blue chip company, and has
successfully raised US $100 million
through Euro Bonds.
!t has, over the years, employed state !t has, over the years, employed state··of of··the the··
art know art know··how and processes to manufacture a how and processes to manufacture a
wide range of steel and engineering products wide range of steel and engineering products
as well as minerals and ferro as well as minerals and ferro··alloys. !ts steel alloys. !ts steel
products include HR coils, tubes, bars, rods, products include HR coils, tubes, bars, rods,
structurals, strips, sheets and bearings. The structurals, strips, sheets and bearings. The
steel plant is integrated with activities ranging steel plant is integrated with activities ranging
from mining of raw materials to finished rolling from mining of raw materials to finished rolling
of steel. Over the years the company has of steel. Over the years the company has
promoted promoted
several associate companies in related areas several associate companies in related areas
such as engineering, refractors and rolls. such as engineering, refractors and rolls.
Hindustan Steel Works Hindustan Steel Works
Construction Limited (HSCL) Construction Limited (HSCL)
1, Shakespeare Sarani, 8th Floor 1, Shakespeare Sarani, 8th Floor
Kolkata Kolkata · · 700 071, !ndia 700 071, !ndia
HSCL, with its headquarters at Calcutta HSCL, with its headquarters at Calcutta
is engaged in the construction and is engaged in the construction and
specialised works in steel sector, power specialised works in steel sector, power
plants, dam construction, bridges, coal plants, dam construction, bridges, coal
handling plants, underground handling plants, underground
communication and transport system, communication and transport system,
industrial and township complexes etc. industrial and township complexes etc.
Sponge !ron !ndia limited Sponge !ron !ndia limited
Khanij Bhavan' Khanij Bhavan'
10 10· ·33· ·311/A, Castle Hills 311/A, Castle Hills
Nasab Tank Nasab Tank
Hyderabad Hyderabad · · S00 028, !ndia S00 028, !ndia
S!!L with its headquarters at Hyderabad, S!!L with its headquarters at Hyderabad,
was established as a demonstration Sponge was established as a demonstration Sponge
!ron plant to establish the techno !ron plant to establish the techno··
economic feasibility of producing Sponge economic feasibility of producing Sponge
!ron from lump iron ore and 100º non !ron from lump iron ore and 100º non··
coking coal. The Plant is designed both for coking coal. The Plant is designed both for
production of Sponge !ron and for RSD production of Sponge !ron and for RSD
work. The plant has not only established work. The plant has not only established
the viability of the technology but has also the viability of the technology but has also
paved the way for the development of paved the way for the development of
Sponge !ron industry in the country. Sponge !ron industry in the country.
Steel authority of india Steel authority of india
!40, ]awaharlal Nehru Road !40, ]awaharlal Nehru Road
Kolkata Kolkata · · 700 071, !ndia 700 071, !ndia
SA!L with its corporate office in New Delhi SA!L with its corporate office in New Delhi
operates and manages five integrated operates and manages five integrated
steel plants at Bhilai, Bokaro, Durgapur, steel plants at Bhilai, Bokaro, Durgapur,
Rourkela and Burnpur, a plant of the Rourkela and Burnpur, a plant of the
!ndian !ron and Steel Co. Ltd. (!!SCO), !ndian !ron and Steel Co. Ltd. (!!SCO),
which is a wholly owned subsidiary of which is a wholly owned subsidiary of
SA!L. SA!L also has four Special and Alloy SA!L. SA!L also has four Special and Alloy
Steel and Ferro Steel and Ferro··alloys units at Durgapur, alloys units at Durgapur,
Salem, Chandrapur and Bhadravati. Salem, Chandrapur and Bhadravati.
The plants at Chandrapur and Bhadravati belong to The plants at Chandrapur and Bhadravati belong to
the Naharashtra Elektrosmelt Limited and the Naharashtra Elektrosmelt Limited and
visvesvaraya !ron and Steel Limited respectively visvesvaraya !ron and Steel Limited respectively
which are also subsidiaries of SA!L. The !!SCO which are also subsidiaries of SA!L. The !!SCO··Ujjain Ujjain
Pipe and Foundry Company Limited, a subsidiary of Pipe and Foundry Company Limited, a subsidiary of
!!SCO, manufactures cast iron spun pipes at its !!SCO, manufactures cast iron spun pipes at its
works at Ujjain. Besides, SA!L has seven Central works at Ujjain. Besides, SA!L has seven Central
Units viz. Research and Development Centre for !ron Units viz. Research and Development Centre for !ron
and Steel, Centre for Engineering and Technology, and Steel, Centre for Engineering and Technology,
Nanagement Training !nstitute, all located at Ranchi, Nanagement Training !nstitute, all located at Ranchi,
Central Coal Supply Organisation located at Ranchi, Central Coal Supply Organisation located at Ranchi,
Central Coal supply Organisation located at Dhanbad, Central Coal supply Organisation located at Dhanbad,
raw materials Division. raw materials Division.
Rashtriya ispat nigam limited Rashtriya ispat nigam limited
visakhapatnam Steel Plant visakhapatnam Steel Plant
visakhapatnam visakhapatnam · · S30 031, !ndia S30 031, !ndia
R!NL has its registered office at R!NL has its registered office at
visakhapatnam. visakhapatnam Steel visakhapatnam. visakhapatnam Steel
plant, under R!NL, is the country's first plant, under R!NL, is the country's first
shore shore··based and sixth public sector based and sixth public sector
!ntegrated Steel Plant. !ntegrated Steel Plant.
Bhushan steel Bhushan steel
Bhushan Power S Steel Ltd., an !SO 3002 Bhushan Power S Steel Ltd., an !SO 3002
certified company, is a merged entity of certified company, is a merged entity of
Bhushan Bhushan
!ndustries Ltd., Bhushan Netallics Ltd. and !ndustries Ltd., Bhushan Netallics Ltd. and
Decor Steel Ltd. Bhushan Steel has a Decor Steel Ltd. Bhushan Steel has a
turnover of more than USD S40 Nillion and turnover of more than USD S40 Nillion and
is a leading manufacturer of Flat, Round is a leading manufacturer of Flat, Round
and value added products in Steel. Bhushan and value added products in Steel. Bhushan
have 7 World class and state of art plants at have 7 World class and state of art plants at
Chandigarh, Derabassi, Kolkata and Orissa Chandigarh, Derabassi, Kolkata and Orissa
in !ndia. in !ndia.
]indal steel and power limited ]indal steel and power limited
]indal Steel and Power (]SPL), part of the ]indal Steel and Power (]SPL), part of the
US$4 billion ]indal Organisation, has business US$4 billion ]indal Organisation, has business
interests in steel production, power generation, interests in steel production, power generation,
mining iron ore, coal and diamond mining iron ore, coal and diamond
exploration/mining. The current turnover of the exploration/mining. The current turnover of the
company is over Rs. 30 billion and on a company is over Rs. 30 billion and on a
path of catalyzing economic development of path of catalyzing economic development of
the country through its contribution to the the country through its contribution to the
infrastructure sector. infrastructure sector.
Production Capabilities expanded to serve Production Capabilities expanded to serve
the infrastructure sector, catalysing economic, the infrastructure sector, catalysing economic,
development and growth. ]SPL has the development and growth. ]SPL has the
integrated steel plant (as approved by ]oint integrated steel plant (as approved by ]oint
Plant Committee) at Raigarh in the state of Plant Committee) at Raigarh in the state of
Chhattisgarh, !ndia. The facilities include Chhattisgarh, !ndia. The facilities include
world's world's
largest coal largest coal··based Sponge !ron Plant with a based Sponge !ron Plant with a
capacity of 1.37 million TPA using ten capacity of 1.37 million TPA using ten
indigenously developed rotary kilns. The indigenously developed rotary kilns. The
company has achieved complete backward company has achieved complete backward
Corporate Catalyst !ndia . Corporate Catalyst !ndia .
Rules and policies of Rules and policies of
government government
Customs Policy Customs Policy
The government has significantly reduced the The government has significantly reduced the
duty payable on inputs to steel production, on duty payable on inputs to steel production, on
capital equipment and on finished steel products capital equipment and on finished steel products
and has streamlined the associate approvals and has streamlined the associate approvals
processes. The government administers schemes processes. The government administers schemes
covering duties, licenses and taxes to support covering duties, licenses and taxes to support
firms firms
That export steel ,although some have the net That export steel ,although some have the net
effect of remitting duty in excess of what was effect of remitting duty in excess of what was
levied on the inputs to the production of export levied on the inputs to the production of export
goodsand are potentially subject to challenge in goodsand are potentially subject to challenge in
trade forums. trade forums.
The government introduced 'special
economic zones' in June 2005, with the aim of
creating
internationally competitive regions in which
exporting businesses can base their
operations.
Eight of these zones are functional or under
construction and approval has been given for
an additional eighteen zones. Previously
existing 'export processing zones' have been
converted to special economic zones.
Steel plants operating in special economic Steel plants operating in special economic
zones are zones are
not subject to restrictive normal laws for the not subject to restrictive normal laws for the
purpose of export operations and also receive purpose of export operations and also receive
some additional advantages including tax some additional advantages including tax
holidays, freedom to source inputs holidays, freedom to source inputs
domestically or domestically or
externally without any specific approval or externally without any specific approval or
duty payable, and sales tax reimbursement on duty payable, and sales tax reimbursement on
domestic purchases. domestic purchases.
However, the proposed new economic zones However, the proposed new economic zones
will be relatively small, will be relatively small,
which may limit their effectiveness given that which may limit their effectiveness given that
economies of scale are one of the key economies of scale are one of the key
advantages of such zones. advantages of such zones.
The government has recently announced The government has recently announced
plans to set up 'special economic and investment plans to set up 'special economic and investment
regions' in six states, modeled on similar regions regions' in six states, modeled on similar regions
established in China (Pudong), the United established in China (Pudong), the United
States (Houston), and the Netherlands States (Houston), and the Netherlands
(Rotterdam (Rotterdam
The regions are planned to support Corporate The regions are planned to support Corporate
Catalyst !ndia. A report on !ndian !ron and Steel Catalyst !ndia. A report on !ndian !ron and Steel
!ndustry further downstream processing !ndustry further downstream processing
such as steel production, and encompass a number such as steel production, and encompass a number
of special economic zones, with central and state of special economic zones, with central and state
governments providing world class infrastructure governments providing world class infrastructure
linkages to form a larger industrial region. linkages to form a larger industrial region.
This policy is at an early stage of This policy is at an early stage of
development, but the key difference between special development, but the key difference between special
economic and investment regions and economic and investment regions and
special economic zones appears to be that linking special economic zones appears to be that linking
infrastructure will be built by the government in the infrastructure will be built by the government in the
former but is generally the responsibility of industry in former but is generally the responsibility of industry in
the latter. Corporate Catalyst !ndia the latter. Corporate Catalyst !ndia
competitors competitors
rom the biggest players like SAÌL and Tata
Steel, to mid-level players like Bhushan Steel
and Welspun, the next four years are a time
to ramp up. SAÌL, a state-owned public sector
undertaking and Ìndia's largest steel
manufacturer, is planning to increase its
annual production of 12 million tonnes per
annum (mtpa) to 22.5 mtpa by 2011-12.
Tata Steel proposes to increase its steel Tata Steel proposes to increase its steel
making capacity to 33 making capacity to 33··34 mtpa by 201S, 34 mtpa by 201S,
besides increasing the capacity of its besides increasing the capacity of its
]amshedpur plant from S mtpa to 10 ]amshedpur plant from S mtpa to 10
mtpa. !n addition, the mtpa. !n addition, the
Tatas are planning to set up a 12 Tatas are planning to set up a 12··mtpa mtpa
greenfield project in ]harkhand, a 6 greenfield project in ]harkhand, a 6··mtpa mtpa
plant in Orissa and another S mtpa plant in Orissa and another S mtpa
capacity unit in Chhattisgarh. capacity unit in Chhattisgarh.
According to London According to London··based !ron and Steel based !ron and Steel
Statistics Bureau (!SSB), !ndia's Tata Steel, Statistics Bureau (!SSB), !ndia's Tata Steel,
whichrecently acquired Anglo whichrecently acquired Anglo··Dutch firm Corus Dutch firm Corus
Croup, has been ranked the world's sixth Croup, has been ranked the world's sixth
largest producer of the alloy with an output of largest producer of the alloy with an output of
24 million NT. !ndia 24 million NT. !ndia··born business tycoon born business tycoon
Lakshmi Nittal Lakshmi Nittal··controlled Arcelor Nittal has controlled Arcelor Nittal has
emerged as the largest producer with total emerged as the largest producer with total
production of 118 million metric tonnes in production of 118 million metric tonnes in
2006, after Nittal Steel acquired European 2006, after Nittal Steel acquired European
giant Arcelor SA for giant Arcelor SA for
US$ 38.3 billion in the industry's biggest ever US$ 38.3 billion in the industry's biggest ever
transaction. transaction.
As !ndia surges ahead in building As !ndia surges ahead in building
infrastructure and catapulting its industry to infrastructure and catapulting its industry to
new economic new economic
highs, investments in steel will pave the way highs, investments in steel will pave the way
ahead. Nittal Steel has announced a 12 ahead. Nittal Steel has announced a 12··mtpa mtpa
greenfield steel project in ]harkhand and a 12 greenfield steel project in ]harkhand and a 12··
mtpa greenfield steel plant in Orissa. mtpa greenfield steel plant in Orissa.
The biggest opportunity before !ndian The biggest opportunity before !ndian
steel sector is that there is enormous scope steel sector is that there is enormous scope
for increasing consumption of steel in for increasing consumption of steel in
almost all sectors in !ndia. The following almost all sectors in !ndia. The following
graph gives a glimpse of untapped graph gives a glimpse of untapped
potential of increasing steel consumption in potential of increasing steel consumption in
!ndia, eg, even to reach the comparable !ndia, eg, even to reach the comparable
developing and lately developed economies developing and lately developed economies
like China and other Europe, a quantum like China and other Europe, a quantum
jump in steel consumption will be required. jump in steel consumption will be required.
Point of !nflection Point of Saturation !ndia Point of !nflection Point of Saturation !ndia
China Trigger Point Singapore ]apan EU China Trigger Point Singapore ]apan EU
USA Peak Point 0 100 200 300 400 S00 600 USA Peak Point 0 100 200 300 400 S00 600
700 800 !ndia China USA 700 800 !ndia China USA
SingaporeAustralia EU 1S ]apan 60 SingaporeAustralia EU 1S ]apan 60·· 02 02
³³!ndia is the fifth largest producer of steel in the !ndia is the fifth largest producer of steel in the
world. !ndia Steel !ndustry has grown by leaps world. !ndia Steel !ndustry has grown by leaps
and bounds, especially in recent times with !ndian and bounds, especially in recent times with !ndian
firms buying steel companies overseas. The scope firms buying steel companies overseas. The scope
for steel industry is huge and industry estimates for steel industry is huge and industry estimates
indicate that the industry will continue will to grow indicate that the industry will continue will to grow
reasonably in the coming years with huge reasonably in the coming years with huge
demands for stainless steel in the construction of demands for stainless steel in the construction of
new airports and metro rail projects. The new airports and metro rail projects. The
government is planning a massive enhancement of government is planning a massive enhancement of
the steel production capacity of !ndia with the the steel production capacity of !ndia with the
modernization of the existing steel plants. modernization of the existing steel plants.
FUTURE SCOPE FUTURE SCOPE
Steel is a major input in the construction, Steel is a major input in the construction,
shipbuilding, automobile and oil industries. shipbuilding, automobile and oil industries.
Although the U.S. and Western Europe were Although the U.S. and Western Europe were
largely responsible for the initial development of largely responsible for the initial development of
this industry, since about 1370, China this industry, since about 1370, Chinahas become has become
a major force in the steel industry a major force in the steel industry. Chinese steel . Chinese steel
production has grown from 13º of world steel production has grown from 13º of world steel
production in 133S to 32º in 200S. However, production in 133S to 32º in 200S. However,
China's demand for steel has grown just as fast, China's demand for steel has grown just as fast,
and it remains a net importer of steel. and it remains a net importer of steel.
NARKET SHARE NARKET SHARE
The cost to produce steel varies from country The cost to produce steel varies from country
to country, largely with the cost of labor and to country, largely with the cost of labor and
energy. Russia, !ndia, Ukraine, Brazil are able energy. Russia, !ndia, Ukraine, Brazil are able
to produce steel at the lowest cost because of to produce steel at the lowest cost because of
a combination of cheap energy and labor. a combination of cheap energy and labor.
The US's costs are roughly middle of the The US's costs are roughly middle of the
road. Unlike many other commodities, China road. Unlike many other commodities, China
is not the lowest is not the lowest··cost steel producer. Chinese cost steel producer. Chinese
labor is cheap, but energy in China is still labor is cheap, but energy in China is still
pricey. As a result, China produces steel at a pricey. As a result, China produces steel at a
cost 20º below that in the US, but energy cost 20º below that in the US, but energy
costs in China are higher than they are in costs in China are higher than they are in
Russia, !ndia, Ukraine, and Russia, !ndia, Ukraine, and Brazil Brazil. .
³³Economic growth Economic growth across the globe in 2007 and across the globe in 2007 and
early 2008 spurred a rise in construction early 2008 spurred a rise in construction
activity activity ·· steel prices rose. As the steel prices rose. As the 2008 2008
Financial Crisis Financial Crisis worsened in late 2008 and worsened in late 2008 and
early 2003, global demand for steel fell while early 2003, global demand for steel fell while
new steel new steel production capacity production capacity was coming into was coming into
the market the market ·· steel prices fell. On Nay 18, steel prices fell. On Nay 18,
2003, global steel prices fell to a six 2003, global steel prices fell to a six··year year
low. low.
|1] |1]
³³!t should be noted that the majority of !t should be noted that the majority of
steel is utilized by a fairly limited number steel is utilized by a fairly limited number
of purposes. For example, in the United of purposes. For example, in the United
States eight industries consume over 30 States eight industries consume over 30
percent of the steel used. percent of the steel used.
|2] |2]
!n North !n North
America 2/3 of steel fabricated for America 2/3 of steel fabricated for
consumption is recycled from previous consumption is recycled from previous
uses. uses.
|3] |3]