Indian Steel Market

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SUMMER PROJECT ON

Indian Steel Market

Acknowledgement

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There are certain quarters without whose guidance and support this project would

not seen the light of the day. My sincere thanks are to due to all of them.

First of all, I am immensely grateful to acd , who has been a constant source of

inspiration and motivation for me. She has always been the guiding force in holisticdevelopment of her students in all walks of life. While undergoing this project work,

I have drawn immensely from her able guidance and leadership. She has always

provided considerable flexibility and freedom to her students in successful and

timely completion of their dissertation / research projects.

I am also thankful to my project guide Mr.ff for his unstinting guidance and support

throughout the project.

My sincere thanks are also due to the Library staff of Amity School of Business fortheir constant support during my occasional visits to the departmental library for

consulting related literature on the subject.

My special thanks are also to all other members of faculty, and staff of Amity School

of Business, my friends and batchmates for extending their helping hand whenever

I needed it the most.

`

Guide Certificate

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This is to certify that Mr avs student of AmityBussiness school in BBA General has carried

out the work presented in the project of theTerm paper entitle " Indian Steel

Market" as a part of First year programme

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RESEARCH METHODOLOGY

A research is done whenever we try to analyse a particular trend, or to study the

impact of a new policy on various socio-economic variables in the society. At times

it is also undertaken to analyse the effects of some happenings in the past. The wayin which such a research is done is called Research Methodology. A research work

consists of an objective which tells us what we want to establish or co-relate with

the help of our research.

RESEARCH METHODOLOGY ADOPTED

The research methodology being adopted in this project is to extract and analyse

information and secondary data available in the public domain from credible

sources such as, Ministry of India etc. Information has also been sought from therelated literaure (books, business newspapers, and magazines) available in the

departmental library. The information thus obtained has been edited and

condensed accordingly keeping in mind the scope of the project. Time-series data

has been analyzed by plotting charts using MS-Excel software. Keeping in mind the

nature of topic chosen, primary data / research has not been conducted or included

in this research project.

CONCLUSIVE RESEARCH

A conclusive research is meant to provide information that is useful in researching

conclusion of decision making. It tends to be quantitative in nature which is to say

in the form of numbers that can be quantified and summarized. It relies on both

secondary data, particularly existing database that are analyzed to shed light on

different problems than the original one for which they were constituted and

primary research or data specifically gathered for the current study

Data Collected : Secondary Data

For analysis of data graphs have been used.

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Secondary Data Methodology: Secondary data was collected from the web, various

repots published on the internet, books, newspapers (Economic Times, Business

Standard, Financial Express) and business magazines.

Various websites those were visited and data / information collected from: -

www.wikipedia.com www.google.com

CONTENTS

1. Abstract

2. Introduction

3. Structure of Indian steel industry

4. SWOT Analysis

5. Logistics in Indian steel industry

6. Public Sector Enterprises

7. Private Sector Enterprises

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8. Future outlook for the Indian steel industry

9. Conclusion

10. References

ABSTRACT

The Indian steel industry has made a rapid progress on strong fundamentals over the recent few

years. The industry is getting all essential ingredients required for dynamic growth. The

government is backing the industry through favorable industrial reforms, while the private sector

is supporting it with investments worth billions of dollars. Even in the tough times of economic

slowdown, the industry succeeded to sustain its positive growth momentum on the strong

fundamentals of domestic demand from construction, automobile and infrastructure sectors.With an impressive track record, the country has become a reputed name in the world steel

industry.

In this report a brief overview on the Indian steel industry is given. Its current position and future

outlook is also discussed. Also the Indian steel industry with respect to logistics is also discussed

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to certain extent. SWOT analysis for the Indian steel industry is done to find out the strengths,

weaknesses, opportunities and treats faced by the industry.

Logistics and supply chain is one of the key drawbacks for the Indian steel industry. In this

report the current scenario of handling and transportation of steel is discussed briefly. Finallysome measures which are to be taken by the industry to be competent in the global market are

analyzed and discussed.

INTRODUCTION

Iron and steel represents one of the most energy intensive sectors in any economy and therefore

this industry has such a prominent role. Steel industry in India has dominated the other energy

intensive industries such as aluminum, cement, fertilizers, glass and paper etc. With the

improvement in production technologies and transport means, demand for steel production is

increasing. Due to many reasons such as the infrastructure development in developing countries,

improvements in automobile industry, increasing industrial capacity etc, demand for steel is

increasing drastically. Industries which are closely related to steel industry and helping the

growth of Indian steel industry are power generation, infrastructure, urban and rural

infrastructure and real estates.

There have been almost revolutionary changes in the global steel scene with fierce competitive

pressures on performance, productivity, price reduction and customer satisfaction. National

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boundaries have melted to encompass an ever increasing world market. Trade in steel products

has been on the upswing with the production facilities of both the developed and the developing

countries complementing each other in the making of steel of different grades and specialty for

the world market.

Also with increasing concerns such as eco friendly production, reduction in carbon emissions,

safe and hygienic transportation etc made global steel manufacturers to concentrate on

production and supply processes.

The steel industry is also highly material intensive. Generally, 1 tons of steel output requires

handling and transportation of around 4 tons of bulk materials. Therefore, logistics play a critical

role in determining the operational efficiency and cost structure of a steel producer.

According to industry estimates, these costs account for over 15% of the total costs of Indian

producers of steel. In addition, the specific investment (rupees per ton of capacity) requirement

for a steel project is high and therefore the capital outlay for a typical steel project is quite large.

Consequently, success or failure in executing projects may impact the financial health of steel

companies quite significantly.

Structure of Indian steel industry:

India has emerged as the 3 rd largest exporter of iron ore behind Brazil and Australia. India stands

in top 10 countries in producing steel in the world. But its global trade only accounts for only

2% of the global steel trade. The domestic steel industry reported rapid growth during the period

between 2003-04 and 2007-08, and steel producers responded positively to this by announcing

large Greenfield or Brownfield expansion projects. Almost all domestic steel companies, along

with some international majors, have announced large expansion projects. While some of the

projects are likely to be deferred or shelved, the capital expenditure for the industry would still

be large, given the high capital intensity of steel projects.

The last decade of the twentieth century will go down as one of the most turbulent phases for

Indian steel industry. The period witnessed sweeping changes in the steel arena, transformation

of self contained national markets into linked global markets and consequent fierce competition;

oversupply of most kinds of steel resulting in no real appreciation of steel prices and

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simultaneous rise in input cost; and most importantly, rise in customer expectations. The

profitability of Indian steel companies has improved in 2009-10 on a quarter-on-quarter basis.

Besides a somewhat improving steel price scenario, a significant softening of iron ore and

coking coal prices has also contributed to this improvement. India with its abundant availability

of high grade iron ore, the requisite technical base and cheap skilled labor is thus well placed for

the development of steel industry and to provide a strong manufacturing base for the

metallurgical industries. Companies in more mature industrial countries like India are

increasingly forced to look to assets (and growth) by setting up production operations (steel

factories) in key developing economies that places then close to natural resource supplies (both

in terms of inputs and energy).

Recent years have witnessed unprecedented turmoil in the global steel market. The crisis in the

international steel market might be attributed to the misbalance between capacity, demand and

production and consequent drop in prices.

Availability of iron ore was and is not an issue, as the domestic production of iron ore is

sufficient to meet demand. Secondary steel producers require closely sized lumps (CLO) which

generate fines. In addition, at the time of mining 60% of the ore comes as fines and balance 40%

as lumps (including big boulders). Thus, in the total production of iron ore 70-72% are fines

either at the time of mining or while crushing into CLO or handling (loading/unloading)

operations at mines, railway stations or at ports.

India is 5th largest producer of steel with total production of 53.08 MT in 2007. The crude steel

production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6

Million Metric Tons. On the other side, some Asian countries such as Japan and South Korea

saw significant decline in their production levels. In 2008, per capita finished steel consumption

stood at an estimated volume of around 44 Kg, which represents tremendous growth potential for

coming years. This further signifies the resilience and strength of the Indian steel industryagainst external risk factors. Indian steel industry mainly consists of three distinct groups. The

first group comprises the integrated steel producers which produces greater than 1MT and

includes Steel Authority of India Ltd (SAIL), Tata Steel (capacity 3 Mt) and Rashtriya Ispat

Nigam Ltd (RINL) (3 Mt). SAIL has four integrated steel plants at Bhilai (4 Mt), Bokaro (4 Mt),

Durgapur (2 Mt) and Rourkela (1.8 Mt). The group of secondary majors consists of the Ispat

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Group, Jindal Group, Lloyds and Essar. Their capacities range between 1 Mt and 2 Mt using a

mix of technologies, with much lesser degree of backward integration. These two strategic

groups together hold around 70% of the mild steel capacity in the Indian steel industry. The third

groups of tertiary producers are mini-steel plants, using electric arc or induction furnaces and are

very small in size.

There have been almost revolutionary changes in the global steel scene with fierce competitive

pressures on performance, productivity, price reduction and customer satisfaction. National

boundaries have melted to encompass an ever increasing world market. Trade in steel products

has been on the upswing with the production facilities of both the developed and the developing

countries complementing each other in the making of steel of different grades and specialty for

the world market. The Indian steel industry comprises of the producers of finished steel, semi-

finished steel, stainless steel and pig iron. Indian steel industry, having participation from both

public sector and private sector enterprises, is one of the fastest growing markets for steel and is

also increasingly looking towards exports as driving the growth of the industry.

The Endeavour is not only in tandem with India's National Steel Policy of achieving a

production level of 110 Mt of crude steel by the year 2020. The timely completion of the

projects for new forthcoming steel plants is of great challenge in the present Indian scenario.

Factors which influenced growth of Indian steel industry:

Factors which were favorable for the growth of Indian steel industry are:

Global steel consumption: The global steel consumption due to many reasons is

increasing consistently year by year. The main cause is the development of infrastructure

in the developing countries, also with the other growth of other complementary industries

such as automobiles; construction, urban infrastructure etc helped the steel industry to

grow at a rapid pace.

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Implementing latest technologies for improving the quality and productivity also helped

the industry. This led the manufacturers to focus on improving the customer delivery

times and also decrease the costs of production and transportation.

Making strategic alliances: The manufacturers started making strategic alliances with the

other OEM (original equipment manufacturers) in long term which helped them in

mitigating demand risks and uncertainties, high product take off and better capacity

utilization.

Government initiatives: The government policies and initiatives helped the domestic steelmanufacturers to a great extent. This is also key for the growth of the Indian steel

industry. Also, increased infrastructure spending by the Government of India and

development of roads could generate significant savings in freight and transportation

cost, making Indian steel companies and other industries globally competitive.

Impact of liberalization: The economic reforms initiated by the government in 1991 have

added new dimensions to the industrial growth in general, and steel industry in particular.

Automatic approval granted for foreign equity investment in steel has been increased upto 74% [Government of India 1999]. Restrictions on external trade, both in import and

export, have been removed. Import tariff reduced from 105% in 1992/93, to 30% in

1996-97.

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Other policy measures like convertibility of rupee on trade account, permission to

mobilize resources from overseas financial markets, and rationalization of existing tax

structure.

Cost competitiveness of Indian steel industry:

The cost of major raw materials like iron ore, coking coal, and other raw materials is less in

India among the countries mentioned. The labor cost is low, but it is neutralized by its low level

of productivity.

The financial cost and the cost of power, oil and some other materials are high. Energy accounts

for about 35 - 40% of the cost of steel production in 13 India, whereas it is about 28% in the

developed countries. All these make the pre-tax cost of steelmaking in India higher than that of South Korea, Australia, Mexico, and CIS countries.

India has a definite advantage of having low wage rates compared to all the other countries. The

wage rates and other related costs accounts to 15% of the total costs for production of steel, it is

almost half compared with other countries which is 30% of the total costs.

Current projects under progress:

Bhushan Steel plans to invest US$ 5.72 billion for building 12 million ton-capacity in thestates of West Bengal, Jharkhand and Orissa.

Non-ferrous metals giant, Vedanta Resources, plans to invest around US$ 4.79 billion in

a 5 million ton steel plant in Keonjhar district of Orissa and envisages its commissioning

by 201213.

Tata Steel is also planning to build a 5 million ton plant in Chhattisgarh with an

investment of around US$ 3.59 billion. The steel major is setting up Greenfield projects

in Jharkhand, Orissa and Chhattisgarh. While in Jharkhand it is likely to invest about

US$ 8.38 billion for a 12 million ton integrated steel plant, in Orissa it plans to pour in

almost US$ 4.39 billion for a six million ton capacity plant.

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Mesco Steel plans to invest US$ 2.20 billion for expansion of two of its steel plants in

Orissa.

Reliance Infrastructure, (part of the Reliance Anil Dhirubhai Ambani Group) plans to

build a 12-million ton steel plant in Jharkhand, which is likely to be completed by 2012.

Indian Railways plans to invest around US$ 437.25 million per annum to raise its

consumption of stainless steel for adding new alloy-made wagons and coaches to its

portfolio.

Welspun Gujarat Stahl Rohren, (one of the largest steel pipe makers in India), plans to

increase the capacity of its pipe plant by 75 per cent to 1.75 million tons with an

investment of US$ 222.52 million.

The JSW group plans an outlay of US$ 40 billion for steel and power projects. These

projects will be completed by 2020.

Visa Steel has lined up a US$ 1.51 billion US$ 2.02 billion integrated steel project in

Chhattisgarh.

Sarralle India, a subsidiary of Sarralle Equipos of Spain and one of the largest designers

of steel plant equipment, has decided to set up a manufacturing base in Uluberia in West

Bengal.

Interarch Building Products Private, (the largest player in pre-engineered steel buildings

space) plans to set up its Greenfield manufacturing facility in Gujarat by 200910.

Also, the Confederation of Indian Industry (CII) plans to start six new small and medium

enterprises clusters for steel companies in Visakhapatnam. It will also set up a steel task

force to propel growth in the steel clusters.

SWOT ANALYSIS

Strengths:

Abundant supply of iron ore

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Low cost and reasonable efficient labor force

Strong man power capability and improving productivity

History in steel making and acquired skill

Strongly globalised Industry and emerging global competitiveness

Increases in productivity through the adoption of more efficient and cleaner technologies

in the manufacturing sector will be effective in merging economic, environmental, and

social development objectives.

Strong steel production base and achieved productivity levels

High degree of entrepreneurship

Availability of investments and capital back up

Support from government which helped in growth of the steel industry

The biggest boost to efficiency in the steel industry has come from the increased use of

continuous casting an indicator of the modernity of the production process.

Availability of good rail way network for domestic shipping

Weaknesses:

Limited availability of coking coal

High transportation and handling costs.

Mining costs are also high.

Implementing latest technology has become a concern for the Indian steel industry.

Steel industry in India did not attain self sufficiency in constructing and efficiently

maintain steel plants. It still relies on the countries like Russia, Ukraine, and Kazakhstan

etc. for installing new steel plant in India.

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Although India has modernized its steelmaking considerably over the past decades,

nearly 6% of its crude steel is nevertheless still produced using the outdated open-hearth

process Quality is also one of the drawbacks India is focusing. Quality of either flat steel or long

steel is becoming an issue for reaching international quality standards.

Logistics for steel industry is one of the constraints for the competing in the global

markets. Industry has to concentrate on the supply of the raw materials and reaching the

customers delivery times. The loading and unloading rates at ports, container handling,

in plant logistics were also weak in terms of Indian steel industry.

With 1 ton of finished steel requiring handling and transportation of around 4 tonnes of

bulk material, the anticipated expansion of steel capacity, even accounting for delays,

would exert tremendous pressure on Indias logistics infrastructure post-commissioning

of projects. The problem would get aggravated if the future capacities show regional

concentration, which is likely.

Opportunities:

Increase in steel consumption hugely will result in tremendous growth in steel industry in

coming years

India has all the resources and capabilities to become a global supplier of quality steel

Low steel prices smooth the way for imports from Russia, Ukraine and Kazakhstan. The

geographical proximity of Japan, South Korea and China makes them important suppliers

as well.

With the decreased potential for steel in developed countries, India have opportunities for becoming the world leader in production and supply of steel and iron ore

Concurrently industries like automobiles and urban infrastructure are also growing

simultaneously

Threats:

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Infrastructure is becoming a major threat for the steel industry. Insufficient infrastructure

in terms of transportation and logistics is becoming concern for Indian steel industry.

Government is also planning to increase its share of infrastructure in GDP from 2.5%

currently

Huge competition in the global markets. In the Indian markets also, with the entry of the

foreign players the domestic steel producers are facing high market competition.

Increasing concern for the global climate change is becoming a threat to the industry.

With the concern over the climate change countries are focusing on the reduction in

carbon emissions particularly with respect to the energy intense industries like steel,

cement etc. The steel industry accounts for between 5 and 6% of total man-made CO 2

emissions. This is less than accounted for by transport or power use by the general

public, it does mean that the steel industry is in the frontline in making a contribution to

fight global warming.

Future energy use and carbon emissions depend on the level of production and the

technologies employed. Furthermore, different economic and policy settings affect

structures and efficiencies within the sector.

Issues with dumping of low priced steel products from the Chinese and companies of

other countries is also becoming a barrier for the growth of Indian steel industry.

Infrastructure with respect to steel plants and logistics of steel industry is also one of the

key challenges for the Indian steel industry.

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LOGIST ICS IN INDIAN STEEL INDUSTRY

There is a growing concern for the macro and micro level logistics of Indian steel industry. The

customer delivery times, inventory management, cargo handling at ports, procurement of ironore and other raw materials are some of the areas in which steel manufacturers are focusing at

micro level. Some of the concerns of logistics for the steel industry at macro level are:

High transportation costs: This is one of the major concerns which is affecting the growth

of the industry. Due to the problems in infrastructure and also with low levels of

productivity in terms of handling and transporting cargo, the costs of transportation were

soaring day by day.

Lack of connectivity to the ports with sufficient rail and road networks is also one of the

causes for high transportation costs.

Along with the transportation costs, the costs of order placement and transactions costs

are also increasing. Industry should look for the efficient flow of information from end to

end in the supply chain. Implementation of technologies like EDI (electronic data

interchange) and ERP (enterprise resource planning) will help to improve reliability of

the information flow and also reduce the costs to a greater extent. The implementation of these technologies and also the other strategies like BPR (business process reengineering)

are at the initial stages in the industry. Apart from some major producers of steel like

Tata, JSW, ISPAT etc were able to successfully implement them in their steel plants

which helped them in reducing the inventory lead times and also improved the

information flow. These technologies must be implemented in a large scale at a macro

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level so as to increase the growth of Indian steel industry. Creating the virtual

information networks from end to end will not only save in terms of costs but also the

time for order placing and procurement can be done. Lead times and delivery schedules

can be improved much better than ever before.

The advantage of a proper IT-based information system is that accurate information can

be obtained at a much faster rate, reducing downtime and speeding up decision making

process. Since, time is more than money; it would have direct impact on cost. The

objective would be to implement IT in all operations and to integrate these with day-to-

day decision-making process. IT applications will help in streamlining both process chain

and supply chain and would thereby result in cost reduction and increase in productivity.

Proximity and access to raw materials. Infrastructure development requires the transportof raw materials for steel production for achieving the goal of 75 million ton of additional

capacity by 2019-20 will require the movement of an additional 300 million ton of raw

material

Freight movements are further delayed by onerous transport regulations, which include

restrictions in the hours of the day that heavy vehicles can operate, interstate border

crossing closures and lengthy trans- border crossing procedures, frequent tolls and

inspections, and road closures at night due to the risk of attacks by insurgents or bandits.

The efficiency of Indian ports is affected by shallow draught, low productivity, high

costs, long vessel 60 turnaround times, poor governance, and lengthy customs delays.

Shipping costs are consequently high a shipment from India to the United States can

cost 20 per cent more than from Thailand and 35 per cent more than from China

Unlike international ports like Singapore and Rotterdam, the shortage of storage space in

the major ports in India had further compounded the problem of speedy evacuation of cargo from port premises.

Performance of logistics in Indian steel industry:

Some of the key performance indicators of logistics in Indian steel industry are:

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Performanceattribute

Factors India Internationalstandards

Reliability Forecast accuracyDelivery

performance tocustomer requestdates

50- 70%

40 65%

85%

97.5%

responsiveness Order fulfillmentlead timesResponse time toenquires

20 30 days

1day 1 month

14 days

Less than 3 hoursFlexibility Re-plan cycle

times1 3 months 15 days

Assets Inventory turns 3 5 times 7 times

From the above table it can be observed that the performance of India in terms of logistics is

poor and has to improve drastically to be in the global competition. Though Indian companies

are excelling in terms of production they are lagging far behind in terms of supply and

distribution of the finished product which affects the industry considerably.

Some of the other factors which influence the performance of logistics in steel industry are:

Out bound logistics costs: due to the problems with inefficient maintenance of cargo, the

out bound costs of the logistics are increasing considerably. Out bound logistics costs

includes costs of idle freight, detention, in plant logistics, transaction costs, handling and

storage costs, lashing and bracing costs etc.

In plant logistics: In plant logistics includes the activities such as Real time location

visibility levels, In plant wagon turn around, In plant truck turn around, Dispatch spread,

Transit inventory, In plant route network, No of handlings etc. these are the activities

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which are to be carefully taken care and also the efficient operations of these activities

will also reduce the costs considerably.

Selection of and planning for transport minimizes transportation costs in accordance with

company documentation.

Planning for the availability of personnel and plant conforms to plant production

schedule.

Scheduling of on-line product to customers enables the plant production schedule to be

achieved. Load sequencing of on-line and ex-stock product enables the plant production

schedule to be achieved

Destination sequencing prevents multiple handling of the product en route.

Documentation enables transportation of product to required destinations.

Handling and transportation of steel and iron ore:

Increase there is an increase in use of multi modal transportation for the shipment of cargo.

Since, steel and iron ore comes under the dry bulk cargo, handling and maintenance would be a

challenge. Though containerization solved the problems of handling cargo to a greater extent,

there must be focus on the improvement of handling capacities and dispatch of cargo. More than

98% of the steel and iron ore are exported and imported using the seaways. Also for the

domestic shipments rail and road networks are the major means of transportation.

Cargo handling at Ports:

Global sea trade in iron ore is dominated by the countries such as Brazil, China, Australia etc.

though India is also a key player in the global steel trade, huge competition in terms of sea trade

is given by these countries.

Major iron ore exporting countries:

Country Exports of iron ore in the year 2007 (in

MT)

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Brazil 269.40

Australia 266.80

India 90.70

Major iron ore importing countries:

Country Imports of iron ore in 2007 (in MT)

China 383.10

Japan 138.90

South Korea 46.20

Germany 46.20

From the exports and imports of some of the top countries in the global steel trade, it can be

observed that India is one of the largest exporters of iron ore in the world. Though India is in

such a dominating position in the exports of iron ore and steel production in India, its share to

GDP is comparatively low with less than 2%.

China seems to be dominating the global steel industry with 47% of the iron ore imports and

stood as world leader in the production of steel with 36% of the global production. China have

very limited mineral resources compared to India, but its the market leader in the steel

production. India, being one of the largest manufacturer of iron ore and major producer of steel

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has huge opportunities for increasing its exports and become a dominant player in global

industry. Also the domestic consumption of steel for India is very little with per capita of only

about 48 KG where as the per capita of steel consumption for other major countries is 340 KG in

EU, 1200 KG in Singapore, 420 KG in north America, 635 KG in Taiwan etc.

There are 12 Major Ports, 185 nos. of Minor and Intermediate Ports Cargo basket moving away

from being bulk cargo Centric. Minor ports market share increased from 9.9% in 1997 to 28.8%

in 2007. Major sea ports accounted for traffic of steel and iron ore cargo are JNPT, Mumbai,

VPT, Visakhapatnam, ports of Chennai, Mangalore etc.

In almost all the ports iron ore loading is a mixture of mechanical loading systems which

consists of conveyors, stack reclaimers and ship loaders and manual loading process using shore

cranes and ships gears and grabs. The existing mechanical loading systems are becoming old andobsolete and there is an immediate requirement for upgrading the infrastructure in the ports

particularly with respect to loading and unloading of cargo.

Also poor infrastructure at ports leads to high through put times, high turnaround times for ships,

slower loading rates, delays due to break downs etc. This in turn results in higher incidents of

demurrage costs and over all high costs for loading and unloading cargo.

Rail connectivity:

Rail networks are the most preferred means of transportation of steel and iron ore for domestic

shipping. It is also the most commonly used mode of transportation. As per the statistics of 2007,

iron ore is the second largest commodity moved by rail accounting for 16% of the total traffic,

coal being the first with 43% of the share. About 116 MT of iron ore is moved out of ports using

rail of which 38.84 MT were for exports. Iron is moved from mines to steel plants, sponge iron

and pig iron plants.

Keeping in view the significance of port connectivity for efficient evacuation of cargo from the

ports and its impact on international trade, the Committee on Infrastructure recommended (2006)

minimum double-line rail connectivity for major ports, which was to be achieved within the

stipulated time frame of three years.

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JNPT, Kandla, Mumbai, and Paradip ports had double lines in parts of their rail networks

whereas the ports at Chennai, Cochin, Goa, Haldia, Kolkata, Tuticorin and Visakhapatnam

continued to have single-line connectivity, resulting in slower movement and inefficient cargo

dispersal. Although NMDP envisaged taking up 16 railway schemes for laying of new lines, no

specific scheme for conversion of single lines to double lines had been mooted. Despite the

emphasis on exclusive freight corridors by the Government, passenger and freight systems

shared the same railway networks outside the port areas. Rail networks at ports other than

Mormugao were not connected to the hook points and the cargo had to be inter-carted74 to the

sidings using dumpers, trucks and trailers. Such multiple handling of cargo could only add to

increase in the handling time and the cost of handling. Port users at Chennai felt that the long

distances between railway sidings and the berths needed to be addressed by laying railway tracks

just along the berths which would result in quicker, easier and cheaper loading / unloadingoperations.

The sidings at JNPT, Haldia, and New Mangalore could handle full rakes of 59 wagons, while

only some sidings at Chennai (two sidings), Paradip (21 out of 41) and Visakhapatnam (eight out

of 15) could handle full rakes. Out of 18 sidings at Mumbai, only two had the length to

accommodate 40 wagons whereas the other sidings could accommodate 20 or less wagons. At

other ports, the sidings could not accommodate even half rakes. At Mumbai, even the two

sidings having capacity of 40 wagons each could not be optimally utilized as the low capacity

locomotives used for hauling could not handle rakes having more than 20 wagons. Users at

Kolkata port stated that full rakes could not be handled at the berths at Netaji Dock and

Kidderpore Dock due to which longer time was required for handling the rakes, resulting in

increased detention charges for wagons.

International railway systems carry more than 100 wagons per rake with the Australian system

carrying over 300 wagons per rake. Compared to this, a rake in India handles 58 BOX wagons as

the length of the loops in the yards and stations in India is only 686 m, limiting the length of the

trains. Even rakes of 58 wagons cannot be handled at sidings of some ports. The space

envelope82 in India does not permit the movement of double stack container wagons. Since

stations, platforms, roofs and bridges had been constructed according to the previously designed

space envelopes, the envelopes of existing railway lines cannot be increased, thereby limiting the

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carrying capacity of the rakes. Load carrying capacity expressed as the ratio of a loaded wagon

to an empty one ranges from 4-7 internationally as against 2.5 in India.

NMDP envisaged undertaking 11 projects under Phase-I and three projects under Phase-II for

improvement of port railways. The scheduled date of completion of the projects under Phase-Iwas March 2009, whereas the projects under Phase-II were to be completed by 2012.

Some of the other challenges with rail connectivity are:

Iron ore miners are forced to move out by road due to the lack of proper rail connectivity

Sharing of rail way lines for both passenger and goods is creating a problem resulting in

priority of passengers and thereby delays and congestions of good traffic.

Low average speed of freight traffic leads to longer lead time and reduced through put.

Lower haulage capacity leading to higher lead time.

Frequent changes in freight charges. Freight charges for iron ore are being targeted for

frequent hikes leading to increase in costs for rail than by road.

Roads connectivity:

About 28 per cent of cargo dealt with by the major ports during 2007-08 was transported through

roads. Except for Haldia, Mormugao, Paradip and Visakhapatnam where rail was the preferred

mode for dispersal of cargo, the movement at other ports was by roads. most of the major ports

except Princess Dock in Mumbai had two to three common entry and exit gates for movement of

cargo. JNPT had only one access point to the port. In all the ports, the exit points opened to

roads common to general traffic as well and there were no exclusive port roads except for short

ones in Kandla and Visakhapatnam. This restricted the free and speedy movement of cargo from

the port premises, which was further delayed due to restrictions imposed on cargo movementduring working hours.

At Chennai, the movement of cargo during the daytime was restricted due to the absence of

exclusive approach roads. At Mormugao port, entry for heavy vehicles in the city was restricted

during daytime. At Kolkata port, Customs clearances were given from 10 am to 4 pm whereas

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from 6 am to 6 pm, trucks were not allowed on the roads. The waiting period for trucks to enter

the port was thus very long. Due to non-availability of data, the waiting time could not be

measured in respect of Kolkata port but the feedback of users disclosed that it was more than a

day. Thus the lack of exclusive approach roads as well as access restrictions on common roads

resulted not only in delays in the movement of cargo but also led to congestion. Ports such as

Haldia, Kandla, Mormugao and Visakhapatnam, were connected to one national highway

whereas the other ports had connectivity with more than one highway.

The National Maritime Development Programme envisaged 22 road connectivity projects under

Phase-I and five projects under Phase-II. The projects under Phase-I were to be completed by

March 2009 whereas the stipulated date of completion of the projects under Phase II was 2012.

Some of the other challenges for road connectivity are:

Width of the highways is not sufficient for both passenger and goods to go comfortably.

Maintenance of high ways is also poor. Much of the highway maintenance is

underfunded.

Lack of organized fleet owners is resulting in reduced quality and professionalism.

Improper road connectivity resulting in longer lead times

Reliability and cargo integrity with other modes of transportation are becoming an issue

Iron ore transportation through inland water ways:

The riverine system of Goa consisting of Zuari, Mondovi Rivers and Cumbarjua canal is the

only water way used for iron ore transportation. Mormugao and Panjim ports in Goa state

receive iron ore barges from mines and loading jetties on this riverine system. Almost all the iron

ore of the Goan origin is transported to ships by barges. This quantity is approximately 33.5 MTin the year 2007. Non Goan iron ore is first transported to nearest rail head or by road to nearest

jetty and then moved by barges to the two ports. Any movement of iron ore through water ways

in the rest of the country is almost nonexistent. Since water ways is the cheapest and most

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reliable means for transportation of cargo, government has to take steps to improve the status of

national water ways.

Other than this only water way system existing in the country for transporting iron ore, many of

the major companies uses coastal mode of transportation for iron ore shipments. Companies likeISPAT and ESSAR steel dont have captive mines and thus ships them through coastal shipping.

But, the feasibility of coastal shipping is only limited to large sized mills with large requirement

of iron ore.

Pipeline transportation of iron ore:

KIOCL and Hy-Grade pallets of ESSAR group is using pipeline mode of transportation. These

pipe lines are privately owned and of captive use. This is the cheapest mode of transportation

compared to all modes of transportation irrespective of size of mines and amount of cargo

transported. But the small sized mines and dispersed steel mills are becoming barriers for use of

this mode of transportation. However, movement of cargo to ports will be a feasible option.

However, the only drawback of this pipeline is the requirements of huge initial investments.

KIOCL in 1982 has constructed a 67 KM length of pipe line from Malleshwara (Kudremukh) to

Panambur near Mangalore. Capacity of this pipe line is 7.5 MT. But, this pipe line is not

operational since 2006. KIOCL has stopped using as mines in Kudremukh have been banned on

mining due to environmental considerations.

In early March 2006, Essar Steel commissioned the world's second longest iron ore slurry

pipeline. The length of this pipe line is 267 KM long. The pipeline will connect Essar's iron ore

beneficiation plant at Bailadila in Chhattisgarh to its pelletization plant at Visakhapatnam in

Andhra Pradesh. The pipeline will traverse Chhattisgarh en route. The Bailadila pipeline, built

by Essar Steel, is designed to carry 8 million TPA of slurry and is expected to reduce Essar

Steel's transportation cost from Rs.550 per ton to about Rs.80 per ton. The pipeline will help thecompany save at least Rs.200 crore every year, with its capacity set to increase to 4.6 million tpa

from the present 3 million tpa. The pipeline infrastructure includes two pumping stations and a

valve choking station, apart from terminalling facilities at Visakhapatnam and Bailadila. The

pumping operation from Bailadila to Visakhapatnam is monitored and controlled by a

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computerized supervisory system. The slurry pumps were supplied by Geho, Netherlands and a

consortium of JSC Stroytransgaz and Essar Constructions executed the project.

LIST OF PUBLIC SECTOR UNDERTAKINGSAND COMPANIES UNDER THE ADMINISTRATIVE

CONTROL OF THE MINISTRY OF STEEL

SL.No.

Name of the company Headquarters Subsidiaries

1. Steel Authority of Ispat Bhawan, Lodi Road, Maharashtra Elektrosmelt

India Ltd. New Delhi - 110003 Ltd., Chandamul Road,

Chandrapur-442401(Maharashtra)

2. Rashtriya Ispat Administrative Building,

Nigam Ltd. Visakhapatnam - 530031

(Andhra Pradesh)

3. NMDC Ltd. Khanij Bhawan, 10-3-311/A, J&K Mineral Development

Castle Hills, Masab Tank, Corporation Ltd.

Hyderabad-500028 33 B/ B IInd Extn

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(Andhra Pradesh) Gandhi Nagar,

Jammu-180004 (J&K)

4. Maganese Ore MOIL Bhawan, 1-A,

(India) Ltd. Katol Road, Nagpur-440013(Maharashtra)

5. MSTC Ltd. 225-C, Acharya Jagdish Ferro Scrap Nigam Ltd.,

Chandra Bose Road, FSNL Bhawan, Equipment

Kolkata-700020 Chowk, Central Avenue,

(West Bengal) Bhilai-490001(Chhattisgarh)

6. HindustanSteelworks 5/1, Commissariat Road,

Construction Ltd. (Hastings), Kolkata -700022(West Bengal)

7. MECON Ltd. MECON Building,

Ranchi-834002(Jharkhand)

8. Sponge Iron IndiaLtd.

Khanij Bhawan, 10-3-311/A, Castle Hills,Masab Tank,Hyderabad-500028,(Andhra Pradesh)

9. KIOCL Ltd. II Block, Koramangala

Bengaluru-560034(Karnataka)

10. Govt. Managed FD-350, Sector-III, SaltLake City,Companies - Bird Kolkata-700106 (West

Bengal)Group of Companies

PUBLIC SECTOR

The companies under the Ministry of Steel have performed well in the last five years.Profit After Tax (PAT) of the Companies was around Rs. 7,772 crore during the year 2009-10 (up to December 2009). The contribution to Central and State Governmentexchequer by way of excise duty, customs duty, dividend, corporate tax, sales tax,royalty etc. was around Rs. 11,298 crore during the year 2009-10 (upto December

2009).

STEEL AUTHORITY OF INDIA LIMITED(SAIL)

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The Steel Authority of India Limited (SAIL) is a company registered under the IndianCompanies Act, 1956 and is an enterprise of the Government of India. It has fiveintegrated steel plants at Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (WestBengal), Bokaro (Jharkhand), and Burnpur (West Bengal).

SAIL has three special and alloy steels plantsAlloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamil Nadu)and Visveswaraya Iron and Steel Plant at Bhadravati (Karnataka). In addition to these,a Ferro Alloy producing plant at Chandrapur is owned by Maharashtra ElektrosmeltLimited which is a subsidiary of SAIL. SAIL has seven central units viz. Research andDevelopment Centre for Iron and Steel (RDCIS), Centre for Engineering andTechnology (CET) and Management Training Institute (MTI), all located at Ranchi,Central Coal Supply Organisation (CCSO) located at Dhanbad, and Raw MaterialsDivision (RMD) and Environment Management Division (EMD), located at KolkataDuring the year, pursuant to the Order of amalgamation issued by the Ministry of

Corporate Affairs under Section 396 of the Companies Act, 1956 on 28th July, 2009,the Bharat Refractories Limited (BRL) has been amalgamated with SAIL with effectfrom 1st April, 2007. The BRL has four plants in the states of Jharkhand andChhatisgarh and isengaged in the business of manufacturing, trading and otherwise dealing in assortedtypes of refractories. Consequent to amalgamation, it has become a unit of SAIL andrenamed as SAIL Refractory Unit (SRU).

The Central Marketing Organisation (CMO), with its headquarters at Kolkata,coordinates the countrywide marketing and distribution network. The SAIL ConsultancyDivision (SAILCON) functions from New Delhi.

A panoramic view of the Blast Furnaces that form the skyline of SAILs Bhilai Steel Plant .

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Capital structureThe authorised capital of SAIL is Rs. 5000 crore. The paid-up capital of the companywas Rs. 4130.40 crore as on 31 st March, 2009, out of which 85.82% is held by theGovernment of India and the balance 14.18% by the financial institutions/GDR -holders/banks/employees/individuals etc.

Financial performanceThe company recorded turnover of Rs.48,681 crore in the financial year 2008-09. Thepost-tax net profit for the year was Rs. 6,175 crore. The company has paid dividend @26 % of paid up equity capital for the year 2008-09. The sales turnover and net profitafter tax for nine months ended 31st December, 2009 were Rs. 30928.82 crore and Rs.4669.47crore respectively.

Production performanceThe details of the actual production are given below:

000 tonne

Items 2008-2009 2009-10 (upto December 2009)

Hot Metal 14442 10908

Crude Steel 13411 10175Saleable Steel 12494 9366

Raw materialsDuring the year 2008-09, the total iron ore production from captive mines of thecompany was 24.43 million tonne as against 26.37 million tonne in the year 2007-08.The flux (limestone/dolomite) production of captive mines during theyear was 2.4 million tonne in comparison to 2.6 million tonne in the year 2007-08. Theproduction of iron ore and fluxes during the period April-December '09 was 17.3 milliontonne and 1.5 million tonne respectively.

Manpower The manpower strength of SAIL as on 31st March, 2009 was 121295. The reduction in

manpower achieved during the year stood at 7,509. The manpower strength of SAIL ason 1.1.2010 was 119105 (including MEL and SRU), achieving reduction of 4499manpower during the year 2009-10 (upto December, 2009). Honble Union Minister of Steel, Shri Virbhadra Singh, dedicating the 0.8 million tonne Slab Caster Complex inSMS-II at Bhilai Steel Plant (SAIL).

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MAHARASHTRA ELEKTROSMELT LTD.: ASUBSIDIARY OF SAIL

Maharashtra Elektrosmelt Limited is situated in Chandrapur, Maharashtra, and is amajor producer of ferro manganese and silico manganese for captive use of SAILplants.The authorised and paid-up share capital of the company as on March 31, 2009 wereRs. 30 crore and Rs. 24 crore respectively. SAIL's holding is approximately 99.12% of the paid-up capital.

Financial performanceDuring the year 2008-09, the company recorded a turnover of Rs. 425.06 crore andmade a net profit of Rs. 40.88 crore. The turnover and net profit after tax of theCompany during April 2009 to December 2009 are Rs. 283.65 crore andRs. 33.03 crore respectively.

Production performanceThe production of all grades of ferro alloys during 2009-10 is as under:(tonne)

(tonne)

Material 2008-09 2009-10 (upto December 2009)High Carbon Ferro Manganese 68789 45322Silico Manganese 35640 37982Medium Carbon FerroManganese 1763 899

RASHTRIYA ISPAT NIGAM LTD. (RINL)

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A view of the Sinter Plant at Visakhapatnam Steel Plant (RINL ).

RINL is the first shore based integrated steel plant in the country located atVisakhapatnam in Andhra Pradesh. The plant was commissioned in August 1992 with acapacity to produce 3 million tonne per annum (Mtpa) of liquid steel.The plant has been built to match international standards with state-of-the-arttechnology, incorporating extensive energy saving and pollution control measures.RINL has an excellent layout capable of expanding upto 16 Mtpa. RINL is today on thegrowth path and almost doubling it's capacity to 6.3 Mtpa of liquid steel and the newunits are set to come on stream progressively from 2010-11. within a short period of time since its commissioning, the plant achieved high levels of performance inproduction and technological norms. Right from the year of its integrated operation,RINL established its presence both in the domestic and international markets with itssuperior quality of products. RINL has been awarded all the three internationalstandards certificates, namely, ISO 9001:2000, ISO 14001:1996 and OHSAS18001:1999. RINL is the first Indian steel plant to get the 'Capability Maturity ModelIntegrated (CMMI) - Level 3' certification issued by 'Software Engineering Institute (SEI)of Carnegie Mellon University', USA for implementation of IT systems in RINL.

The company has emerged as a good corporate citizen and has contributedsubstantially for the development of the region.The physical performance in terms of production and percentage achievement of ratedcapacities along with financial/marketing performance for the year 2008-09 and 2009-10 (April-December 2009) is given below:

Item 2008-09 April-December

2009

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Production (in million tonne); Capacityutilisation (%)Hot Metal 3.55 (104%) 2.9 (113%)Liquid Steel 3.15 (105%) 2.4 (108%)

Saleable Steel 2.70 (102%) 2.3 (114%)Financial and Marketing performance (Rs. incrore)Gross Turnover 10411 7543Profit After Tax 1336 464

Net worth 12420 12884

Value Added steel production of 17.18 lakh tonne during Apr-Dec 09 was 8% more thanthe levels achieved in the corresponding period last year. Value Added steel productionwas 76% of the saleable steel produced.

NMDC LTD.NMDC was incorporated on November 15, 1958, as a Government of India Enterprise.It is a Navratna Company engaged in the business of developing and exploiting mineralresources of the country (other than coal, oil, natural gasand atomic minerals). Presently its activities are concentrated on mining of iron ore anddiamonds.NMDC operates the large mechanized iron ore mines in the Country at Bailadila(Chhattisgarh) and Donimalai (Karnataka). The Diamond Mine is situated at Panna

(Madhya Pradesh). The mining activities at Diamond Mine, Pannawere stopped w.e.f. 22.08.2005 due to environmental reasons. Subsequently severaldevelopments took place. Madhya Pradesh State Authorities issued formal orders on19.06.2009 for restarting the mining activities. Production has resumedw.e.f 20.06.2009 after a gap of around 4 years. All the iron ore production units havebeen accredited with ISO 9001:2000 and ISO 14001:2004 certifications and alsoR&D Centre of NMDC was accredited with ISO 9001:2000 certification.

Finance Capital StructureThe Authorized share capital of the company is Rs. 400 crore. The paid up equity sharecapital is Rs. 396.47 crore.Outstanding loans from Government of India are Nil.Financial Performance The financial performance of the company for the year 2009-10as against previous year 2008-09 is as below:

Financial Performance

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The financial performance of the company for the year 2009-10 as against previousyear 2008-09 is as below:

(Rs. in crore)

Item 2009-10 (upto December) 2008-09

Sales/Turnover Gross MarginProfit before tax

4255.763693.903642.64

7564.036725.256648.23

MANGANESE ORE (INDIA) LTD. (MOIL)

Manganese Ore (India) Limited (MOIL) was established in 1962. It is the largestproducer of Manganese ore in India. At the time of inception, the Central ProvinceManganese Ore Co. Ltd. (CPMO) held 49% of shares and the remaining 51% wereheld in equal proportion by Government of India and the State Government of MadhyaPradesh andMaharashtra. Subsequently, in 1977, Government of India acquired the shares held byCPMO in MOIL and it became a wholly owned Govt. Company with effect from October,1977. As on 31st March, 2009, the paid up capital of the Company was Rs. 28 crore,which has been increased to Rs. 168 crore as on 31.12.2009. Government of India hold81.57% shares in MOIL while the State Governments of Maharashtra and MadhyaPradesh are holding 9.62% and 8.81% shares respectively.MOIL produces and sells different grades of Manganese ore as below:

High grade ores for production of Ferro manganese Medium grade ore for production of Silico manganese Blast furnace grade ore required for production of hot metal and Dioxide for dry battery cells and chemical industries.

MOIL has set up a plant based on indigenous technology to manufacture ElectrolyticManganese Dioxide (EMD). This product is used for the manufacture of dry batterycells. EMD produced by the Company is of good quality and well accepted by themarket. A Ferro manganese plant having a capacity of 10,000 Tonne per annum wasalso set up in 1998by MOIL for value addition.

FinanceAuthorised Capital of the Company was Rs. 100 crore and paid-up Capital was Rs. 28crore as on 31st March, 2009.Subsequently, the Authorised Capital of MOIL has been increased to Rs. 250 crore andpaid up capital to Rs. 168 crore as on 31.12.2009.Operational and Financial Results

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The physical and financial performance of the Company for the last 3 year i.e. 2006-07,2007-08 and 2008-09 and for 2009-10 (upto December, 2009) are given below:

(Rs. in crore)

S. No. Item 2006-07

2007-08

2008-09

2009-10(up to

December 2009)

1

Productiona) Manganese Ore ('000tonne)b) Electrolytic Manganese

Dioxide (tonne) c) Ferro

Manganese (Tonne)

10471312

10200

13651122

11130

11751240

10120

794807

6895

2.3.4.5.6.7.8.2.3.

4.5.6.7.8.

Total Income (Rs. in crore)Profit before tax (Rs. incrore)Profit After tax (Rs. in crore)Reserves (Rs. in crore)Net Worth* (Rs. in crore)Book value per share (Rs.)Earning per share (Rs.)Total Income (Rs. in crore)Profit before tax (Rs. in

crore)Profit After tax (Rs. in crore)Reserves (Rs. in crore)Net Worth* (Rs. in crore)Book value per share (Rs.)Earning per share (Rs.)

451.82210.21134.20433.49455.811604.46479.31451.82210.21

134.20433.49455.811604.46479.31

1030.04734.91479.82784.68812.682902.161713.631030.04734.91

479.82784.68812.682902.161713.63

1407.991006.76663.79

1292.871320.874717.402370.691407.991006.76

663.791292.871320.874717.402370.69

746.08424.09279.94

1323.371491.3788.77**16.66**746.08424.09

279.941323.371491.3788.77**16.66**

(*) As on 31st March of the year.(**) MOIL has issued bonus shares in the ratio of 1:5 and also the face value of theshares has been changed from Rs. 100/- to Rs. 10/- each. Consequent upon this, thenumber of shares has increased from 28 lakh to 16.80 crore and paid up sharecapital has increased from Rs. 28 crore to Rs. 168 crore. Accordingly, the book value of shares and Earning per shares have also change.

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MarketingAbout 95% of manganese ore is used in steel industries. The year 2008-09 has been aroller-coaster ride for most of the industries all over the world and same was continuingespecially in first half of the year 2009. During the first half of the current year 2009-10,

the demand and prices of manganese ore, Ferro manganese and Silico manganesewere verysluggish, however, since second half of the year, the economy is improving slowly. Theprices and demand of steel as well as manganese ore are improving and it is expectedthat the same will continue in coming times. The total income and profit after tax of theCompany during the year 2008-09 were Rs. 1407.99 crore and Rs. 663.79 crorerespectively. Thesales performance achieved during 2008-09 and 2009-10, is as under:

* including sale of eletricity

Cost Reduction PlansThe Company has introduced following cost reduction measures:

Proper manpower planning and introduction of Voluntary Retirement Scheme toreduce surplus manpower.

Judicious machanization of various mining operation to improve the overallproduction and productivity thereby reducing cost per ton ultimately.

implementation of benchmarks so fixed for consumption of major consumablessuch as Steel, Cement, Explosives, Spares, POL etc.

36

Sl.

No.

Details 2008-09 2009-10 (upto December

2009) (Provisional)Sales Quantity(tonne)

Value (Rs. incrore)

Quantity(tonne)

Value (Rs.in crore)

1 Manganese OreDomestic

ExportTotal

1023486-

1023486

1187.28-

1187.28

867139-

867139

609.49-

609.49

2 Electrolite ManganeseDioxide

1419 9.28 625 4.24

3 Ferro Manganese 9425 80.03 6388 33.424 Other income* - 131.40 - 106.755 Grand Total - 1407.99 - 753.90


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MSTC LTD.MSTC Ltd. (formerly Metal Scrap Trade Corporation Ltd,) a Government of India

enterprise, under Ministry of Steel was set up on 9th September 1964 as a canalisingagency for export of scrap from the country. With the passage of time, the companyemerged as the canalising agency for the import of scrap into the country. Import of scrap was decanalisedby the government in 1991-92. Presently, the company undertakes trading activities, e-commerce, disposal of ferrous and non-ferrous scrap, surplus stores and other secondary arising generated mostly from Public Sector Undertakings and Govt.Departments, including Ministry of Defence. The Company also undertakes import of raw materials in bulk required by large industrial houses on back-to-back basis. Theitems of import include petroleumproducts, LAM Coke, Coking Coal, DR Pellets, HR Coils and Melting Scrap etc. It alsoundertakes trading in items within the country in competition with any other privatetrader.

Financial PerformanceThe financial performance of the company for the last three years is given below:

(Rs. in crore)

2007-08 2008-09 2009-10(Provisional)

A.Physical(i) Agency (including e-procurement) 5,579 11,121 3,901

(ii) Marketing 6,345 8,881 3,382(iii) Total Volume of Business 11,924 20,002 7,283

B. Financial(i) Income 5,197 7,082 2,209(ii) Operating Profit 138.33 132.09 72.06(iii) Interest, Depreciation andProvision 3.863 2.56 1.64

(iv) Profit before Tax 134.47 129.53 70.42(v) Profit after Tax 92.20 85.05 43.48* Provisional

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FERRO SCRAP NIGAM LTD. (FSNL)FSNL is a wholly owned subsidiary of MSTC Ltd. with a paid up capital of Rs. 200 lakh.The Company undertakes the recovery and processing of scrap from slag and refusedumps in the nine steel plants at Rourkela, Burnpur, Bhilai, Bokaro, Durgapur,Visakhapatnam, Dolvi, Duburi and Raigarh. The scrap recovered is returned to the steelplants for Processing of Mill rejects through gas cutting operations by FSNL, at Bhilai Steel Plant.recycling/disposal and the Company is paid processing charges on the quantityrecovered at varying rates depending on the category of scrap. Scrap is generatedduring iron and steel making and also in the Rolling Mills. In addition, the Company isalso providing steel mill services such as scarfing of slabs, handling of BOF slag, etc.

Physical performance

The production performance of FSNL for the last two years and for the year 2009-10(upto December 2009) is givenbelow:

Item 2007-08 2008-09 2009-10*(upto

31.12.2009)Recovery of scrap (lakh metric tonne) 23.77 22.63 17.39

Market Value of Production (Rs. in crore) 1045.88 995.82 765.05

* Provisional

Financial performance(Rs. in lakhs)

Item 2007-08 2008-09 2009-10* (upto31.12.2009)

Total Turnover i.e, Service charge realisedincluding misc. Income,etc. 12822.32 13730.33 100.93

Gross Margin Before Interest &Depeciation 1586.00 1683.17 1576.30

Interest & Depeciation 1385.11 1251.96 1181.25

Profit Before Tax 200.89 431.21 395.05

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HINDUSTAN STEELWORKSCONSTRUCTION LIMITED (HSCL)

Hindustan Steelworks Construction Limited (HSCL) was established in 1964, as aconstruction agency of the Government of India under the Ministry of Steel, to mobiliseindigenous capability for putting up integrated steel plants in thecountry. The young organisation rose to the occasion and successfully met thechallenge by bringing together competent human resources and mobilising a fleet of updated construction equipment. Since then, there has been no looking back.In the years that followed, almost every major steel plant in India was constructed byHSCL. As the company grew in resources and expertise, it diversified in other areas likepower plants, mining projects, irrigation projects including dams and barrages, oilrefineries, railways, airports, buildings and commercial complexes, rural roads,highways,flyovers, minor and major bridges for railways and road traffic, infrastructure for educational institutions, health centres and hospitals etc. The company undertook andsuccessfully completed a number of turnkey projects also for various clients. Today,HSCL is an ISO 9001-2000 company and its capabilities cover almost every field of construction activities.Starting with a modest Rs. 5 crore in 1965-66, the company achieved a turnover of Rs.538.48 crore (upto December 2009). The order book also is swelling every year. Theorder book stood at a healthy Rs. 691 crore at the end of 2009.Turnover and order booking registered CAGR of 25% and 26% respectively during thelast four years; much more than the envisaged industry growth of 2.4% during 2008-09.The company has so far executed orders worth more than Rs.9335 crore till December 2009 since inception. The financial results also are improvingwith the company earning an operating profit of Rs. 31.84 crore during 2009-10 (uptoDecember 2009). Being in the public sector, HSCL pledges to comply with theframework of transparent corporate governance and considers it a primaryresponsibility to participate in the development of remote rural areas of the countryunder thegovernment's Bharat Nirman Programme.

Capital structureThe authorised and paid-up share capital are Rs. 150 crore and Rs. 117.10 crorerespectively.

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Financial performanceYear 2008-09 2009-10# (April-December)

Turnover 721.26 538.48

Operational Profit (PBIDT) 64.63 31.84

Net Loss 6.88* 42.48**

*The net loss includes Rs. 2.96 crore, towards voluntary retirement expenditure chargedduring theyear, and Rs. 63.54 crore towards interest on Government of India (GOI) loan.**The net loss includes Rs. 72.43 crore towards interest on GOI loan.

Order bookingThe order booking position during 2009-10 (upto December 2009) is as below:

Steel Units = Rs. 217 crore(25%)

Infrastructure Units = Rs. 654 crore(75%)Total = Rs. 871 crore

HSCL has secured orders of Rs. 691 crore till 31st December 2009. The break up is asbelow:Steel Units = Rs. 76 crore(11%)

Infrastructure Units = Rs. 615 crore(89%)Total = Rs. 691 croreManpower positionThe manpower position as on April 1, 2009 = 1248The manpower position as on January 1, 2010 = 1089Separation on Voluntary Retirement Scheme (VRS)

Employees separated on VRS during 2009-10 = -Employees separated on VRS after restructuring in1999 = 11,485

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MECON LTD.Projects Completed

Development of continuous NOx monitoring system, funded by SteelDevelopment Fund (SDF), Ministry of Steel.

development and implementation of slag detection system for converter andcaster, funded by SDF, Ministry of Steel.

SupplySuccessfully completed and received money for the supply of two nos. of "Solid StateMicroclimate Conditioning Unit [SSMCU]" for MBT Arjun and other armoured vehiclesagainst the order from Defence Institute of Physiology and Allied Sciences (DIPAS),Unit of Defence Research & Development Organisation (DRDO).On-going ProjectsThe project on "Development of thermoelectrically cooled / heated helmet for industrialapplications" is sanctioned by Ministry of Steel and fund is yet to be received. Projectwill start after receiving the 1st installment from SDF, MoS. New R & D Proposal under consideration

Submitted new R&D project on "Portable Microclimate Thermoelectric CoolingSystem for Flight Suit" to Vikram Sarabhai Space Centre, Trivandrum(Department of Space) in September, 2009.

Submitted new R&D project on Development of continuous multi-gas monitor toSDF, Ministry of Steel on September 2009.

New R&D project on "Infrared Camera based ladle condition monitoring system"will be submitted shortly to funding authority.

Other R & D EffortsInternational Recognition

MECON received the certificate of technical excellence for technical presentationon "BOF Slag detection using a

long wave Infrared Camera" in INFRAMATION 2009, Las Vagas, Nevada, USA. Patent under process:

Patent entitled "Infrared imagery based slag detection system for Basic OxygenFurnace (BOF) Converter" has been filed on October 13, 2009.

Patent entitled "Continuous NOx Monitoring System" has been filed on October 13, 2009. Publication

International Journal : Onenternational Conference : One

TrainingTwo R & D engineers were trained on Autocad.Four R & D engineers were trained on Lab View.

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One R & D engineer was trained on Skill Improvement. Seven full time scientists/technologists are engaged in R & D.

SPONGE IRON INDIA LTD. (SIIL)Sponge Iron Plant of the company was initially established as a demonstration unit witha capacity of 30,000 tonne per annum (tpa) with UNDP/UNIDO assistance to establishthe techno-economic feasibility of producing sponge iron (a part substitute for ferrousscrap used by Induction and Electric Arc Furnaces) from lump iron ore and 100%noncokingcoal. The unit, based on non-coking coal from Singareni Collieries Company Ltd.(SCCL) and iron ores available at various regions in Andhra Pradesh and neighbouringstates, went into regular operations in November 1980. Several improvements andmodifications were effected to the Sponge Iron Plant based on Rotary Kiln Process tosuit the localraw materials and operating conditions. As a result, it has not only helped developing

SIIL technology but also paved way for the development of Sponge Iron Industry in theCountry. The Company doubled its capacity from 30,000 tonne per annum to 60,000tonne per annum in October 1985.

Capital structure

The authorised share capital of the Company stood at Rs. 66 crore on 31.12.2009; paidup capital was Rs. 65.10 crore. (Rs.64.27 crore held by Government of India and the

balance Rs. 0.83 crore by the Government of Andhra Pradesh) PerformanceThe Production and Financial Performance of the Company during the last two years,together with provisional figures for 2009-10 upto 31.12.2009 is furnished in the tablebelow:

2007-08 2008-09 2009-10 (uptoDecember 09)(Provisional)

Production-Sponge Iron (tonne) 43,331 30,489 24,076-Power Generation (lakh Kwh) 34 34 32-Capacity Utilisation (%) 72 72 40Sales-Sponge Iron (tonne) 44,447 25,203 28,671-Sales Turnover (Net) (Rs. inlakh) 5,573 4,080 3,192

-Generation of InternalResources

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(Rs. in lakh) 495 6 (-) 927-Net Profit (Rs. in lakh) (PBT) 647 -129 (-) 1,035

KIOCL LTD.KIOCL Limited (formerly Kudremukh Iron Ore Company Limited), an 100% EOU, ISO9001-2008, ISO 14001-2004 and ISI 18001-2002 Company was established in April,1976 to meet the long term requirements of Iran. An Iron Ore Concentrate Plant of 7.5million tonne capacity was set up at Kudremukh. This project was to be financed in fullby Iran. However, as Iran stopped further loan disbursements after paying US $ 255million, the project was completed as per schedule with the funds provided byGovernment of India.While the project was commissioned on schedule, consequent upon the politicaldevelopments in Iran, they did not lift any quantity of Concentrate. As a diversification

measure, the Government approved the construction of a 3 million tonne per year capacity Pellet Plant in Mangalore in May, 1981. The capacity of the Pellet Plant wasincreased to 3.5 million tonne with additions/modifications. The plant went intocommercial production in 1987 and is now exportingIron Ore Pellets to China and also to domestic units such as Ispat Industries Limitedand SAL Steel Limited. Consequent upon the Honble Supreme Court's verdict, Miningwas stopped at Kudremukh with effect from 31.12.2005 and Pellet Plant is operatedwith Hematite Iron Ore purchased from NMDC.

ProductionThe target set for production during the year 2009-10 is 2.65 million tonne of Pellets.

Target set for production upto December 2009 was 1.910 million tonne. Actualproduction upto December 2009 was 0.573 million tonne which represents 30% targetfulfilment. There was shortfall in production of Pellets upto December 2009. Theshortfall is dueto close down of Pellet plant during first quarter of 2009-10 and upto 17.07.2009, from19.08.2009 to 19.10.2009 and from 02.12.2009 onwards. The demand for Pellets isless and the prices are picking up from December 2009 onwards.The target set for production of Pig Iron including Auxiliary during 2009-10 is 1,70,000tonne. Target set for production upto December 2009 was 1,26,000 tonne. Actualproduction upto December 2009 was 62,041 tonne which represents 49% of the target.There was shortfall in production of Pig Iron upto December 2009. The shortfall was onaccount of shut down of plant from 05.08.2009 due to depressed market condition.

DespatchesBudgeted sales for the year 2009-10 is Rs. 1948.10 crore. Targeted sales uptoDecember 2009 was Rs. 1412.25 crore.

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Actual sales upto December 2009 was Rs. 502.61 crore representing 36% of the target.Shortfall in financial performance upto December 2009 was due to lower despatch of Pellets and Pig Iron and lower price realisation. The Sales revenue during the last fiveyears and upto December 2009 during 2009-10 is as under:

(Rs. in lakh)

Year Concentrate Pellets * Blast FurnaceUnit

Total

2009-10 (uptoDecember 2009) -

37681 12581 50261

2008-09 - 99410 23488 122898

2007-08 - 117385 35626 153011

2006-07 - 26744 - 26744

2005-06 12091 111137 - 123228

2004-05 16050 169327 - 185377

* The erstwhile Kudremukh Iron and Steel Company Limited merged with theCompany with effect from 1st April, 2007, hence information furnished from theyear 2007-08 onwards.

Financial performanceAn overview of the performance of KIOCL during the year 2009-10 upto December,2009 together with actuals for the previous three years, is indicated below:

Particulars 2009-10 (uptoDecember 2009) 2008-09 2007-08(Rs. inlakh)2006-07

Total value of Sales 50261 122898 153011 26744

Gross Margin (12857) 6767 21174 5181Profit after Tax (18487) 2201 10816 1377The erstwhile Kudremukh Iron and Steel Company Limited merged with the Companywith effect from 1st April, 2007, hence financial information furnished above includesfinancial performance of Blast Furnace unit for the year 2007-08 onwards.

BIRD GROUP OF COMPANIES (BGC)Consequent upon nationalization of the Undertaking of Bird & Company in 1980, thefollowing seven companies came under the administrative control of the Ministry of Steel ,Government of India.

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The Orissa Minerals Development Company Ltd. (OMDC) The Bisra Stone Lime Company Ltd. (BSLC) The Karanpura Development Company Ltd. (KDCL) Scott & Saxby Ltd. (SSL) Eastern Investment Ltd. (EIL) Burrakar Coal Company Ltd. (Burrakar) Borrea Coal Company Ltd. (Borrea)

At the time when the Bird Group of Companies came under the administrative control of the Ministry of Steel, Government of India, all of them were financially sick andburdened with various problems. With the financial support from the Government of India, outstanding liabilities could be settled to a considerable extent.The status of the companies are as under:

Burrakar and Borrea Coal companies become non-operational after nationalization of coal mines. The two companies are under liquidation and theofficial liquidator has taken over the assets and liabilities of these twocompanies.

The cabinet in its meeting held on 10.09.2009, has approved the Restructuringproposal of Bird Group of Companies (BGC). The proposal envisages convertingcompanies viz. EIL, OMDC and BSLC under BGC, into Governmentcompanies/Public Sector Undertakings and vesting their management control toRashtriya Ispat Nigam Limited

(RINL), in a subsidiary cum holding structure in order to make these companieseconomically viable and sustainable. The commercially unviable companies viz KDCLand SSL are proposed to be wound up and their employees to be adjusted in other sister companies under the Group or would be offered Voluntary Retirement Scheme(VRS).

PERFORMANCE OF THE INDIVIDUAL OPERATING COMPANIES.THE ORISSA MINERALS DEVELOPMENT COMPANY LTD. (OMDC)Location of Mines, Activities and Capital Structure The mines of the company arelocated around Barbil, Keonjhar district, Orissa. The activities relate to mining andmarketing of iron ore and manganese ore. The authorized as well as paid up capital of the Company is Rs. 60 lakh.

PerformanceThe performance of the company is given below:

2007-08 2008-09 2009-10* (April-December 2009)

Production (000 Metrictonne) 1821 1695 575

Sales (Rs. in crore) 246.31 271.81 64.29

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Gross Margin beforeInterest on governmentLoans & Depreciation (Rs.in crore)

227.87 289.29 91.83

Net Profit/Loss (Rs. in

crore)148.83 181.81 59.22

* Provisional

THE BISRA STONE LIME COMPANY LTD.(BSLC)

The mines of the Company are located around Birmitrapur in the district of Sundargarh,Orissa. The main activities ofthe company are mining and marketing of Limestone anddolomite. The authorized as well as paid up capital of the Company is Rs. 50 lakh.Performance The performance of the company is given below:

2007-08 2008-09 2009-10* (April-Dec, 2009)

Production (000 Metrictonne) 1,113 1,070 873

Sales (Rs. in crore) 46.31 48.94 40.83Gross Margin beforeInterest on GovernmentLoans & Depreciation (Rs.in crore)

1.19 5.43 3.04

Net Profit/Loss (Rs. in

crore)-81.61 -91.38 2.41

* Provisional

THE KARANPURA DEVELOPMENTCOMPANY LTD. (KDCL)

The mines of the Company are located around Sirka, Jharkhand and Bihar. Thecompany produces limestone suitable for cement manufacture. The authorized andpaid up capital of the Company is Rs. 40 lakh and Rs. 20 lakh respectively.

PerformanceThe performance of the company is given below:

2007-08 2008-09 2009-10* (April-December 2009)

Production (000 Metrictonne) 51 36 29

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Sales (Rs. in crore) 1.52 1.01 0.84Gross Margin beforeInterest on GovernmentLoans & Depreciation (Rs.in crore)

-0.13 0.38 -0.22

Net Profit/Loss (Rs. incrore) -2.21 -2.56 -0.22

PRIVATE SECTORThe private sector of the Steel Industry is currently playing an important role inproduction and growth of steel industry in the country. The private sector units consistof both major steel producers on one hand and relatively smaller and medium scaleunits such as Sponge iron plants, Mini Blast Furnace units, Electric Arc Furnaces,Induction Furnaces, Re-rolling Mills, Cold-rolling Mills and Coating units on the other.They not only play an important role in production of primary and secondary steel, butalso contribute substantial value addition in terms of quality, innovation and costeffectiveness. A brief report on activities of some of the major steel companies isfurnished below, based on the input furnished by the respective companies.

TATA STEEL LTD.TATA Steel has an integrated steel plant, with an annual crude steel making capacity of 6.8 million tonne, located at Jamshedpur, Jharkhand.The crude steel production of TATA Steel during the period April-December 2009-10 is 4.86 million tonne which ishigher by 18.6% over the production of 4.105 million tonne last year. The saleable steelproduction was at a higher level during the period April-December 2009-10 (3.717million tonne) compared to the corresponding period last year (3.310 million tonne).As part of the Brownfield expansion project, TATA Steel has commissioned H BlastFurnace in May 2008, Caster #3 in October 2008 at the steel melting shop #1 andupgradation of Hot Strip Mill roughing mill as part of 1.8 million tonne growth plan toreach capacity of 6.8 million tonne. TATA Steel is continuing with its programme of expansion of hot metal and steel making capacity by 3 million tonne to reach 10 milliontonne.

Crude steel capacity as on March 31, 2009: 6.8 million tonne (Jamshedpur works)

Tata Steel has also envisaged massive expansion of its capacities throughvarious greenfield projects at Sarai Kala (Jharkhand), Kalinganagar (Orissa) andBastar (Chhattisgarh).

JSW STEEL LTD .JSW Steel, Vijayanagar Works JSW Steel is a 6.9 Million Tonne Per Annum (MTPA) integrated steel plant, having aprocess route consisting broadly of iron ore beneficiation - pelletisation - sintering - cokemaking - iron making through blast furnace, as well as Corex process which entails

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steel making through the following process route: BOF-continuous casting of slabs - hotstrip rolling - cold rolling mills.JSW Steel has the distinction of being certified ISO-9001:2000 Quality ManagementSystem, ISO-14001:2004 Environment Management System and OHSAS 18001:1999Occupational Health and Safety Management System. The Brownfield expansion plan

of the Vijayanagar plant is in progress and is likely to be completed by 2010, with a totalinstalled capacity of 9.6 MTPA.

JSW Steel, Tarapur and Vasind Works JSW Steel Tarapur and Vasind Works specialise in down-streaming facilities whichinclude: 1.0 MTPA cold rolling, 0.9 MTPA Hot Dip Galvanising (HDG), 0.1 MTPA colour coating, 0.1 MTPA CRCA products and 0.3 MTPA hot rolled plates capacity. JSW Steelhas a distinction of being certified to ISO-9001:2000 Quality Management System.

JINDAL STEEL & POWER LTD.Jindal Steel & Power Limited is one of the fast growing major steel units in the country.Raigarh plant of JSPL has a present capacity of 1.37 MTPA sponge iron plant, 2.40MTPA Steel Melting Shop (SMS), 1.0 MTPA Plant Mill, 2.30 sinter plant, 0.8 MTPAcoke oven and a 330 mega watt captive power plant.

Capacity addition plan at Raigarh

Enhancement of the present steel capacity from 2.4 million tonne to 6.0 MT in a phasedmanner by 2011 will incorporate: 2.0 MT gas based Direct Reduced Iron (DRI) producing gas by coal gasification 4000 cubic metre blast furnace n 3 MT steel melting shop with electric arc

furnace route and thin slab caster. Hot strip mill (compact strip product technology) Cement plant to consume the blast furnace slag. 4X135 MW power plant increasing the capacity to 840 Mega Watt (MW).

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Jindal Steel and Power Ltd. has plans for expansion of its Raigarh plant to a capacity of 6.0 MTPA. It also has plans for two Greenfield projects in Orissa and Jharkhand withproposed capacity of 6.0 MTPA each, in the first phase.

JSPL expanding horizons

Jindal Steel & Power Limited is setting up a 10 MTPA Pellet Plant at Barbil, Orissabased on huge stocks of iron ore fines lying with various Iron Ore Mines in Orissa. Thefirst module of 5 MTPA is undergoing trial runs since January, 2010. This project aimsto conserve precious iron ore reserves of the country by converting unused fines intopellets for usage in DRI production.The Pellet Plant would be using producer gas derived from coal for its energyrequirement to keep its production cost contained and free from fluctuations of petroleum based fuels.The Company has also commenced hot trials of its 0.6 MTPA Wire Rod Mill at Patratu,Jharkhand where work on 1.0 MTPA Bar Mill is progressing fast so as to commissionthis plant by October, 2010. Also the Company is setting up a 6 MTPA Steel Plant at

Patratu.

ESSAR STEEL LTD. (ESL)Essar Steel Ltd., the Indian company of Essar Steel Holdings Limited, is the largeststeel producer in Western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat,and plans to increase this to 8.5 MTPA. The Indian operations also include an 8 MTPAbeneficiation plant at Bailadila, Chattisgarh, which has the world's largest slurry pipelineof 267 km to transport beneficiated iron slurry to the pellet plant, and an 8 MTPA pelletcomplex at Visakhapatnam. The Essar Steel complex at Hazira in Gujarat houses theworld's largest gas-based single location sponge iron plant, with a capacity of 4.6MTPA. The complex also houses the steel plant and the 1.4 MTPA cold rolling complex.The steel complex has a complete infrastructure setup, including a captive port, limeplant and oxygen plant.Essar Steel utilises Hot Briquetted Iron-Direct Reduced Iron (HBI-DRI) technologysupplied by Midrex Technology, USA along with four 150 tonne DC electric arc furnacesimported from Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5million tonne per annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric arcfurnace, 4.6 MTPA continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA coldrolling mill. During the year 2007-08, Essar was awarded costs ISO/TS 16949 andOHSAS 18000 certification.The brownfield expansion project of Essar Steel, at its Hazira complex is currently at anadvanced stage and the first phase (1.6 MTPA) is scheduled to be commissioned inOctober 2010.

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ISPAT INDUSTRIES LTD.Ispat Industries Ltd. (IIL) has set up one of the largest integrated steel plants in theprivate sector in India at Dolvi in Raigad district, Maharashtra, with a capacity tomanufacture 3 million tones per annum of Hot Rolled Steel Coils (HRC). The Dolvicomplex also boasts of an ultra modern blast furnace (set up by a group company IspatMetallics India Limited) capable of producing 2 million tones per annum of hot metal/pigiron, 2 million tonne capacity sinter plant (newly commissioned) and a DRI plant with acapacity of 1.6 MTPA.The integrated steel plant uses the Converter cum Electric Arc Furnace Rout

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