4 Steel Insights, June 2014

COnTEnTs

32 | INTERVIEW Ferro manganese demand to remain strong Astha Ferrotech plans to tap international market, produce other speciality alloys to expand base.

28 | INTERVIEW We continue to grow in a difficult marketTata Steel’s T V Narendran has set the ball rolling for future growth of the company.

34 | COVER STORY A green plant that grows steel!RSP is gearing to enhance capacity, product and market segments even as it gives thrust to CSR.

12 | FEATuRE What will be the Modi operandi for steel? India Inc, world expect Modi govt to catapult the economy on to the growth path.

6 | SPECIAL FEATuREIndia needs to rush to plug iron ore loopholes Odisha govt expedites mine leases; Tata, SAIL mines reopen.

10 Narendra Singh Tomar takes charge as new steel minister

16 Dull trend in coking coal market in May

20 Car sales move into fast lane in May

24 Realty sector expected to pick up in H2

26 Remembering the Man of Steel

46 Solutions for increased usage of DRI in electric arc furnace

52 SMS Siemag to modernise CSP caster at JSW Steel

53 Tata Steel, L&T IDPL divest Dhamra Port stake to Adani Ports

54 JSW Steel Q4 net up 63.16% to `482.83 crore

56 JSPLQ4netprofitdown47%

57 SAILbeginsfiscalwithdouble-digitgrowthin sales

58 Gates conducts technology week from May 14-15

59 Iron ore handling by major ports down 16.79% in April

60 Railways’ iron ore handling falls19.78% m-o-m in April

61 Global crude steel output down 3.33% in Apr m-o-m

62 Steel PSU stake sale proposal generates buzz

63 Price data

64 Production data

66 Ferro alloy data

68 Iron ore data

6 Steel Insights, June 2014

India needs to rush to plug iron ore loopholes

Steel Insights Bureau

India’s new government has to tackle a crisis brewing in the iron ore sector. Just a few days before the new government

took oath of office, India’s Supreme Court ordered almost half of the iron ore mines in India’s top producing province, Odisha, to shut down because of the local government’s failure to renew decades-old mine leases.

The Supreme Court directed closure of 26 leases whose agreements had expired and directed the state to decide on reopening them within six months. The ban has dealt a body blow to expectations of the iron ore industry worldwide and particularly to the perception that India would regain its position as a leading ore exporter.

Odisha produced more than 70 million tons (mt) of ore in the last fiscal from 56 operating mines. Now, the court ruling has shut down 26 of them, which translates into a cut of about 40 mt of production.

Analysts said the move puts a hurdle in the plan of new Indian Prime Minister Narendra Modi, who has often said he would like the country to export steel and not iron ore.

The ruling has sent all those connected with the sector into a tizzy. The verdict will force Indian steel-makers to cut output or import expensive iron ore. Among the companies that rely on ore from Odisha are Tata Steel Ltd and Jindal Steel and Power Ltd. Most of the mining in Odisha is done by state-owned Odisha Mining Corp. Jindal has already purchased about 12,000 tons of low-quality iron ore from Goa, according to available government data, a first in years. Many sponge iron plants in the neighbouring state of Jharkhand, too, are dependent on the Odisha ore.

Goa, which ranks high among the iron-ore producing states, has traditionally exported most of its iron ore to China since Indian steel mills prefer higher-quality ore.

The high court had earlier imposed mining bans in Karnataka and Goa to halt irregularities.

In April, the Goa ban, imposed in September 2012, had been lifted, but with an annual cap of 20 million tons. With a fresh ban in Odisha, supply is under further pressure. The move is unlikely to lift global iron ore prices given the limited flows from Odisha.

The Odisha state government is now working overtime to renew the licenses of the affected mines within the court’s stipulated six-month period. It has assured miners that within the next two months, it would be able to renew licenses of 10 of the 26 mines that were ordered shut by the Supreme Court. Because of all the earlier bans, India has already slipped to 10th position on the list of leading global iron ore exporters from its previous No.3 position.

A few days ago, industry lobbying group Associated Chambers of Commerce and Industry of India (ASSOCHAM) dashed off a letter to the finance ministry asking it to consider ordering the government-owned National Mineral Development Corporation (NMDC) to stop exporting iron ore to Japan and Korea. As per an earlier contract, NMDC exports about 2.5 mt to these two nations. When the domestic Indian steel industry is struggling to meet its requirement

sPECIAL fEATuRE

12 Steel Insights, June 2014

Corroborating this view, JSW Steel said in a statement: “A stable and new government at the Centre will have a sizeable task to over-ride structural impediments, garner business confidence and restructure fiscal space to support investment for securing and sustaining economic growth recovery.”

Within India Inc, the common refrain is a thrust on infrastructure, welded with right policy measures.

Trade organisations as well as the steel ministry have put forth a slew of suggestions, some of them long-standing, to the new government to boost production.

The steel ministry’s suggestions include the following:

� Diluting stakes in public sector units to 51 percent; and

� Ensuring raw material security to steel-makers;

The steel ministry made the presentation to the new Modi administration’s Cabinet Secretary recently where it made these recommendations.

The logic of bringing down the government’s ownership in steel companies was to re-utilise the monies obtained from the sale of the government’s shares for development.

Underscoring the need for policy measures, T V Narendran, Managing Director, India & South East Asia, Tata Steel, said: ”… We look forward to clarity on policy going forward and a commitment to strong action that will help the steel and mining industry to play its part with the government in enabling India’s all-round growth.”

Elaborating further, C S Verma, Chairman, CII National Committee on Steel and Steel Authority of India (SAIL), said: “Though there are adequate resources of iron ore and coal available in the country, ironically, ensuring uninterrupted availability of these two key raw materials for the industry remains a challenge.”

He further stressed that the key focus areas for the new government should be ensuring availability of iron ore and coal mines to existing steel plants, improving viability of the alloys and stainless steel sector, the impact of the Comprehensive Economic Partnership Agreements with Japan and Korea on the steel industry and rationalising the railway freight structure so that there is no cross-subsidisation.

What will be the Modi operandi for steel?Will minimum governance be able to bring maximum shine back to steel? The industry and its user-segments are waiting for the right policy measures from the new NDA dispensation

Madhumita Mookerji

The much-anticipated new government has assumed office and the Narendra Modi-led dispensation,

needless to say, is expected to clean up the mess and catapult the economy on to the growth path.

Will “minimum government” be able to bring maximum shine back to steel?

The steel industry and end-user sectors like automobiles and real estate & construction are waiting for the positive signals, which would see the emergence of some green shoots, since, the last two years were regarded as especially barren, the pitch queered by a runaway inflation, rate hikes, a depreciating rupee and a widening current account deficit.

Banks were saddled with a huge baggage of non-performing assets. Infrastructure and

steel companies went into debt restructuring mode, gasping for survival against the backdrop of stalled projects and a slump in demand.

But, at the very outset, in his second key meeting with his Cabinet colleagues on May 29, 2014, Prime Minister Modi, in his 10-point priorities agenda, sent some assuring signals to India Inc, underlining that the stress will be on infrastructure and investment reforms, the economy’s concerns, implementation of policies in a time-bound manner and stability and sustainability in government policies.

However, no matter what, it is a tough ask for Modi and his ministers, requiring a high run rate of cohesive strategies to kick-start the steel sector if the government has to achieve its target of 300 million tons (mt) of steel production by 2025 from the present level of around 100 mtpa.

fEATuRE

28 Steel Insights, June 2014

InTERvIEw

Excerpts:

For the financial year 2103-14, what would you pick as the highlights for Tata Steel India in terms of both achievements and challenges?

The economic downturn has slowed down businesses in India, particularly in the case of auto and construction industries. But Tata Steel India has, in a difficult market, managed to add a million tons to its capacity in 2013-14, growing by 12-13 percent. We not only gained in terms of market share, but we also increased our volumes, protected our margins (compared to last year), and entered new segments.

Given the tough market conditions, where did the growth come from?

The growth has come from both existing and new products. We have grown our share in the auto industry from last year’s 39-40 percent to 43 percent this year. We reached out to almost 6,000 SME customers, a segment that has traditionally been under-served by steel companies. We have built a network of over 40 distributors to ensure that SMEs get the steel they want. The effort has paid rich dividends as we have sold a significant amount to the SMEs, which contributed to the growth.

In terms of customer-centricity, we have probably done more work in the market than most steel companies in the world. Few companies have achieved the level of innovative work we have done, the new routes we have developed and the engagement we have with our customers.

The weaker rupee helped as imports shrank and we were able to step into that space. Over the last year, India has turned from being a net importer to a net exporter of steel, but given the lucrative domestic market, we decided not to focus on exports.

Tell us how the business has grown in South East Asia in the last one year.

Tata Steel Thailand, which is largely focused on the domestic market, has struggled over the past four years due to operational, internal and investments related issues, but this year we expect it to turn around.

NatSteel, which is based in Singapore, has joint ventures and downstream units in China, Vietnam and Australia. It is probably our only overseas business that has never made a loss. The business is self-sufficient and does not need cash infusion for growth. The Australian business, where we were losing money after the 2008 crisis, is being

restructured. We exited the Philippines business and are setting up downstream centres in Indonesia and Malaysia.

For the business in China, which has grown significantly, we use the existing assets and leverage the equity we have in the market to sell almost 150,000 tons a month and 2 million tons a year. China is a thin-margin and quality-conscious market, so we have to operate a nimble business that offers good quality.

The Kalinganagar project in Odisha, India, has been one of your biggest projects in recent times. What does it mean for Tata Steel?

We are looking at commissioning the project in the last quarter of 2015. The first phase of the project will create capacity of 3 million tons at an investment of over `250 billion. It’s a massive financial commitment and we need to start production soon.

‘We continue to grow in a difficult market’

Within months of taking over as Managing Director of Tata Steel (India and South East Asia), TV Narendran has set the ball rolling as far as future growth for the company is concerned.

He talks to Tata Review on regulations, the challenges his company faced in the last year, growth prospects for next year, and his focus on making Tata Steel more confident, creative, and collaborative.

34 Steel Insights, June 2014

COvER sTORy

Rourkela Steel Plant (RSP) from the Maharatna Company Steel Authority of India (SAIL) stable is gearing up to enhance its capacity to 10.8

million tons under SAIL’s Vision 2025 programme. RSP, which also boasts of India’s largest blast furnace Durga, is focusing on enhancing product and entering newer market segments. It is also betting big on the increase in the consumption of white goods and automobiles, which, in turn, will boost its demand for flat products.

But, steel apart, RSP is also focused on bettering the lives of its employees through various avenues that include a thrust on environment, healthcare, education and culture and various other CSR activities. Steel Insights’ Tamajit Pain caught up with RSP CEO G S Prasad, the person responsible for changing the face of the plant and its immediate surroundings and ensuring that there is a little bit of SAIL in everyone’s life.

A green plant that grows steel!

A green plant that grows steel!

Steel Insights, June 2014 35

COvER sTORy

Excerpts:

Let’s start from the days when you were graduating. What was it like then for a young man taking his first stride into the professional circuit?

I did my B.Sc in mechanical engineering from NIT (the erstwhile REC), Rourkela in 1976. Soon after I got a job in Steel Authority of India Limited (SAIL) and joined as junior manager in the plate mill of Bhilai Steel Plant in March 1977. I spent my childhood as well as youth in the steel township of Rourkela, which is part of SAIL.

Hence, a steel plant or the steel industry was not new for me. In fact, the environment in the steel city had a deep impact on my life and inspired me to take up engineering. I was extremely excited at getting an opportunity to work in a mega steel plant like Bhilai Steel Plant. Being a mechanical engineer, the huge machineries of the plant kind of beckoned me to take me to their fold.

Could you tell us about your growing up years?

As I have already said, I spent my formative years in Rourkela. I used to be quite good in studies and had secured position amongst the ‘Best Ten’ in the HSC examination of Odisha Board.

When I recall my life in Rourkela in those times, I remember the greenery, the hills and rivers which were beautiful. Those were the days when we were happy with very small things. I have many memories of playing cricket in the field. I also remember that those were the days when football was very popular and we had many good footballers. The memories of Durga Puja and Saraswati Puja are very fresh in my mind which I used to enjoy a lot. Those were beautiful days which were spent listening to orchestras and watching movies. I have seen the growth of Rourkela with movie halls coming up, shopping complexes being opened and Ispat Stadium being set up. The Ispat Market was opened in 1965-66 and cricket was an upcoming sport thereby affecting football. There were badminton

players like Dipu Ghosh and Chuni Goswami whom I used to admire a lot.

Briefly tell us about your career before taking over the helm of affairs at Rourkela Steel Plant.

As I said I commenced my career at the plate mill of Bhilai Steel Plant where I worked for around 30 years. In June 2006, I was promoted as general manager and posted to Rourkela Steel Plant where I took charge as GM (plate mill, special plate plant, roll shop and pipe plants). In October 2009 I took over the responsibility of GM Incharge (Services) at RSP.

In April 2010, I was posted as Executive Director (Works) at Durgapur Steel Plant. After a year I moved to the Centre for Engineering and Technology, Ranchi as ED (CET). From there I came to RSP as CEO and took over the responsibility on October 1, 2011.

Apart from hard work, what are the factors that helped you achieve success in life? Do you consider destiny as a driving force behind success?

I have always believed in the concept of

‘karma’. If you work hard with single minded devotion and perseverance success will come searching for you. Destiny is the dividend of dedication. The more dedicated you are, the better is your destiny. I have always tried to give my 100 percent to anything I do, never gave up anything for fear of the amount of effort it would need. I am reminded of Mahadevi Verma’s saying,“Jo bhi karo man se karo” (Whatever you do, do so with passion and you will be successful). Yes, I have received a lot of goodwill and good wishes from my family and friends which, you can say, catalysed my success.

What has been the most crucial and satisfying project you have undertaken in your service life?

As you know, Rourkela Steel Plant is implementing a massive modernisation and expansion project at an expenditure of about `11, 800 crore. This futuristic project aims at increasing the capacity of the steel plant to more than double. The hot metal capacity will go up from the current level of 2 million tons (mtpa) to 4.5 mtpa, the crude steel making capacity will then increase from the

New Sinter Unit-III

Tear along the dotted lineTear along the dotted line

70 Steel Insights, June 2014