Competiviness of Indian Steel Industry Through Inovation

8 IE(I) Journal–MM

Competitiveness of Indian Steel Industry through Cost Efficiencyand Innovation

Ms S Ghosh, Non-member

P Gupta, Associate Member

Dr R Datta, Non-member

Dr D Mukerjee, Non-member

There have been revolutionary changes in the global steel scene with fierce competitive pressures onperformance, productivity, price reduction and customer satisfaction. National boundaries have melted toencompass an ever increasing world market. Trade in steel products has been on the upswing with theproduction facilities of both the developed and the developing countries complementing each other in themaking of steel of different grades and specialty for the world market. Innovation and reduction in cost arekeys to achieve a competitive edge in the international market. Innovation in its broadest sense includes newtechnologies, new ways of managing or discovering new market segments. Technology influences costcompetencies in the long term which in turn generates price competition in the market. However, in the shortterm prices are also influenced by capacity utilisation through better efficiency. Innovation results in continuousdevelopment of cutting edge solutions in technology, processes and products. Achieving this calls forsubstantial efforts in R & D, for which, to stay ahead in the competitive world. Competition between steelmakers promotes innovation and efficiency. It promotes the growth in steel use and serves steel’s customerand society as a whole. Post-liberalisation, Indian firms have been under tremendous pressure to improvetheir competitiveness. The removal of physical restrictions on imports and the lowering of customs dutiesimplied that Indian firms had to be as good (or nearly as good) as their international competitors in order tosurvive. This accelerated the process of technological absorption. Several companies also pushed ahead inimproving production and improving their products so as to be able to add value to their products and improveprofitability. The steelmaking and processing technologies have undergone significant changes in the lastfew decades, in order to make steel more cost competitive and also enhance the performance capability ofsteel to meet the increasing needs and expectations of market and society. New processing technologies,such as, continuous casting, ladle refining, thermo-mechanical controlled processing, continuous annealingand processing line, endless hot rolling, etc have dramatically improved material property and performance.The steel industry is continuously striving to make its product lighter, stronger and cheaper than ever before.In addition to new technologies, new concepts have been introduced which has led to significant improvementin product property and capability. Ultra low carbon Bainitic steels have fulfilled the long felt need for higherstrength level without sacrificing low temperature toughness and weldability properties. Recent developmentof interstitial free (IF) steel for the auto segment has completely eliminated presence of cementite frommicrostructure of cold rolled steel sheets and has made it amenable for press forming of complex shapedauto components. Ultra fine grained (1µm - 3µm) steels have been successfully made in laboratory scale,which has led to high strength levels (YS~800MPa) with excellent impact toughness combination. The paperthrows light on global steel scenario and structure of Indian steel industry. A detailed SWOT analysis ofIndian steel industry presents various opportunities and impediments in front of the industry during the nextfew years. Competitiveness of Indian steel industry has been analysed with other global players with the helpof various parameters and finally some ways have been suggested. Apart from new concepts and technologies,a number of other measures have been taken up by the Indian steel industry to improve its competitiveness.Such measures include enhancing volume of value added products, reduction in dependence on importedcoking coal, creation of infrastructure to sustain 160Mt production by 2020, quality assurance, improved ITstrategy, etc. Innovation and cost efficiency keep hand in hand. Innovation not only in product development,but in process, business strategy, marketing strategy, HR policy leads to cost efficiency. This paper providesa detailed overview of the steps to enhance competitiveness of the Indian steel industry through cost efficiency,innovative concepts and new technologies.

Keywords : Indian steel industry; Cost efficiency and innovation; Five forces model; Techno-economic competitiveness of Indian

steel industry through benchmarking

INTRODUCTION

Steel is considered to be the backbone of human civilization.As the steel industry has tremendous forward and backwardlinkages in terms of income and employment generation,

Ms S Ghosh, P Gupta, Dr R Datta and Dr D Mukerjee are with the

RDCIS SAIL Bokaro, Bokaro Steel Plant, Bokaro 827 001.

This paper received the Dr M Visvesvaraya Award 2009, which waspresented to the authors in the 24th Indian Engineering Congress heldat Surathkal during December 10-13, 2009.

Volume 91, April 2010 9

the growth of an economy is very closely related to thequantity of steel consumed by it. Historically, the global steelindustry, apart from being subjected to cyclical ups anddowns of demand and prices, has also suffered fromstructural deficiencies of large unutilized capacity and highdegree of fragmentation.

STEEL : A GLOBAL PERSPECTIVE

Long plagued by sluggish sales to slow-growing markets,global steel industry struggled from the mid 1970s until theturn of the century in the grip of a no-win stalemate.Overcapacity was rampant, and any improvement in efficiencydesigned to cut costs and improve margins inevitablyexacerbated overcapacity.

But, at the dawn of new millennium, the industry took a newlife. Demand surged, fuelled by China’s booming economyand voracious appetite for steel. From 2001 to 2007, globalsteel production grew at more than seven percent per year,culminating in a 1343 Mt of crude steel1 in 2007. But worsewas still not over. End of 2008 saw a slowdown in steelindustry, affected by the global recession. Global steelproduction decreased by 1.2% in 2008, to 1330 Mt from1343 Mt in 20072. Global crude steel production duringJanuary-April 2009 was 354 Mt, which is 23% lower comparedto the same period last year. World steel production in May2009 (95.6 Mt) decreased by 20% compared3 to May 2008(120 Mt). Table 1 shows region wise crude steel productionin 2008-2009 and Figure1 shows their share of production. Itmay be observed that only India and China showed a positivegrowth trend during this period.

INDIAN STEEL INDUSTRY : AN OVERVIEW

The Indian iron and steel industry is nearly a century old,and it was the first core sector to be completely freed fromthe licensing regime. India is the fifth largest producer ofsteel with total production2 of 55.0 Mt in 2008 (Figure 2). TwoIndian companies (SAIL ranks 21st and Tata Steel 8th)4 figureamong the world’s 50 largest steel producers. Indian steelindustry is growing at CAGR of more than 10% from theperiod 2003-04 to 2007-085.

Assuming a similar growth rate beyond 2007-08, theconsumption of steel in the country is likely to touch 160 Mtby 2020, which is a threefold increase from the present levelof 55 Mt. The National Steel Policy 2005 projects a moreconservative demand of 60 Mt by 2012 and 110 Mt by 2020,based on a CAGR of 7.3% per annum. Thus an additionaldemand of at least 20 Mt by 2012 and 60 Mt by 2020 isenvisaged6, providing a huge opportunity to the steel industryto expand both by installation of entirely new plants or addingnew capacity to the existing ones. The steel industrycontributes 1.3% to India’s GDP and accounted for 10% inexcise duty collections in 2006-07. The industry providesemployment to 0.4 million people directly and 0.6 millionpeople indirectly.

Structure of the Industry

The Indian steel can be divided into two groups of producers.The first group comprises major producers called, integratedsteel producers (ISPs). This includes large steel producerswith capacities of over one Mt. The main companies in thisgroup are Steel Authority of India Limited (SAIL), Tata Steel,Rashtriya Ispat Nigam Limited (RINL), JSW Limited, EssarSteel and Ispat Industries.

It can be seen from Figure 3 that the top six companiesaccount for 60% of crude steel production in India. Figure 4shows the share of different steel plants in flat steel productionand SAIL leads in long product production with 38% share(Figure 5).

SAIL has planned to increase its production capacity from15.0 Mt of crude steel presently to 26 Mt7 by 2012 and 40Mtby 2020. Other integrated steel plants, such as, RINL, TATASteel, JSW, Essar Steel and ISPAT have also drawn up theirgrowth plans, both through green and brown field projects,

Table 1 Region wise crude steel production, 2008-09

Country Crude steel production

Production, Mt Change, %

China 502 2.6

Japan 119 -1.2

USA 92 -6.8

Russia 69 -5.4

India 55 3.7

World 1330 -1.2

(Source : World Steel Association)

Figure 1 Regionwise crude steel production, 2008-09

Others

37.07%

China

37.75%

RussiaUSA

Japan

India4.14%

5.18%6.91%

8.95%

Figure 2 Crude steel production of India, 1950-2008

Production, Mt

19

50

19

60

19

70

19

80

19

90

19

93

19

95

19

98

20

00

20

01

20

04

20

05

20

06

20

07

20

08

1.1 2.4 5.1 7.513.0 15.2

21.423.8

29.730.6

38.444.5

50.1 52.6 53.160

50

40

30

20

10

0


targeting total capacity of 15 Mt, 33 Mt, 22 Mt, 21 Mt and15 Mt, respectively by 2020. In addition, new steelcompanies, such as, Mittal Steel, POSCO, and JSPL havesigned MOU’s for setting up integrated steel plants of 44 Mttotal capacity.

The second group comprises smaller stand alone steel plantsthat include producers and processors of steel.

♦ Processors/Re-rollers : Units producing small quantitiesof steel from materials procured from the market or throughtheir own backward integration system.

♦ Stand alone units making pig iron and sponge iron.

♦ Small producers using scrap-sponge iron-pig ironcombination produce steel ingots (for long products) usingelectric arc furnace (EAF) or induction arc furnace (IAF)route. The secondary steel sector, which is presently of ~12 Mt capacity, is likely to be doubled by 2020. All theseprojections, if realized will lead to total steel production inexcess of 200 Mt.

MICHAEL PORTER’S FIVE FORCES MODEL:UNDERSTANDING COMPETITIVENESS OF INDIANSTEEL INDUSTRY

Backed by robust volumes as well as realizations, steelindustry has registered a phenomenal growth across theworld. The situation in the domestic industry was noexception. In fact, it enjoyed a double digit growth ratebacked by a robust growing economy. However, the currentliquidity crisis seems to have created medium term hiccups.The steel sector can be analysed through Michael Porter’sfive force8 model (Figure 6) to understand the competitivenessof the sector. The factors of competitiveness range from highto medium to low.

Entry Barriers : High

Capital Requirement

It is estimated that to set-up one Mt/annum capacity ofintegrated steel plant, it requires around Rs 4000 crores. Inthe present economic meltdown many Greenfield andBrownfield projects have been deferred due to shortage ofcapital fund.

Economies of Scale

As far as the sector forces go, scale of operation does matter.Benefits of economies of scale are derived in the form oflower costs, R and D expenses and better bargaining powerwhile sourcing raw materials.

IISCO10.2%

Figure 3 Share of different steel plants in crude steelproduction in India

Others

39.6%

Essar, Ispatand JSWL,

16.5%

SAIL

26.6%

RINL

6.9%

Figure 4 Share of different steel plants in flat product production

SAIL15%

TATASTEEL

8%

RINL16%

OTHERS61%

Figure 5 Share of different steel plants in long product

production

OTHERS4%

SAIL38%

ISPAT12%

JSW13%

TATASTEEL18%

ESSAR15%

Figure 6 Michael Porter’s five forces model

Suppliers

SubstitutesPotentialentrants

Buyers

Industrycompetitors

Rivalry amongexisting firms

Threat ofnew

entrants

Threat of

substitutes

Bargaining power of buyers

Bargaining power of suppliers


Government Policy

There are certain discrepancies involved in allocation of ironore mines and land acquisitions. Furthermore, the regulatoryclearances and other issues are some of the major problemsfor the new entrants.

Product Differentiation

Steel has very low barriers in terms of product differentiationas it does not fall into the luxury or specialty goods andthus does not have any substantial price difference. However,certain companies like SAIL, Tata Steel still enjoy a premiumfor their products because of its quality and its brand value.

Competition : High

The steel industry is truly global in terms of competitionwith large producing countries, like China significantlyinfluencing global prices through aggressive exports. Dumpingof cheaper products from competitors poses threat to Indiansteel industry.

Bargaining Power of Suppliers : Medium

The bargaining power of suppliers is low for the fully integratedsteel plants as they have their own mine, eg, SAIL, TataSteel. But for coking coal they largely depend on importers.Globally, the top three mining giants BHP Billiton, CVRDand Rio Tinto supply nearly two third of the processed ironore and command very high bargaining power. In India, NMDCis a major supplier to standalone and non-integrated steelmills.

Threat of Substitutes : Medium

Plastics and composites pose a threat to Indian steel inone of its biggest markets - automotive manufacture.Similarly, aluminium has replaced steel to a great extent forapplications, such as, door and window frame, beer cansand automobile engine.

Bargaining Power of Consumers : Medium

Some of the major steel consumption sectors, likeautomobiles, oil and gas, shipping, consumer durables andpower generation enjoy high bargaining power and getfavourable deals.

INDIAN STEEL INDUSTRY : SWOT ANALYSIS

SWOT analysis9 of Indian steel industry helps inunderstanding strengths, weaknesses of the industry, aswell as its various opportunities and threats.

Strengths

Availability of Raw Material

India has abundance of iron ore, coal and many other rawmaterials required for iron and steel making. It has the fourthlargest iron ore reserves (10.3 billion tonnes) after Russia,

Brazil, and Australia.

Low Cost of Labour

Indian steel industry has low unit labour cost which getsreflected in lower production cost of steel compared to manyadvanced countries.

Quality Manpower

It has third largest pool of technical manpower, next to USAand the erstwhile USSR, capable of understanding andassimilating new technologies.

Mature Production Base

Indian steel industry is more than 100 years old and boastof quality steel producers, eg, TATA Steel, SAIL, etc.

Weaknesses

Poor Quality of Raw Material

Indigenous coking coal is high on ash content and isgenerally imported (Figure 7). Advantage of high iron contentof indigenous ore is often neutralized by high basicity index.

High Cost of Capital

Interest payments in India are on average between 7% - 9%of the total costs as compared to 2.4% in Japan and 6.4%in USA.

Low Labour Productivity

In India the advantages of cheap labour gets neutralized bylow labour productivity, eg, labour productivity of SAIL andTATA Steel is 215 t/man year and 277 t/man/year, whereas,for POSCO, Korea and NIPPON, Japan the values are 1345t/man year and 980 t/man/year.

Obsolete Technology

Indian steel industry is far behind in terms of technology,compared to other global players.

Figure 7 Coking coal import data, Mt

25

20

15

10

5

0

2001-02 2001-02 2001-02 2001-02 2001-02

Table 2 Comparison of input costs

China India

Power US Cents/kWh 4.50 9.0

Freight US Cents/ t/ km 0.96 1.6

Finance Interest rate, % 6.00 10.0


High Cost of Basic Inputs and Services

High administered price of essential inputs like electricity,freight etc puts Indian steel industry at a disadvantage, eg,cost of electricity is three cents in the USA as compared tonine cents in India (Table 2). Added to these are everincreasing prices of coking and non-coking coal.

Labour Laws

Archaic Indian labour laws add to the woes of Indian steelindustry.

Higher Duties and Taxes

Excise duties, sales tax, other direct and indirect taxesfurther push up costs of steel. Total taxes contribute morethan 16% of total costs.

Dependence on Imports for Steel Manufacturing Equipments

and technology

India highly depends on foreign countries for steelmanufacturing equipments and technology which eventuallyresults in rise in cost of production.

Slow Statutory Clearances for Development of mines

Slow clearances for Rowghat and Chiria mines of SAILdelayed their development.

Quality

Indian steel makers are still far behind global players, interms of quality products.

Slow Adaptability to Technological Change

Indian steel industry is slow to adapt to latest technologies,due to various constraints including slow decision making.

Low investment in R and D

India’s R and D expenditure is only 0.26% of turnover.

Opportunities

Increasing Demand of Steel in India

Compared to other countries and global average (190.4 kg)per capita steel consumption is very low in India4 (44.3 kg).Figure 8 gives a glimpse of untapped potential of increasingsteel consumption in India to reach the level of developingeconomies like China and CIS.

Unexplored Rural Market

The Indian rural sector, comprising 70% of country’spopulation, remains fairly unexposed to their multi-faceteduse of steel. Presently per capita steel consumption in therural sector is only 2kg. Enhancing applications in rural areasassumes a much greater significance now for increasingper capita consumption of steel.

Positive Stimuli from Construction and Infrastructure Industry

An increasing investment in infrastructure, construction andurbanisation as well as growth in automobile, white goodsand industrial sector will provide a further boost to theoptimism within the domestic steel industry. Figure 9 showsthe amount of expenditure to be borne in improvinginfrastructure10.

Power

Addition of about 61 000 MW between 2007 and 2012 shoulddrive steel off take northwards, leading to an incrementalconsumption of 0.4 million t/year during this period.

Roads

The government intends to embark on the construction of48 new projects with a view to four lane about 10 000 km ofroads. With steel consumption in the roads underconstruction being considerably higher in recent times, theoutlook for increased steel consumption on this countappears to be brighter.

Housing

Low interest rates and easy availability of housing financehas resulted in housing boom. The Housing and Urban

Figure 8 Per capita steel consumption

2000

-06

0 100 200 300 400 500 600 700 800

Triggerpoint

↑

↑

Point ofinflection

Peak pointPoint of

saturation

↑

Japan

EU 15

Australia

Singapore

USA

China

India

Per capita, kg

200000

175000

150000

125000

100000

75000

50000

25000

0

Figure 9 Amount of expenditure in improving infrastructure

Outlay, Rs in crores

194263

72530

10003315

43560

Civilaviation

Ports Shipping Roads andbridges

Railways


Development Corporation intends to add two million housesevery year, estimated to create an additional annual demandof 0.6 Mt to 0.8 Mt of steel.

Malls

From 25 malls in 2003, India expects to commission morethan 600 malls by 2010 (100 million ft2). These malls arebased on steel based composite construction where the steelconsumption is much more compared to conventional RCCconstruction.

Automobile and Ancillaries

In 2004-05, India’s auto industry consumed about 2.8 Mt ofsteel (about 8% of India’s steel consumption). This isexpected to grow at 11%-12% over the next three years.

White Goods

Rising income and the easy availability of low cost financehas started a white goods revolution in India, leading to anincreased consumption of steel.

Export Market Penetration

It is estimated that world steel consumption will double innext 25 years. Quality improvement of Indian steel combinedwith its low cost advantages will definitely help in substantialgain in export market.

Mergers and Acquisitions

Mergers and acquisitions helps in capacity & technologyaugmentation. TATA Steel acquired CORUS in 2006 for $8billon.

Threats

Threat of Substitutes

Plastics, aluminium and composites pose a threat to Indiansteel in one of its biggest markets, automotive manufacture.Steel has already been replaced in some large volumeapplications, namely, railway sleepers (RCC sleepers), largediameter water pipes (RCC pipes), small diameter pipes (PVCpipes), and domestic water tanks (PVC tanks).

Technological Change

Technological changes often force the industry structure tochange. For a developing country like India where capital

itself is costly, technological obsolescence is a major threat.

Price Sensitivity and Demand Volatility

The steel industry is characterized by cyclical fluctuationsin prices of finished steel products as well as those of thekey inputs. Any downward cyclical movement in the steelsector could affect the demand for steel and reduceprofitability.

China Net Exporter

China’s steel export in 2008 was 59.23 Mt. Export valueincreased by 43.8% year-on-year to $63.44 billion.

Environmental Norms

Stringent environmental norms will add to woes for Indiansteel firms, if they fail to meet the statutory norms. ISPATwas forced to shut its blast furnace for six months for notmeeting environmental norms.

Global Economic Slowdown

Global economic meltdown has resulted in lower productionand lowering cost of steel. These eventually affected Indiansteel industry and profits plummeted for Indian steel firms.

Dumping by Competitors

Indian steel industry is under threat of dumping of steel byRussian and Chinese mills.

Protectionism from the West

With the devaluation of currencies, the impact of the highercost of funds could have been offset by developing countries.But America and the EU were quick to impose anti-dumpingduties on imports from Brazil, Korea and Japan. For someproducts, even Indian producers were not spared.

Systemic Deficiencies

♦ Poor quality of basic infrastructure like power, road,railways and port, etc.

♦ Limited access to good quality iron ores, normallyearmarked for exports.

♦ Lacking in international competitiveness on determinantslike on-time delivery, post sales service, distributionnetwork, managerial initiatives, information technology, etc.

Table 3 WEF rankings on select indicators of competitiveness

Parameter India China Korea Malaysia Indonesia Taiwan

Overall quality of infrastructure 54 46 28 18 42 26

Sophistication of technology available 38 42 23 27 48 16

Import fees 59 45 32 25 40 24

Average tariff rates 59 57 40 41 45 13

Ease of starting a new business 39 37 33 18 24 6

Local development of product designs 47 36 22 50 51 19

Efficient production processes 47 43 28 29 46 21

Labour flexibility 53 32 18 38 26 13

Pay related to productivity 52 15 23 29 42 2


GLOBAL COMPETITIVENESS AND INDIAN STEELINDUSTRY

Steel industry is an integral part of manufacturing sector.Many parameters, which have a direct bearing onmanufacturing sector, also significantly impact steel sector.Global competitiveness survey rankings, such as, those inthe WEF’s Global Competitiveness Report11 providecorroborative results, which point towards significant lack ofcompetitiveness, where India has been ranked 37th and 49th(out of 59 countries surveyed) in terms of current and growthcompetitiveness, respectively (Table 3).

Table 4 illustrates that in both technology intensive andcapital intensive sector India’s competitiveness is mediumlow12. India’s low index level, indicating major determinantsof international competitiveness (Table 5) also points in thesame direction13. However, these parameters represent

competitiveness of manufacturing sector in general whichhas a bearing on steel sector although not exactly reflectiveof steel industry. Worldsteel Dynamics has listed 17 factors,which has major influences on the long term competitiveness14

of an ISP (Table 6).

Cost Competitiveness of Indian Steel Industry

The competitiveness in steel industry is dependent on manyfactors, such as, state-of-the-art technology, availability andcost of inputs, infrastructure, manpower productivity, financialcosts and exchange rates. The Indian steel industry needsto evaluate all these factors to be a low cost producer.

World Steel Dynamics recently carried out a study on costof steel production in various countries (Figure 10). India ishaving lower labour cost, but this is neutralized by low labourproductivity. China is having the lowest labour cost. Energycost and raw materials cost is also higher for India.

At slab stage, HR and CR coils costs from India are lowerthan those of USA and Japan but higher than China, SouthKorea and the CIS countries. It is also to be noted that ateach stage the cost differentials between South Korea andIndia widened. Superior technology used by a country likeSouth Korea results in bringing down the costs in eachdownstream rolling stage. This is further confirmed that whilethe cost of conversion of liquid steel to slab in South Koreaand India are quite comparable, at slab to HR coil stage the

Table 4 Category-wise competitiveness in manufacturing sector

Category Percentage Percentage Percentage Competitiveness Competitivenessof value of capital of labour in the domestic in the globaladded employed employed market market

Consumer centric 33 25 39 Medium-high Low

Labour-skill intensive 13 13 22 High High

Naturally protected 14 14 7 Medium-high Low-medium

Capital/scale intensive 25 34 21 Low-medium Low

Technology intensive 14 13 11 Low Low

Table 5 Major determinants of international competitiveness

Item Unit India Brazil SouthCanada USAJapan Germany

Korea

Product Index 41 52 61 68 60 93 93quality

Product Index 34 57 49 58 70 81 71design

On-time Index 30 36 59 62 63 93 88delivery

After Index 41 39 47 63 58 90 79salesservice

Distribution Index 52 52 57 66 74 72 76network

Labour Ratio 6177 7724 9291 30034 44070 4667 38207productivity

Training Index 36 37 47 40 48 79 69

Managerial Index 61 61 68 62 74 72 73initiative

Expenses % 0.91 0.38 1.63 1.32 2.66 2.85 2.79in R&D of GDP

Information Index 44 52 59 63 57 82 87technology

Figure 10 Cost of production of crude steel (Source : WorldSteel Dynamics)

1000

800

600

400

200

0

-200

Others

Energy credit

Raw material

Labour

Energy

Depreciationand interest


cost differential moves up by US $ 11/ t in favour of SouthKorea. The high conversion ratio of liquid steel into CR coilimpacts the relative cost of production. Thus the ratio ofliquid steel to CR ranges between 13% to 15% in USA,Japan and South Korea, while these are around 22% -23%in the cases of India and China. Individual unitwise, someplants in India are most cost competitive as compared toother countries.

At slab, HR coil and CR coil stage, the cost of production atTISCO is the lowest followed by JVSL, SAIL BSL and Essar.It may also be mentioned here that while the cost of

conversion of liquid steel to slab is US $ 7 for Jindal, US $ 9for Ispat, US $ 14 for TISCO, US $ 12 for Essar and US $ 23for Bokaro, it is US $ 32 for USA, US $ 20 for South Koreaand US $ 24 for China. As regards conversion of slab to HRCoil, while the Indian steel majors spent around US $ 37 to50 / t, the cost varies from US $ 68 to 81 for USA, Germany,Japan, UK and France.

TECHNO-ECONOMIC COMPETITIVENESS OF INDIANSTEEL INDUSTRY THROUGH BENCHMARKING

Benchmarking requires those advanced or best practices ina specific area and/or process is identified and existing

Table 6 Major influences on the long term competitiveness of an ISP

Factor Bao Car China CSN Dofasco Gerdau Nippon Nucor Posco Severstal Tata Usinor(10 =best) Steel Steel Steel

Operating costs 8 6 8 10 7 9 6 7 8 10 9 8

Ownership of 3 – 1 9 6 – 1 – 1 9 10 6low cost iron makingand coke making coal

Favourable location 5 6 6 9 6 6 8 7 8 7 10 6for procuring rawmaterials

Skilled and productive 7 8 9 7 8 8 10 10 10 7 7 9workforce

Price paid for 6 5 5 6 6 7 6 8 8 8 7 7electricity

High quality and 5 10 8 6 8 6 10 8 9 6 7 9niche products

Low legacy costs 8 4 6 8 4 5 5 5 6 6 6 5

Ongoing cost 8 8 8 8 8 8 8 8 8 8 8 9cutting efforts

Cost position of 6 8 6 8 8 7 6 8 9 6 7 7nearby competitors

Owns downstream 5 8 5 4 5 7 10 8 6 6 5 7steel using business

Domestic market 10 6 6 6 4 7 2 3 6 6 9 8growing at ahigh rate

Proportion of sales 9 8 8 6 7 8 4 10 6 1 7 8in home market

Degree of pricing 8 6 9 7 5 6 6 3 7 6 8 8power with largesteel buyers

Dominant in region 7 7 8 6 3 8 6 2 9 7 7 7

Balance sheet 7 7 8 8 9 7 6 10 8 7 7 8

Borrowed funds 10 6 9 6 6 7 8 10 9 2 8 –and equity onfavourable basis

Management 9 9 9 9 9 9 9 9 9 9 9 9experienced,aggressive,proactive

Average score 7.12 6.58 7 7.24 6.41 7.38 6.53 7.25 7.47 6.53 7.71 7.59


practices are compared against best practices. When thereare gaps between the two, the best practices are, to theextent possible, adopted. Ensuring a financial turnaroundwould demand benchmarking of all critical operations.Benchmarking would help the steel industry in cost reductionand control starting from procurement to delivery stage.

Table 7 shows, blast furnace productivity is low and totalfuel rate is high for Indian steel industry. Steel industry alsooperates at a sub-optimal level with a relatively high rate of

energy consumption which is a major contributory factor forthe high cost of steel and cut into its competitiveness. Inaddition, specific raw material consumption is also high(Table 8) which offsets our competitive advantage of domesticavailability of iron ore. Therefore, in both technological andtechno-economic front Indian steel industry need considerableimprovement since Indian product quality index is also nothigh. This kind of quantum leap, ie, multi-dimensionalefficiency and productivity gains is possible only when properinternal and external infrastructure for steel industry is inplace.

COST EFFICIENCY AND INNOVATION

Cost efficiency and innovation goes hand in hand. In steelindustry, 4 M’s are important, namely, man, machine, money,and minutes. Any innovation in these four factors results incost reduction. In human resources, innovation is necessaryto improve labour productivity. Improvement in technologyand process results better techno-economic parameters andcost-effective production. Improvement in yield andproductivity also helps in cost reduction.

Cost Reduction

Cost reduction is probably the most important driver forimproving competitiveness. To ensure a competitiveadvantage, Indian steel makers have to concentrate on thefollowing areas, such as, reduction in operating costs,reduction in working capital costs, introduction of new cost-effective technologies, reduction in product inventory (unsoldstock), improvement in techno-economic parameters,substitution of raw material, differentiated sourcing, effectivesupply chain management, reduction in social infrastructurecosts, etc. Operating and working capital costs need to bebrought down through a combination of benchmarking andstrict cost control, potential for improvement in techno-economic parameters, like energy consumption, yield etcneed to be identified through benchmarking and implementedthrough in-house research and technological expertise.

A major cost in steel manufacturing relates to the cost ofraw material. There is a need to selectively focus on purchaseof high-value items. This can be achieved through focusingon the ‘total cost of ownership’ instead of just the purchaseprice and identifying critical levers that can be used to reducethe ultimate cost. Cost of raw material, like imported coal isto be analysed with respect to its productivity and for theoptimum purchase pattern. Efforts should also be made todevelop product specific and differentiated sourcing strategiesinstead of current practice of a single strategy for allpurchases. Perhaps the greatest driver to cost reduction isthrough introduction of new cost effective technologies. Oneof the greatest technological breakthroughs in this directionis continuous casting. It has not only improved the quality ofthe cast product as opposed to ingot casting, but has alsoled to concurrent cost saving in terms of higher yield andlow energy consumption. The other opportunities for costreduction lie in reducing internal business costs like inventoryholding, transportation and purchase processing costs.

Table 7 Benchmarking of integrated steel plants

Parameter Indian International

Blast furnace, t/m3/d 1.3 - 2.2 2.5 - 3.5

Sinter plant, t/m2/h 1.2 - 1.5 >1.8

Coke rate, kg/thm 450 to 610+ 350 - 400

Steel making, blows/yr/ 4K - 4.5K 6K - 10K+working converter

BOF lining life 2K - 10K 5K - 10K+(no of heats)

Cont casting, m/min

l Slab 1.0 - 1.9 1.4 - 2.5

l Billet 3.0 - 3.5 3.0 - 4.7

l Bloom 0.5 - 0.9 0.5 - 1.0

Hot strip mill

l Mill utilization, % 70 - 78 85 - 90

l Yield from slab, % 96.3 - 97.6 98.5

Cold rolling mill

l Mill utilization, % 56 - 64 90

l Yield, % 92.7 - 94.3 95+

Specific energy 6.45 - 8.5+ 4.5 - 5.5Consumption,Gcal/ tcs

CO2 emission, kg/tcs 2600 - 3300 1200 - 1800

Steel cleanliness, ppm(S, P, O, N)

l S 10 - 100 5 - 100

l P 50 - 200 10 - 150

l O 10 - 50 5 - 40

l N 30 - 60 10 - 40

Table 8 Raw material used up to hot metal stage, kg/thm

Raw material Indian steel industry Nippon steel

Coking coal 952 545

Injection coal 43 169

Lump iron ore 646 280

Ore fines 882 1205

Fluxes 183 174

Total raw material 2707 2373


Plants should also identify on a continuous basis themeasures to increase revenue by reducing freight costs,cost of arisings, demurrage and non-confirmed orders. Thesocial infrastructure costs may also be looked into for itseffectiveness and brought down in a phased manner.

Innovation

Research and development plays a pivotal role in makingsteel industry globally competitive. The driving forces arethe need to produce new products to satisfy customerrequirements, the need to reduce production costs by newproduction technology and the need for clean technology(including more recycling). New processes and technologiesare needed to increase the potential for reducing raw materialsuse and reduce production costs and for improving quality.Research, development and demonstration play an importantrole in the creation of new technologies. Development ofnew technologies and processes and their successfulapplication would enable the domestic industry to gaintechnological advantage which in turn will lead to competitiveadvantage. Innovation indeed leads to cost reduction throughquality improvement, reduced labour cost, improvedproduction process, reduced energy and materialconsumption, extended product range, etc. Figure 11 showsthe relationship between competitive environment andtechnological innovation.

Infrastructure – Major Factor of Competitiveness

Any physical facility that aids in improving cost reduction,quality improvement, improved delivery / service and higherdemand can be termed as infrastructure. Infrastructure canbe divided into two parts, namely, external and internal.Figure 12 shows how internal or external infrastructure affectscompetitiveness.

STRATEGIES FOR IMPROVING COMPETITIVENESSTHROUGH COST EFFICIENCY AND INNOVATION

The strategies to improve cost efficiency and innovationsare keys to success of any manufacturing industry. Thisrequires both short and long term steps through operationaland strategic management. Operational management resultsin short term gain but sustainability it is brought throughstrategic business plans. Efficiency can be improvedimmediately by taking cost cutting measures in terms ofprocess innovation whereas in long term, capacity expansionand technology management is needed to enhance efficiency.

India on the Move : New Concepts and Technologies

New concepts and technologies15 in iron making, steelmaking and downstream processing areas have emerged inrecent times, leading to significant improvement in qualityof final product and reduction in cost. India is emerging as aglobal player in the steel sector only after the plants haveresorted to major technological upgradations.

Raw Materials

In India, raw materials consist of around 30% to 40 % of thecost of steel making. Consumption of raw materials is highin India compared to other global players as shown in Table 8.Improved ore beneficiation techniques will improve the qualityof iron ores. Also to reduce cost, use of sinter and pelletsshould be increased in order to reduce use of lump ores, eg,Corus does not use lump ore at all. Usage of 10% lump orewith 70% - 80% sinter and 10% - 20% pellet is reported byPosco. Pre-treatment techniques, such as, selectivecrushing and pre-heating of coal charge improves M 10 andM 40 and increases oven throughput to produce a betterquality of coke. Using pre-reduced ore fines, which areunsuitable for sinter making, as a raw material in the blastfurnace is effective in increasing the blast furnace productivityand decreasing the reducing agents rate.

Coke Making

Improved coke quenching system, ie, use of dry quenchingsystem in place of wet quenching helps in reducing moisturecontent of coke and improves its M10, CSR and CRI. It alsofacilitates power generation by recovering almost 80% ofthe sensible heat of hot coke. RINL is having dry cokequenching facility at coke ovens and SAIL is also comingup with the same facility in its modernization plan at IISCO.Coke stabilisation quenching (CSQ) is also a cost efficienttechnology, in which coke moisture comes down to 3% -

Figure 11 Relationship between competitive environment and

innovative technology

High

Productioncost

Low

Past(Low)

Time (Intensity of competition) Future(High)

Cost curve having slow technological development

The difference in costcompetitiveness due toinnovation

Cost curve having fast technological development

Figure 12 Effect of internal and external infrastructure on

competitiveness

Quality of finishedsteel (IF)

Meeting thedemand (EF)

Materialefficiency (IF)

Energyefficiency (IF)

Technology(IF)

Cost to finalcustomers

Costcompetitiveness

Cost effectiveinputs

Workforce(IF)

Demandcreation (EF)

Landed cost ofraw material (EF)

Shipment cost tomarket place (EF)

IF : Internal infrastructure; EF : External infrastructure


3.5%. Partial briquetting of coal charge (PBCC) improvesbulk density of coal charge by 40 kg/m3 to 50 kg/m3 and BFcoke yield by almost 4%. Nippon Steel Oita Works is usingdry cleaned and agglomerated pre-compaction system(DAPS) instead of wet charging of coal. Apart from reducingin energy consumption, DAPS increases oven throughputby 21% compared to conventional wet charging process andalso increases use of non or weakly caking coal.

Sinter Making

Waste heat recovery system increases energy efficiency,by recovering waste heat from cooler. Bhilai Steel Plant (SAIL)and RINL have already installed this facility. Base blendingof sinter mix allows uniform blend across the bed. VVVF drivesin motors allow low specific power consumption. Table 9 showshow latest technologies, implemented at sinter plant resultsin cost benefit. Ignition furnace with multi - slit roof mountedburners improves the energy efficiency and reducesconsumption of refractories in the furnace.

Iron Making

Phasing out of small capacity inefficient BFs with highcapacity (4060m3) blast furnaces improves productivity andtechno-economic parameters. Coal dust injection16 withoxygen enrichment reduces coke rate in furnace and in Indiaalmost every integrated steel plant is having this facility. 1 tof pulverised coal injection, ie, PCI (US $ 70/ t) can replace900 kg of metallurgical coke (US $ 170/ t). Savings per tonneof PCI injected is US$83. In top pressure recovery turbine(TRT), pressure energy and thermal energy of the gas comingfrom top of the blast furnace is converted to mechanicalenergy so as to drive generator to recover the electricity,which is not only purify the coal gas, but also lowers thenoise pollution. It also enhances indirect reduction andreduces coke rate. Bhilai Steel Plant (SAIL) is having toppressure recovery turbine. Table 10 and Table 11 show theprofitability on account of PCI and TRT, respectively.Introduction of waste heat recovery system from hot blaststoves and VVVF drives improves the energy efficiency. Forhot metal transportation, torpedo ladles can be used to saveenergy. Recent full-scale tests have shown that injectingnatural gas into blast furnaces at the rate of 195.4 m3/t ofhot metal can reduce coke consumption by 30%, and canincrease iron-making capacity by 40%. Coal bed methanecan be utilised through this process.

Steelmaking and Casting

In the conventional method of steel making17, removal ofimpurities from steel is carried out within a single vessel,such as, basic oxygen furnace (BOF). There is a limit to theextent of refining (ability to carry out oxidation and reduction)possible through a single process and this restricts the purityof steel. In recent years, various types of refining processeshave been developed and added to steelmaking process,which have resulted in production of steels with superiorcleanliness level and enhanced properties. The present steelrefining practices adopted by the major steel producers involvetwo stage process, namely, pre-treatment of hot metal throughdesulphurisation and dephosphorisation units for productionof low S(<0.005) and P(<0.015). After processing the steelthrough BOF, the liquid steel is further refined using ladlefurnace (LF), vacuum arc degasser (VAD) and RH degasseretc depending on the requirements of quality. Thesesecondary refining facilities are capable to restrict totalimpurities like gaseous content (O, N, H) to 50 ppm max.With inclusion content not exceeding 0.05%, Calciumtreatment is also employed to control the morphology ofsulphides thus enhancing crack arrestability of the steel.

One of the greatest technological break-through in the areaof steel making has been continuous casting, which offersgreat advantages in terms of yield, energy, cost saving and

Table 9 Technology improvement in sinter plant

Technology Measures Effect Benefit

Large sized sinter Higher undergrate 12% increase Economy ofplants (>300m2) suction : 1400mm in production scale achievedwith state-of-the - 1700mm WC for large sized-art technology sinter plants

Taller bed height 4% increase Cost savings infrom 500 mm to in production production of

700 mm due to less sinter : Rs 75/ tgeneration ofsinter fines

Integrated Increase inlevel-II process production:2%

automation Decrease incoke rate

VVVF drives Less specific power consumption :

2kWh/t

Waste heat Waste heat Power Power savingrecovery from recovery boiler generationcooler for power of 0.22 kW/ t

generation of sinter

Environmental Use of ESP Lower stack Stack emissionand pollution and emission level up tocontrol bag filter 20mg/Nm3

Use of bag filters Sustenance to Increasedvolatile matter plant

and alkali content availability

Table 10 Profitability on account of PCI

BF size, PCI rate, HM production, Annual

m3 kg/thm t/day savings

Up to 2000 120 Up to 4500 US $ 15.7 million(Rs 76.0 cr)

4000 180 Up to 9000 US $ 47.0 million(Rs 226.0 cr)

Table 11 Profitability on account of TRT

BF size, Top Power Annualm3 pro, atg gen, MW savings,

million

Up to 2000 1.5 5 US $ 4.4

4000 2.5 14 US $ 12.2


quality of cast product. With the recent development of thinslab casting, it became possible to extend the processcontinuity up to hot rolled strip stage. Thin slab castingreduces energy consumption by 30% and increases yieldby 2%. The technology known as compact strip production(CSP) directly links a thin slab casting machine with a state-of-art rolling mill via a tunnel furnace. Liquid steel is cast ina thin slab mould and in less than half an hour it leaves thedown coiler as hot rolled coil. Already such facility has beeninstalled and operating at Ispat Industries.

Hot Rolling

New efficient and cost-competitive technologies that arecoming up in hot rolling area include :

♦ Flexible Production Technology

Schedule free hot rolling has been developed to meetdiversifying user needs permitting small lot production ofa wide variety of products. One major constraint associatedwith schedule free rolling is crown control. Introduction ofsix high mills (HC) and pair cross mills (PC) has helped toa great extent to obtain the required hot strip crown,irrespective of the time of rolling.

♦ Pair Cross Mill

The first pair cross mill was introduced in 1991 at theplate mill of Nippon Steel18. This provides excellent crownand shape control and permits heavy draft rolling in passesresulting in a concurrent improvement of mechanicalproperties, such as, strength and toughness and millproductivity.

♦ Ferritic Rolling

In today’s modern hot strip mills, thinner gauges of hotstrips up to 1.2 mm thickness can be produced. Theproblem of two-phase rolling has been overcome with thedevelopment of a new technology named ‘ferritic rolling’,in which finish rolling is carried out in ferrite region asopposed to austenitic region in conventional hot strip rolling.It has enabled production of ultra thin hot strips of 0.9 mmthickness and 1000 mm wide with excellent surface quality.

♦ Multipurpose Accelerated Cooling System (MACS)

In order to produce a wide variety of as rolled and quenchand tempered plates, online MACS was developed19 andput to use at Mizushima Works, Japan in mid 1980s forthe production of thermo-mechanical controlled processed(TMBP) plates. With appropriate alloy design, it is possibleto control the microstructure of the steel after finish rollingusing MACS. It also eliminates requirement of off-linereheating and quenching facility.

♦ Relaxed Rolling

Production of high strength steels with low temperatureimpact toughness guarantee necessitates lower carbon,

Table 12 Profitability associated with technologicalimprovement in flat product hot rolling

Technology Profitability

Hot charging 1. Energy saving 80-120 kcal/ t

2. Reduction in storage space

3. Product delivery time reducedby 90%

Endless/semi-endless rolling 1. Increase in yield - 0.5 to 1.0%

2. Increase in productivity - 20%

Schedule free rolling 1. Larger heat size for caster

2. Increase in roll life by 40%

3. Increase in rolling length by 50%

Automatic width control 1. Better width tolerances

2. Increase in yield by 1.5 %

Heat shields 1. Around 14% saving in fuelconsumption

Profile control and 1.Improved geometry and flatnessflatness control

Single roll drives in finishing trains 1. 30% reduction in roll force

2. 20% reduction in rollingtorque

3. 40% reduction in gauge inlast three stands

Edge masking 1. Reduction in yield losses dueto trimming

2. Improved edge quality

increase in deformation per pass and lowering of finishrolling temperature (FRT: ~750°C). A novel alloy designconcept has been introduced which permits ‘relaxed rollingregimes’ without affecting product properties. Studiescarried out by Kozasu20 using a 0.08% C to 0.08% Nbsteel demonstrated that it is possible to produce 20 mmthick plates with excellent strength-toughnesscombination even with high FRT’s of 1000°C.Subsequently, steels with new alloy design conceptinvolving high Nb (~0.1%) has been developed on industrialscale. Table 12 provides the profitability associated withdifferent technological improvement in flat product hotrolling.

Cold Rolling Mill

Recent developments in cold rolling mill area shows thatcoupling of pickling line and tandem mill results in higherproductivity, yield, etc. Rolling of thinner gauges of large widthis possible by introduction of six hi rolling mills. Table 13 showsthe improvement in quality and productivity by incorporatingcertain technologies in cold rolling area.

Long Product Mill

Table 14 and Table 15 show how cost efficiency can beachieved by incorporating various innovative technologies atwire and bar rod mill and section mill, respectively.

Refractories

75% of the refractory produced in India is consumed by Indian


steel industry. Use of monolithic lining, ie, castables insteadof bricks in soaking pits increases life of refractory lining atleast four times and also reduces by reducing heating timeand gas consumption (Fuel saving : 33gcal/day). It can alsobe used in steel ladles, tundish, etc. Moreover, utilisation ofused refractories in manufacturing Mg-C bricks will help incost reduction.

New Concepts and Innovations

The need for steels with superior performance capability atlower cost has seen a steady increase over the last fewdecades. This has been met through continuous upgradationof steelmaking and rolling technology as well as introductionof new innovative concepts and products. A betterunderstanding of physical metallurgy has helped in the designand development of new technological concepts as well asnew materials with attractive properties. The fast pace ofdevelopment can be understood from the fact that half the

grades of steel today were not available a decade ago.

Microstructural Engineering

In the fifties and sixties strength levels of hot rolled steelswere increased through addition of higher levels of carbonand manganese. Though this increased strength, it seriouslyaffected the ductility, impact toughness and weldabilityproperties. Quench and tempered (Q and T) steels involvingalloy additions, such as, Ni, Cu, Cr, Mo, etc provides a viablealternative. Alloy addition imparted sufficient hardenabilityon quenching and desired strength-ductility-toughnessproperties on tempering. But Q and T steels suffer from highercost and poor weldability properties. Introduction of micro-alloying and thermo-mechanical controlled processing(TMCP) resulted in generation of new class of high strengthsteels. Addition of microalloyed elements (MAE), such as,Nb, V, Ti and TMCP improved strength-toughness propertieswithout affecting weldablility. In addition to the conventionalferrite-pearlite steels, a variety of non-equiaxed ferriticmicrostructures have been developed in low carbon and ultra

Table 13 Technological improvement in cold rolling

Technology Quality Profitability

Coupling of pickling line Uniformity of 1. Higher productivityand tandem mill product quality 2. Better yield

3. Lower specificconsumption of energy,rolls and consumables4. Saving in space andcrane operation

Laser welding Better weld quality 1. No limitations onsteel grades2.Rollable welds -higher yield

Shallow bath pickling 1.Lower constructioncost2.Lower acidconsumption

Turbulent pickling Good surface Lower acidquality consumption

Electrolytic cleaning Effective strip Higher productivitycleaning

Air knife with auto lip Uniform coating Zinc saving up togap control along width as Rs 1000/ t

well as length

Inline galvanneal facility Additional product mix

Inline tension levelling Flatness up to 2 IU

Dual size work roll Imparting roughnesswith single drive on strip for paintability

Electrostatic oiling Uniform coating ofantirust oil forpreservation

Six Hi tandem rolling Rolling of thinnergauges of large width

Roll shifting and Better shape control Higher roll lifecontoured rolls Better strip flatness

and profile

Edge drop control Better strip edge quality

Thermal crown Uniformity of gauge Higher roll lifecontrol

Table 14 Cost reduction in wire and bar rod mill


On line quenching Increase in yield strength 1. Saving of Rs 270/tand tempering 150MPa -230 MPa 2. Costly alloying

elements not required

High speed Better tolerance 1. Gain in productivitydischarge 50% -70%

2. Benefits - Rs 2600 to 3000/ t

Reducing and Consistent tolerance Increase insizing mills of ±0.1 productivity

by 50%

Table 15 Cost reduction in section mill


Housing less stands Consistent product 1. Higher mill utilisationquality 2. Reduced manpower

Multi line rolling 1. Avoidance of post rolling heat treatment (savings Rs 975/ t to Rs 1105/ t)2. Reduction of annealing time (savings Rs 325/t to Rs 520/ t)

Cast blooms and 1. Saving in energybeam blanks 40%-50%

2. Reduction in conversion cost Rs 1350/ t to Rs 2250/ t

Tandem reversible Consistent product Saving of 68% in initialmill group quality outlay compared to

continuous andsemi-continuous mills

Thermo-mechanical Homogeneity of Increase in mill rolling mechanical property productivity by 15%

and increase in yieldstrength by 100 MPa

to 150 MPa


low carbon steels. This has led to the emergence of acicularferritic and carbon bainitic (ULCB) steels used formanufacturing high strength linepipes and offshorestructures. These steels, with low carbon and alloy content,fulfil high strength with excellent low temperature toughnessand weldability properties. Recent development of interstitialfree (IF) steel for auto segment completely eliminatescementite from microstructure of CR sheets and has madeit amenable for press forming of complex shaped autobodycomponents. Thermo-mechanically treated (TMT) rebarsmake use of tempered martensite at the rim, which providesstrength and ferrite-pearlite at the core imparting adequateductility, toughness and cold workability properties.

Super Steel

In spite of the technological advances made, India is farfrom exploiting the maximum benefit from iron based alloys.Most of today’s ferrous materials are used at strength levelsof about 10%-20% of the theoretical strength of iron. Thismeans that there are ample scope of increasing of strength.The commercial application of steels with such high strengthcalls for adequate toughness levels, which can be achievedthrough generation of an extremely fine grain size (<1µm).Development of super steel and ultra steel are being pursuedby National Research Institute of Metals, Japan with theobjective to develop a dream material of 21st century. Adecrease in grain size from 10 µm to 1 µm lead to an increasein yield strength by about 340 MPa, while a decrease from1µm to 0.2 µm leads to further increase by about 600 MPa.

The development of super steel will be associated withdramatic changes in application of steels. Eiffel Tower asshown in Figure 13 constructed with most advancedtechnologies in 1889, is 300 m height. If today’s high strengthsteel is used, a 750 m tall tower can be built. With supersteel 1500 tall tower can be built with the same weight21.Super steel will lead to development of super-high-rise

buildings as well as other light engineering structures.

Uninterrupted Supply of Raw Material

For capacity expansion, to meet the ever increasing steeldemand, Indian steel companies need to have uninterruptedsupply of raw material to produce steel at a competitive price.As Indian steel industry is dependent mainly on importedcoking coal, it should go for long term mining leases, toavoid price fluctuation. By having control over raw materialcertainly reduces cost, so battle for mines has gone globalstretching from Chiria (SAIL) to Orissa (POSCO) to Bolivia(JSW).

Adoption of Technologies to Avoid Dependence onImported Coking Coal and Unavailability of High GradeOres

Indian steel industry faces potential availability constraintsin high grade iron ore and coking coal inputs, as high gradeiron ores are generally earmarked for exports and indigenouscoals are having high ash content. Hence development oftechnological alternatives, such as, sponge iron instead ofpig iron, which can be produced with low grade coal, theCOREX process for pig iron manufacture, again using lowgrade coal, and the Romelt process which makes pig ironfrom even iron ore fines. POSCO is coming with FINEXtechnology, which does not require coking coal and lumpiron ores. Implementation of dry cleaned and agglomeratedpre-compaction system (DAPS) allows use of non or lowcoking coals. Pre-heating of coal before charging enablesuse of 25% non-coking coal in coal blend. Stamp-charging,in place of top-charging eliminates use of prime coking coal(eg, TATA Steel). Non-coking coal can also be used in PartialBriquetting of Coal Charge. Further, natural gas can be usedin blast furnace, which reduces usage of coke by 30%.

Automation

Automation, done in right earnest has been proved to behighly productive and cost effective in steel industry acrossthe world. In coke ovens, computer control operation ofbatteries including computerized firing control can beintroduced. In repairing central portion of oven, hot repairrobot can be used effectively, without disturbing ovenoperation. Automated PLC based controlled proportioningdevice22 is used for preparing coal blend of desired quality.Equipments, such as, on-line ash analyzer, on-line moisturemeter allows precise control of blend in terms of ash andmoisture, respectively. Automatic control of sinter plant insome developed countries, such as, Japan has taken place.For example, the appearance of burn raise point on sintermachine is set at some point, which indicates completionof sinter operation at the set point. Mathematical modelsand computer simulations are used to achieve more uniformcircumferential distribution of ores in blast furnace. In BOF,control has improved tremendously through adoption of novelonline sensor systems, namely, sub-lance system and massspectrometer based off-gas analyzer. The sensor data areprocessed through several core models for end point control.Figure 13 Construction of ultrahigh-rise Eiffel Tower with super

steel


Adoption of such control technique enabled carbon andtemperature heat rate of over 95%. Automatic gauge andwidth control, on-line shape measurement, on-line inspectionsystems for defect detection etc helps in producing betterquality product.

IT Strategy

The advantage of proper IT-based information system is thataccurate information can be obtained at a much faster rate,reducing downtime and speeding up decision makingprocess. Since time is more than money, it would have directimpact on cost. IT applications will help in streamlining bothprocess chain and supply chain and would thereby result incost reduction and increase in productivity by reducing cycletime (production to sales), improving cash flow, offering fasterinformation, savings in inventory carrying costs, reducingcommunication costs, responding swiftly to market changes,integrating enterprise, facilitating better designed productsand services, reducing manual effort in data compilation andanalysis, etc.

The overall emphasis should be to align with global trend ofe-commerce in steel as early as possible. Indian steelindustry is unable to take advantage of IT in order to attractglobal customers. IT communication network can bestrengthened by computerization of production, planning andcontrol (PPC) and implementation of enterprise resourceplanning (ERP) and manufacturing execution system (MES)to avail the benefit of transparency in negotiations andpurchasing at best available market price. The advantagesof implementation of ERP are instantaneous updating ofinformation, elimination of duplication of data, less time infeeding data, fewer errors due to redundancy or loss ofintegrity of data and optimising production scheduling at theenterprise level. An example of benefit derived throughimplementation of IT is e-auction. Since July 2000, 100% ofscraps, defectives and over-rolls generated by Indian steelplants are being sold through e-auction. This innovativetechnique as shown in the Figure 14, resulted in costefficiency by 2.5% -7%.

Quality Assurance

In steel industry, consumers are demanding better qualityand improved products. Although the industry has greatly

improved its competitive position in the past decade, it stillfaces tremendous challenges to maintain or increase itsshare in the evolving markets of this country and the worldin context with quality products. Inspection and qualityassurance plays a vital role in today’s globalized tradeatmosphere. With the increase in global trade, the productand commercial transactions have become more complex.Measures have taken for quality assurance and fastinspection by deploying automatic systems so that materialavailability in the market is not restricted by quality checks.The quality and recurring problems can be addressed byformation of quality circles and six-sigma teams. They bringin innovation and suggestions in operations of the process.Steel plants of India is implementing six-sigma to enhancethe quality of product and reduce the amount of rejection,which eventually enhances cost-efficiency of a steelcompany. Figure 15 shows how overall quality improvementaffects profitability and cost efficiency.

Value Addition in Product-mix

The industry should change its product mix with moreimportance given to value added products (like automobilegrade galvanized steel) so that a shift is made from beingclassed as a commodity to being a branded product. Theindustry should try to integrate itself with the end user, ie,customer gained importance. India has the capability toproduce a variety of grades of steel and that too, ofinternational quality standards. As per the ratings of the ‘WorldSteel Dynamics’, Indian HR products are classified in theTier-II category quality products - a major reason behindtheir acceptance in the world market. EU, Japan has qualifiedfor the top slot, while countries like South Korea, USA sharethe same class as India. India in order to become globallycompetitive has to increase its quality to Tier-I status andshould have the right blend of product mix so that it cancreate a niche in the global market for its products. Essar’sshare of value-added grade steel has gone up to 48% from37% last year. Close to 40% of JSW’s production is valueadded steel. SAIL has plans to increase volume of value addedsteels to 50% of its saleable steel production by 2009 -2010.

Environment Friendly Technologies

The era of industrial deregulation is being replaced by anera of environmental regulation. The steel industry accountsFigure 14 Cost efficiency through e-auction

Cost efficiencythrough e-auction

(2.5%-7.0%

Reduction incycle time

Inventoryplanning and

disposal

Lowermarketing

infrastructure

e-auctions result in significantreduction in process time for pricenegotiation and contractfinalization.

Not only can stock lots beefficiently sold but capacity

auctioning can bring a lot ofbenefits.

Automation of process leads toreduction in manpower

Figure 15 Quality and profitability inter-relationship

Overallquality

improvement

Better process

Higheroperational

efficiency/ betterservice

Minimise input cost :

♦Machine hours♦Materials consumed♦Energy spent♦Money spent♦Overhead expenses

Maximise return :

♦Volume♦Profit♦Turnover♦Market share


for between 5% and 6% of total man-made CO2 emissions.

It has been seen that policies applied only in the Kyotocountries are not working in terms of making any reductionin total greenhouse gas emissions. Re-cycling of steel isone way for generation of revenue and cost reduction. Steelplants need to apply the best available environment friendlytechnology everywhere to be cost-efficient in future too. Thesteel plants not adhering to the environmental norms mayget closed. For example, using stamp-charging in coke ovensreduces coke dust generation. Strip caster is far more energyefficient and emits less GHG in the atmosphere thanconventional thick slab caster. Electrostatic precipitators,bag filters, etc should be used. Whilst many steel plantsare close to the limits of what can be achieved with presenttechnology, there are many steel plants where energyefficiency and CO

2 emissions fall far below the global best.

Therefore, those plants need to be closed or replaced. Steelhas a major role in the light-weighting of vehicles. With recentdevelopments in ultra-high strength steels, steel provides amuch more energy efficient solution than, for instance,aluminium. The recycling of end-of-life steel is needed tomaximize. Steel is already the most recycled material inthe world without government subsidies or intervention. Everyton of steel re-applied makes a big saving in net CO

2

emissions. Lastly and most importantly, as an industry steelmaker shall take the responsibility to undertake longer-termresearch on new technologies, to radically reduce CO

2 footprint.

Maintenance Practices : Key to Zero Defects

In maintenance practices, the concept of zero defects hasbeen felt necessary for improving overall efficiency. Availabilityof equipment is very important for production of qualityproducts at low cost. The maintenances are done onpredictive and condition based. The predictive maintenancetools, such as, thermal imaging, mathematical modelling,etc are helpful in reducing cost and efficiency of the plantand various linkages in the process are not disturbed. Settingup an effective maintenance program using condition basedmonitoring system (CBMS) boosts the productivity of plantequipment by increasing its availability through avoidingunplanned shutdowns and decreasing the time needed tomake repairs. An effective condition monitoring programme

(Figure 16) is a systematic diagnostic approach consistingof detection, analysis and correction. Basic purpose ofCBMS is to know the deteriorating condition of machinecomponents well in advance of breakdown for proactivemaintenance. Common techniques for condition monitoringare vibration analysis, shock pulse measurement analysis,wear debris analysis and thermography.

Strengthening Research and Development

India’s expenditure on R & D was only 0.26% of turnover inthe year 2004 as against 3% - 4% in developed countriessuch as, Japan, UK, and USA, etc. It is therefore suggestedthat the government should incentivize technologydevelopment which will further facilitate R & D initiatives.This will in turn enhance the competitiveness of the Indiansteel industry. Expenditure on R & D by steel plants shouldbe increased. With a strong R & D base, organisations willbe able to assimilate the technology faster. R & D shouldfocus on introduction of new products according to changein market need, based on indigenous R & D in premiumsegment, continual improvement through process innovationand strategic improvement to reduce cost of operations andreduction in price of products.

Keeping cost competitiveness as its foremost objective, R& D unit should focus on

♦ Optimisation of process technologies for maximisationof productivity at minimum cost (for example, throughsimulation models and data-base management)

♦ Recommendation of remedial measures for cost savingthrough energy conservation, elimination of low value stepsof operation

♦ Intense focus on product development activities, specificallydeveloping difficult-to-make and high value steel grades tomeet global challenges with continuously modifiedstrategies,

♦ Improvement in physico-chemical properties of rawmaterials,

♦ Improvement in productivity and yield of coke ovens,blast furnace, BOF and mills,

♦ Improvement in quality of product,

♦ Cost effective environment friendly technologies.

Hence focus shall be given to innovative ideas and researchand development activities by the steel makers. Innovativeideas, not only from people directly engaged in R and Dactivities, but also from other employees, eg, those involvedoperation, maintenance, etc should be encouraged.

Restructuring HR Policy

The success of the plans to substantially raise production,master sophisticated technology and introduce large scaleFigure 16 Condition based maintenance system

General equipmentdata

Inspection scheduleInspection

Identifying defects

Priorities

Defects repaired

Reinspection

Defects notrepaired or

repair deferred

Database

Managementinformationand reports


automation and achieve market leadership would dependupon effective human endeavour. Competitive superiority ofthe industry could result from relative superiority inknowledge, skills and resources that business can deploy.To this extent, it would be the competence of manpowerthat would ultimately give the industry the competitive edge.

Low labour productivity is detrimental to Indian steel industry,as it raises cost of production. Optimum utilisation of humanresources should be done to achieve cost competitiveness.Training and re-training with updated inputs should be acontinuous process in steel plants. Training programmesshould be designed for people from different hierarchyincluding top level management. One of the major innovativeHR practices is the use of work teams with multi-skill trainingand responsibility. In particular, the use of production workersfor routine maintenance reduces the need for specializedmaintenance workers, who are often underutilized. The useof multi-skilled workers and fewer job classifications is criticalto a high performance workplace in the steel industry.

Innovative Marketing Strategy

Focused marketing with the help of differentiation strategyis the only way by which steel makers can outpacecompetition in today’s business scenario. Focusedmarketing means harmonizing all elements of the marketingmix, product, price, place, pace and people to theiradvantage. While it will be necessary to offer high quality ofproduct in terms of adherence to specifications, it will alsobe necessary to adhere to extend competitive offer in termsof commercial terms, packaging, performance guarantee andservices. These services could either be in terms of addingvalue to the offered product like slitting of coils, side shearing,etc and also in terms of providing pre and post sales servicelike offering information about the status of orders, fastredressal of claims, updating technical know-how andsuggesting better application of existing products.Customers should be given utmost priority.

Marketing division should also look out for unexploredmarkets. To reach those markets, companies should alsohave a large base of dealers. Innovations in the market place,such as, the CVM (customerccalue nanagement), RetailValue Management and the first organized steel retail storein India-Steel Junction have presented TATA Steel to thecustomers in a much better manner.

Creating Brand Value

It has started playing an important role in the steel business.Not only does branding enhance customer acceptance andloyalty, it also allows steel companies to charge a premium.Accordingly, companies like Tata Steel, SAIL, Essar, JSW,Jindal Stainless are increasingly focusing on branding steel.For Tata Steel, branded products accounted for 25% sharein flat products and 31% share in long products, sales duringH1 FY2005 (against 21% and 30%, respectively in H1FY2004). TATA TISCON, TATA PIPES, TATA AGRICO, TATASHAKTI are some of the brands23 from TATA Steel. SAIL is

having SAILJYOTI for GP/GC plates/sheets, SAIL-TMTrebars for construction, SAILCOR for wagon and coaches,SAILMA for earthmovers and bridges, SAIL-HITEN for ATMmachines, SAIL KAVACH for bullet-proof jackets. Innovativeadvertisements also add to brand value. SAIL came up withthe slogan ‘there is little bit of SAIL in everybody’s life’, TATASteel with ‘we also make steel’ and Essar Steel with the ‘24carat steel’ tagline.

Creation of Infrastructure to Sustain Further Growthin Production

In 2005-06, JSW commissioned a 100 MW captive powerplant in Vijayanagar, which helped reduce power costs bynearly 25%. Earlier it used to buy the power from outsideand paid Rs 2.60/unit. But now, this cost was reduced toRs 2/unit. This will result in a benefit of close to Rs 100crore. Bhushan Steel has captive power plants in Khopoliand will set-up a 2000 MW thermal power plant in Orissa.Essar Steel has power supply agreements with Essar Powerand Bhander Power.

SAIL is already having dedicated power plants. Further, JSW,which was dependent on the Goa port earlier, has set up adedicated jetty. Freight costs have come down due to this.The company paid Rs 5.5 million demurrage (charges leviedif a vessel is berthed beyond the time allowed or agreedupon) in 2004-05. In 2005-06, it did not pay any. Indiancompanies are also engaged in backward integration tomitigate risks. For instance, Bhushan Steel and Strips buyhot-rolled steel and converts them to high-end cold rolledand galvanised steel for auto and white good application.Today, it is setting up a 3Mt steel making and hot rollingfacility in Orissa.

Consolidation in the Form of Mergers and Acquisitions

Active mergers and acquisitions (M and As) among playersare indicative of the consolidation dynamics within the steelindustry globally. In doing so steelmakers are pursuing twomain objectives by purchasing additional production capacitythey are aiming to both improve their cost structure andincrease their market clout. The privately owned UK DutchCompany LNM Holdings (Ispat) experienced the fastestgrowth through its strategy of consolidation in EasternEurope. Consolidation enables companies to control theprice of steel by controlling the supply. As for examplesMittal Steel’s acquisition of its rival ARCELOR and TATASteel’s acquisition of CORUS, the second largest steelproducer in Europe. A company can be a good strategic fitfor merger if it has, among other things, attractive access toraw materials, production capabilities, proven success incomplementary markets, new technologies or patentedproducts and a successful global supply network.

Also India has taken a step in this direction by forming anIndian Steel Alliance of five private players, namely, SAIL,Essar Steel, Tisco, Ispat Industries and Jindal Steel. Thealliance objective is to promote domestic consumption ofsteel, take up common export efforts, fight protectionism in


importing countries and make representations to thegovernment about policies to support steel industry. But mostof the Indian manufacturers are significantly small in size inrelation to their global counterparts and hence consolidationhas almost been absent on account of financial distress ofmost of the companies, leaving them with limited free cashand reluctance of investors to find such deals.

To facilitate consolidation a strategy in which banks andfinancial institutions are involved to provide loans at lowerinterest rates should be devised and International playersshould be asked to form marketing alliances with Indiancompanies. As different major global steel producers likeArcelor-mittal, Posco and others are setting up plants inIndia, competition in the future will increase. In that caseseveral midsize domestic companies may go for mergers.

Financial Restructuring of Companies

With the lowering of interest rates most steel companiescan restructure their high interest rate debt to lower debt.Restructuring of high cost debt is estimated to increase theircompetitiveness in the global markets with better ability tomanage the cyclicality of the industry. The recent upturn inthe sector enabled many companies to pay off their longterm debts early and, in general, interest payments havealso come down. Essar Steel, for instance, has come out ofthe purview of CDR (corporate debt restructuring) by repayingits entire CDR debt of Rs 28 000 million. In the process, ithas brought down the average interest cost from 11.6% to9% per annum. Mukand has pumped in funds from the saleof land it owned in Kurla, thereby reducing bank borrowings.And Bhushan Steel has paid off a lot of its high cost debt.There is thus a need to religiously monitor importantparameters like sales, gross margins, interest and depreciation,profit after tax, net worth, total debt and debt equity ratio.

The key feature of a financial restructuring would be

♦ Restructuring of asset values by writing down to theextent of interest capitalised.

♦ Writing off loans and interests to the extent possible.

♦ Restructuring of capital and liabilities through reductionof debts by financial institutions, to the extent possible.

♦ Reduction in plant inventory through just-in-timeprocurement.

♦ Strategic partnership in non-core businesses.

♦ Outsourcing of non-core services.

Financial restructuring will have a positive impact on theprofitability of the company through reduction of interest anddepreciation charges as well as efficient deployment ofcapital.

Development of Logistics

As Indian steel producers gear up for augmenting theircapacity and produce steel more cost efficiently, variousinputs at competitive prices are required for steel makinglike coal, power, fuel and oil. Although India has huge ironore reserves, development and exploitation of iron ore reservewould require huge infrastructural resources like roads andrailway linkages with mine locations. Higher import of cokingcoal would involve development of ports, better transportationinfrastructure to and from ports. The efficiency of Indian portsis affected by low productivity, high costs, long vesselturnaround times, and lengthy customs delays. Shipmentfrom India to the USA costs 20% more than Thailand and35% more than from China. Expanding India’s steel sectordepends on lower port costs for handling key inputs, suchas, coking coal which is predominantly imported, as well asservicing potential steel exports.

Transportation system in India has been a bottleneck toIndian steel industry. Indian Railways, which account for 35%of the transportation of finished steel charges high freightcost and demurrage charges. These charges should belowered in order to make Indian steel industry morecompetitive. Freight movement through road are delayeddue to multiple check points. Onerous transport regulationsshould be modified.

Government Policies

To improve competitiveness of Indian steel industry, JointPolicy Committee (JPC) recommended several measures.Customs duty on certain critical inputs, not availableindigenously, should be reduced. Excise duty deferment oncapital goods and reduction in the stamp duty on financingsteel project, has also been suggested. The governmentshould give reasonable levels of protection to the domesticsteel industry by enforcing anti-dumping duty by othercountries. Relaxation of labour laws, so that public sectorcompanies can increase the labour productivity by therationalization of manpower through cutting down of totalemployee strength, should also be done.

Mass Awareness and Distribution Centers

Mass awareness needs to be launched for greaterconsumption of steel in both rural and urban lives. Privatedistrict level distribution centres and involvement of grassroot non-governmental organisation (NGO) can play a majorrole in enhancing the per capita consumption of steel inrural India, which would fuel growth of steel sector and willmake it more cost competitive.

MANAGING TECHNOLOGY : THE ‘SAIL’ WAY

It is widely accepted that innovative technologies have adirect bearing on today’s complex and uncertain iron andsteel industry. The real essence of technology managementof a company lies not only in careful development ofcompetency in individual stages of activity but inunderstanding and managing the linkages at each stage that


will result in profitability and competitiveness. R and D centrefor iron and steel (RDCIS), the corporate R and D unit ofSteel Authority of India (SAIL), the largest steel maker inIndia, by virtue of its experience and competence, has beeneffectively coordinating and guiding this linkage fordevelopment of inter and intra areas of excellence in SAILplants.

Operational vis-a-vis Strategic Management

Judicious balance between operational and strategicmanagement of technology has always been a cornerstonein the approach of RDCIS in bringing about technologicalcompetitiveness in SAIL. Operational management hasprimarily focused on improving current levels of efficiencyand output in incremental measures. Strategic managementon the other hand has been addressing the technologicalneeds for ensuring added edge to the competitiveness ofthe company, by probing and keeping future market-productlinkage in perspective. Strategic technology management,therefore, has involved quantum jump in technology status,continually reducing the cost of production while improvingproduct quality. The company’s competitive edge dependslargely on how effectively strategic technology shifts aremanaged and nurtured internally while encouragingoperational technological improvements.

Development of frontline technologies and carefulassessment of strategic technological requirements is a veryinvolved process. This not only requires adequate expertise,but also knowledge regarding futuristic technologicaldevelopments and proper analytical skill to assess theirusability and appropriateness in our context. RDCIS hasprovided guidance to SAIL in implementation of strategictechnologies. A few examples of strategic shifts in technologywill be elaborated subsequently. Towards meeting futurechallenges and goals of SAIL, RDCIS has been coordinatinginputs pertaining to process modelling/simulation andproviding smart automation solutions, which has helped bothfor operational as well as strategic improvement in SAILplants.

SALIENT R & D INNOVATIONS IN SAIL

RDCIS has been instrumental in ushering in operationalimprovements and bringing about strategic interventions indifferent units of SAIL with concurrent technologicaladvancements and benefits. Some of the important areaswhere ingenious applications of R & D innovations have takenplace, have been elucidated here. The innovations describedare in place in various SAIL units, namely, Rourkela SteelPlant (RSP), Bhilai Steel Plant (BSP), Bokaro Steel Limited(BSL), Durgapur Steel Plant (DSP), IISCO Steel Plant (ISP)and in Dalli Mines under BSP.

Operational Improvements

Lining Life Improvement (RSP, BSP)

Steel ladles are one of the major consumers of refractories

in steel plant. Higher lining life is required for consistentmaintenance of fleet of ladles for uninterrupted production ofsteel. This enhances availability of vessels and reduces overallspecific consumption of refractories.

Steel Ladle at SMS-II, RSP

With an aim to enhance the average lining life (89 heats) of150 t steel ladles, an in-depth study on the wear profiles ofladle was made. New bricks were developed for the weakestlining areas. For the first time in SAIL resin bonded aluminamagnesia carbon (AMC) brick for ‘bottom impact pad’, andimproved bricks with ‘98% MgO containing fused magnesia’mixed with ‘97% MgO sea water magnesia’ in the ratio of1:1 for the ‘metal zone’ were developed and used. Liningdesign was modified (Figure 17) using the above bricks andtrials were conducted resulting in a highest-ever lining life of129 heats in SAIL plants with average of 122 against shopaverage of 89 heats.

Reduction in Specific Roll Consumption at Hot Strip Mill

(HSM), BSL

In a typical hot rolling mill, the roll change may consume as

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.

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.

.

.

.

.

.

.

.

.

.

.

.

.

SWM9%C

FM + SWM9%C

SWM7%C

FM + SWM8%C

FM + SWM7%C

AMC

Figure 17 Existing and modified lining pattern in 150t steelladle at SMS-II, RSP

Figure 18 Modified roll cooling header location in HSM, BSL

R1 R2 R3 R4 R5


much as 10% of available production time. The work rollsare changed regularly to maintain proper quality of rolledstrips. It is, however, at the cost of loss in production andlower life of rolls. Efforts were, therefore, made to reduce thefrequency of roll change by reducing the roll wear. This alsodecreases production cost by reducing the specific rollconsumption.

Cooling in Roughing Stand, HSM

Roll cooling system of roughing stands of HSM, BSL notbeing properly designed was adversely affecting the roll lifeof the mill. Arrangement of modified roll cooling headers instands (R1 to R5) is shown in Figure 18.

An effective roll cooling system was designed withintroduction of flat jet nozzle for uniform distribution acrossspray width and higher heat transfer rate, relocation of coolingheaders for improved heat transfer co-efficient from rollsurface soon after roll-bite, intense cooling of exit work rollfor arresting heat wave penetration and faster heat removalrate, etc. Improved roll cooling system was designed andintroduced in the first two roughing stands (R1 and R2) of HSM,BSL. It has resulted in substantial improvement in roll life.

Roll-bite Lubrication in Finishing Stand

Application of RBL in the hot strip mill resulted in anappreciable reduction in wear rate of work rolls. Schematicdiagram of RBL is given in Figure 19. It enabled increase incampaign length of rolling by minimum 10% from average101 km (Feb-Jul’ 08) to 112 km (Aug’ 08-March’ 09). Besides,there had been decrease in grinding off-take of rolls of F6-F-8stands by 0.18 mm (from average 0.60 mm to 0.42 mm),which could be translated into saving of over 2 rolls / month.

RBL has also helped in suppressing the generation of rolled-in-scale defect in HR coils.

The system was also found to be advantageous in reducingroll force and power consumption by 5% -10% facilitatingease of rolling of high strength special steels, namely, highstrength LPG steel (SG 295 and P 310 grades), which couldbe rolled for the first time in the hot strip mill in thinner gaugeof 2.2 mm. RBL had also helped in suppressing the generationof rolled-in-scale in the HR coil.

Strategic Interventions

Development of Earthquake Resistant (EQR) TMT Rebars

To meet future needs of the construction sector in seismicprone areas, new varieties of high strength rebars withsuperior seismic resistance capabilities have been developedfor the first time in the country. These rebars have beendeveloped both in Fe-500 grades in two categories, namely,plain (SAIL EQR) and corrosion resistant (SAIL HCR EQR)to meet the diverse needs of construction sector in mild-corrosive and highly corrosive regions. These rebars arecharacterized by high uniform and total elongation, high UTS/YS ratio, low variation in yield strength, respectively (Table 16).

The microstructure of SAIL EQR rebars comprised of a thintempered martensite rim and ferrite + pearlite/ bainite core.Based on extensive trials, it was established for Fe-500 graderebars a volume fraction of 18% - 22% tempered martensite

Table 16 Specified mechanical properties of EQR bars

Parameter SAIL EQR

YS min, N/mm2 500

YS max, N/mm2 625

UTS/YS ratio, min 1.18

Total elongation, min % 18.0

Figure 20 Influence of tempered martensite on YS

800

600

400

200

0

Yie

ld s

tre

ng

th,

MP

a

0 20 40 60

Volume fraction of tempered martensite, %

Y= 7.3897 × 357.6

R2 = 0.9636

is required to meet the requirement of yield strength andUTS/YS ratio (Figure 20). These rebars were extensivelyevaluated for their seismic resistance behaviour undermonotonic and quassi-static cyclic loading conditions atEarthquake Engineering Department, IIT Roorkee andsatisfied all the stipulated requirements. Commercialproduction and dispatch of more than 7 50 000 t of thesegrades of rebars during 2008-09 was achieved across thecountry for RCC construction. In view of the value additionand good demand for this product, Chairman, SAIL hasdirected all the steel units to convert their entire TMT rebarproduction into EQR TMT rebar.

Development of Continuous Casting Technology for

Production of CRNO Steels

Rourkela Steel Plant (RSP), SAIL has been the prime

(1) Tank, (2) Flow meter, (3) Calibration cylinder, (4) Pump-motor,(5) Mixer, (6) Segmented headers, (7) Mill stand, (8) Oil lines, (9) Waterlines, (10) Control signal, (11) Control panel/PLC

Figure 19 Schematic diagram of RBL system


producer of different grades of CRNO steels (M27 to M47graded on the basis of core loss value in terms of W/kg) inthe country with nominal thickness of 0.50 mm and 0.65 mm.Though CRNO electrical steel was and is a prestigiousproduct of RSP, it was produced through the ingot route withlow process yield of 48% till 2003-04. Generally, these gradesare difficult to be continuously cast because of high siliconand low carbon contents.

RDCIS had taken the challenge of developing the technologyfor producing CRNO steels through the continuous cast (CC)route. This was even discouraged by the original suppliersof the process technology and was acting as a hindrance toRSP for converting itself into a 100% CC producer. Castingtechnology was formulated based on fundamentalunderstanding of the solidification process and implementedfor M36 to M47 grade. Careful control of chemistry to ensurebalance between ferrite and austenite casting and severalprocess innovations, such as, intensification of secondarycooling, choice of suitable mould powder, warm charging ofslabs, etc were implemented. This resulted in increasingthe process yield to 75% from 48% earlier, besides facilitating100% changeover from ingot to CC route and elimination ofsoaking pit and slabbing mill. The production of CRNO hasrisen significantly over the years, 54928 t in 2004-05 to80698 t in 2007-08 (Figure 21).

From these examples, it can be seen how innovations inprocess technology and product development resulted inmaking the largest steel producer of the country, SAIL, evenmore cost competitive and technologically enhanced to faceother global giants. Similarly, other steel plants of India shouldfocus on innovation to reduce cost of production and becometechnologically more competitive.

CONCLUSION

The growth of the steel sector is intricately linked with thegrowth of the Indian economy and especially the growth ofthe steel consuming sectors. Production and productioncapacities should be increased through expansion andinstallation of new plants using secondary steel makingroutes that are more cost effective and quality conscious.At the same time, productivity of our steel plants must bemaintained at levels close to international standards. Indiansteel industry must try to derive benefit from enormouseconomies of scale in production, distribution, marketing

and management.

For the Indian steel industry to be competitive, technologicalinnovations are vital. For running a steel plant, the approachhas to be such that a delicate balance is struck betweenintroducing operational improvements and at the same timeplanning for strategic technology shifts.

All in all, in order for the steel industry to become globallycompetitive, it is important that strategies have to be madeso that bottlenecks in the growth of this sector are removedand the companies are more responsive to change. Thosethat respond without delay will be the success stories of thefuture.

ACKNOWLEDGEMENT

Authors are grateful to the colleagues of SAIL for sharingtheir thoughts for the problems and various strategies/solutions for improving competitiveness of Indian steelindustry through cost efficiency and innovation. Authors arehighly obliged to the management of RDCIS for their valuablesupport extended to them in bringing this paper.

REFERENCES

1. ‘World Steel Production Data.’ IISI 2007-08

2. ‘World Steel Production Data.’ IISI 2008-09

3. ‘Steel Market Scenario.’ Steel Tech, vol 3, no 4, July 2009.

4. www.worldsteel.org

5. http://steel.nic.in

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7. SAIL News, November-December 2006.

8. ‘Competitive Strategy : Techniques for Analyzing Industries andCompetitors.’ Michael Porter, 1980

9. National Steel Policy, 2005

10. Planningcommission.gov.in

11. World Economic Forum.

12. ‘Assessment of Indian Manufacturing Competitiveness.’ Accenture

Report.

13. Steel and Metallurgy.

14. www.worldsteeldynamics.com

15. K Krishnamurthy. ‘Technology Transfer : India’s Iron and Steel.’Technology Books, Madras, India, 1987.

16. R Jaffarullah and B K Ghosh. ‘Alternate Fuels in Blast Furnaces toReduce Coke Consumption.’ Journal of The Institution of Engineers

(India), vol 86, pt MM/1, April 2005, p 16.

17. ‘Selection of Appropriate Steelmaking and Casting Technologies forCost Effective Steel Production.’ Steelworld, September 2008.

18. Kiyoshi Nishioka, et al. Nippon Steel Tech, Report no 75, 1997, p 9.

19. F Sudo and T Fuji. Kawasaki Steel Tech, Report no 44, 2001, p 3.

20. I Kozasu, C Ouchi, T Sampei and T Okita. Proceedings of

Microalloying’75, Union Carbide Corporation, New York, 1977, p 120.

21. ‘IISI : Superhigh-rise Eiffel Tower.’ IISI Environment Report, 1998.

22. Automation India.

23. ‘Building Brands of Steel.’ Hindu Business Line, New Delhi, August31, 2006.

Figure 21 Production data of CRNO steels

100000

10000

Pro

du

ctio

n/y

ea

r, t

2004-05 2005-06 2006-07 2007-08 2008-09

54928 t

67443 t

77006 t80698 t

76428 t

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Competiviness of Indian Steel Industry Through Inovation

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