4 Steel Insights, September 2014

COnTEnTs

39 | INTERVIEWRaising the Bar! Tata Elxsi helped Tata Tiscon launch a first-of-its-kind retail-cum-customer experience space.

33 | COVER STORY Power, cement are growth areas for Calderys India Dumping of Chinese refractory materials into India is a key concern area, MD.

44 | CORPORATE JSW acquires Welspun’s stake in Welspun Maxsteel Acquisition part of JSW’s goal to enhance steel production to 40 mtpa in next decade.

31 | COVER STORY Import duty anomaly must be removedGoing forward steel industry will demand quality refractories, Kamal Sarda.

26 | COVER STORY Indian refractory sector is mature & technologically upgraded: Bajoria Best players of world are in India or looking to enter the market.

6 Iron ore royalty rates hiked, supply issues grip industry

10 Steel majors form Indian Steel Association

12 SC verdict on captive coal blocks to impact growth

14 Steel consumption set to improve: Rating agencies

16 Will REIT be a game-changer for Indian realty?

18 MOIL’s `350 crore expansion plan on track

20 Auto sector gears up for festive season24 Coking coal prices inch up in August 37 DeP converter from Siemens

commences operation at Tangshan 38 New steel policy on the anvil 43 Konecranes unveils open winch crane 43 Gujarat NRE Coke net loss at `66.76 cr

in Q145 Jindal Stainless net loss contracts in Q146 SAIL clocks 18% growth in Q1 PAT47 Tata Steel reports sharp decline in Q1

net profit 49 Iron ore handling by major ports at 6.63

mt in Apr-July 50 Railways’ July iron ore handling dips 2%

m-o-m51 Global crude steel production down

0.22% in July m-o-m 52 Price data53 Ferro alloy data 54 Production data

COvER sTORy

Indian refractory sector is mature & technologically upgraded: Bajoria

IFGL Refractories Ltd, manufacturer of specialised refractories and requisite operating systems for the steel industry, offers total solutions for flow control in steel teeming and continuous casting of steel.

The company manufacturers slide gate systems and refractories with the latest know-how from Krosaki Harima Corporation, Japan, a subsidiary of Nippon Steel Corporation. The continuous casting refractories plant set up in technical collaboration with Krosaki Harima Corporation, Japan (then known as Harima Ceramics Corporation) started production in 1993, manufacturing isostatically pressed continuous casting refractories and magnesia carbon tap-hole sleeves.

In 2005, it acquired the Monocon Group, with production facilities in Brazil, China, the UK, the US and

Steel Insights, September 201426

Steel Insights, September 2014 27

COvER sTORy

Excerpts:

What is the current status of the refractory industry in India?

I would put it this way… the refractory industry in India is now very matured. It has really upgraded itself, technology-wise. The best players of the world are now here... Biggies like Vesuvius, RHI, Krosaki... Other large players are exporting to India … for instance, Pohang Refractories which manufacturers from China and Chosun Refractories from South Korea. Other players are looking to enter the Indian market to set up their manufacturing or trading base. The Indian steel industry has really matured and upgraded technology-wise.

What is the most important concern of the refractory industry in India?

The refractory industry anticipated an

increase in steel production. Unfortunately, the refractory industry has expanded but steel production has not done so in a similar manner. Moreover, steel plants are not doing well. Most of them are in the red. So the biggest concern is capacity utilisation and price pressures. If the steel plants are not doing well, refractories will face price pressures.

How is IFGL placed in the current scenario?

The situation at IFGL is not as alarming because of the group’s diversified location. IFGL is not only located in India but Europe and America as well. The European and American steel industry is going steady – so our overseas operations are steady. Of our Indian operations, we export almost 55 percent, which has been helped by the devaluation of the rupee. So that is the scenario at IFGL, compared to other

The refractory industry in India is now very matured. It has really upgraded itself, technology-wise. The best players of the world are

now here... Biggies like Vesuvius, RHI, Krosaki... Other large players are exporting to India … for instance, Pohang Refractories which

manufacturers from China and Chosun Refractories from South Korea. Other players are looking to enter the Indian market to set up their manufacturing or trading base. The Indian steel industry has really

matured and upgraded technology-wise.

Taiwan, for tundish spraying mass, refractory darts, monolithic lances, robotics for electric arc furnaces (EAF), ladle and tundish lining maintenance and monolithics for EAF. In 2006, the Monocon Group acquired Goricon Metallurgical Services Ltd, Wales (UK) and Goricon LLC, Ohio (US) engaged in manufacture of darts, lances, ladle powders etc used by the steel industry. In 2008, the Hoffman Group, with manufacturing facilities in Germany and Czech Republic, was acquired to consolidate position in foundry ceramics – casting filters, feeders, SiC chill plates, pouring systems and monoblock stoppers, high grade fire-proof refractory shapes and drawing tools and tread guides.

In 2010, IFGL acquired EI Ceramics LLC and CUSC International Limited (CUSC), both Cincinnati, Ohio-based companies engaged in the manufacture of isostatically pressed continuous casting refractories. IFGL’s subsidiary is IFGL Exports Limited, which is also engaged in the manufacture of continuous casting refractories in new areas of the Kandla special economic zone (SEZ) in Gujarat. IFGL now has manufacturing facilities in China, Czech Republic, Germany, India, the UK and US. In 2013-14, the company reported `777.64 crore of consolidated income from operations on a consolidated net profit of `64.01 crore, representing considerable growth in performance.

Pradeep Bajoria, Managing Director, IFGL Refractories, tells Tamajit Pain of Steel Insights how the refractory industry in India has matured over time and upgraded itself technologically. The best players of the world have already entered or are looking to penetrate the Indian market in a bid to set up a manufacturing or trading base.

Steel Insights, September 2014 31

COvER sTORy

Excerpts:

How has the refractory industry been faring against the backdrop of the fact that the steel, cement and other user-industries have been performing poorly over the last few years? The industry has been doing fairly well of late, essentially because Indian refractory-makers have also been exporting a great deal over the last few years. I would say… the industry has been doing reasonably well.

How big is the refractory industry in India and what is its growth rate?

At IFGL, over the last five years, we have seen a compound annual growth rate of 15-16 percent. I think, most of the large

refractory companies have also registered similar growth. Vesuvius India, Orient Refractories etc have also grown quite well.

The refractory industry for steel and non-steel together has a turnover of around $1 billion. Indian Refractory Makers Association (IRMA) has industry representation of close to 70 percent of the total refractory industry.

What are the key issues plaguing the sector at present?

Globally, there is an oversupply scenario in refractory manufacturing. Supply is more than demand because, apart from India, China and a few other countries, Europe

and the US have not grown to that extent in steel manufacturing. So, there is a challenge of imports of refractories into India.

And one key reason for this is that the duty on imported finished refractory is almost at par with refractory raw materials. The government has not given any sort of protection regarding this. IRMA has represented to the government but, I think, the steel industry also has to support this representation.

Could you elaborate further on the duty structure?

If we import finished refractory, the customs duty is around 5 percent. But if the refractory- makers import refractory raw materials, then the duty is 5-7.5 percent, which means, the customs duty on refractory raw material duty is more than that on the finished refractory.

What about the dumping aspects from China?

I do not think there are no such major issues here. Apart from magnesia products, imports from China are not much. Magnesia products are imported from China because India does not have a good quality of this particular raw material. Only few players manufacture magnesia carbon bricks in India. Some refractory manufacturers have magnesia carbon brick manufacturing plants in China -- like Vesuvius, RHI, Tata Krosaki Refractories, OCL etc. Also, there are players in India who import from China. Thus, dumping is not a big issue.

How can the challenges be resolved?

First, the duty anomaly must be corrected to protect Indian refractory makers. The duty on finished refractory should be at least same, if not higher, than that on imported refractory raw materials, so that the Indian manufacturers are protected.

Secondly, the steel industry has to grow faster, the new projects in the pipeline have to be completed on time, and government expenditure on infrastructure has to increase substantially and quickly. This is essential because around 75 percent of the volume of refractories manufactured go into the steel industry.

Import duty anomaly must be removed

The refractory industry is inextricably linked to the iron and steel sector, which consumes 75 percent of its production.

There are more than 100 players in this space in India but only around 14 are major and 33 medium-sized. The slump in steel markets in the US and Europe has led to a global scenario of oversupply in refractories, making domestic producers contend with increased import

volumes. Domestic production has not grown much during the last couple of years, dropping to around 1.28 mt in 2012-13 against 1.42 mt in 2011-12. Though production decreased, the industry’s turnover increased due to demand for more specialised items. Moreover, the import duty on the finished products is almost on par with that on raw materials, rendering domestic players even more uncompetitive. However, with the passage of time, the industry has matured and has been doing reasonably well and the presence of leading global players will only help competition to hot up in relation to supplying quality refractory material, Kamal Sarda, Committee Member and ex-President, Indian Refractory Makers Association (IRMA) and CEO, IFGL Exports Limited, tells Tamajit Pain and Madhumita Mookerji of Steel Insights.

Steel Insights, September 2014 33

COvER sTORy

Calderys India Refractories Limited can be traced back to the Associated Cement Companies when the latter’s refractory

unit was set up in 1951. ACC Refractories became ACE Refractories in 2005. In 2007, ACE Refractories became a member of the Calderys Group and the next year the company was rechristened ACE Calderys Limited. Since May 2012, ACE Calderys is known as Calderys Refractories India Limited. The leader in monolithic refractories, with annual revenues

of around `500 crore, the company has capacities of 2 lakh million tons per annum manufactured across its two plants located at Katni in Madhya Pradesh and Nagpur, Maharashtra. However, dumping of Chinese refractory materials into India is a key concern area. So is the trend of offering specification-based solutions to end-user plants. But it is gearing up to face the challenges of the future through various measures. One of these is a series of ‘Calde Serve’ service centres that are being rolled out across the country to assist customers with refractory health audit and shutdown planning and execution, amongst other facilities, Hakimuddin Ali, Managing Director, Calderys India Refractories Limited, tells Madhumita Mookerji of Steel Insights in an interview.

Power, cement are growth areas for Calderys India

Excerpts:

What are the challenges being faced at present in the refractory industry in India?

Interestingly, the current refractory industry is clearly divided into two schools of thoughts.

One group believes in working only on specifications of the material. Matching and supplying materials as per a customers’ specifications is this group’s primary objective whereas the other category (few in numbers!) believe in working on providing solutions to customers.

The biggest concern of working only on the specifications aspects is the specifications themselves. We have seen that in most cases, the parameters are over-specified with respect to the application area. This is an age-old method without any test standards or benchmarks and is based on raw materials which are not available in India.

However, many of India’s refractory manufacturers are ready with the so-called equivalent product against any specification without even understanding the derivatives of the specifications! Eventually, problems

are faced by the customers since, in most of the cases, products do not perform and the cost performance ratio eventually becomes very high.

Dumping of Chinese refractory materials is another issue that is resulting in a high rate of non-performance of production equipment in the present scenario.

Moreover, the transit time from China to Indian customers after port clearances is high and most of the time materials are installed at the customer’s end when their shelf life is almost lost. Eventually, refractory performance is hampered with the usage of Chinese materials.

How is Calderys addressing such issues?

Calderys India is closely working with many of its valued customers on performance- based solutions and striving to come out from specification-based supplies. Creating awareness on the above amongst customers is the main challenge which we are trying to solve through our Calde Serve initiative. Our ultimate aim is to provide value for money to customers.

What other strategies is Calderys India Refractories Limited’ adopting to serve its user-industries?

Our focus has always been on giving the best refractory solutions to our customers which, in turn, create value for them. We strongly believe that the large and diverse Indian manufacturing sectors, especially sponge iron, foundry, cement and power, require proper care of their refractory health to reduce downtime and increase productivity and predictability of the production equipment.

Most of the end-customers have no access to proper refractory services in terms of selection and application of material as they are not equipped with the requisite expertise.

They are dependent on old and outdated specification-based procurement of refractory materials and local unqualified contractors for application of the same which is always expensive in terms of the cost-performance ratio.

Against this in backdrop, we at Calderys, have launched Calde Serve to provide

Steel Insights, September 2014 39

Raising the bar!When Tata Tiscon, a premium rebar brand from Tata Steel, wanted

to improve home-building and construction practices in the country, it turned to Tata Elxsi, a design company that blends technology, creativity and engineering to help customers transform ideas into leading products and solutions. Part of the $100-billion Tata Group, Tata Elxsi helped Tata Tiscon launch a “first- of- its-kind” retail-cum-customer experience space, the Tata Tiscon Experience Zone. The aim was not only to up the glamour quotient of a low-involvement category like steel pipes but to also allow the product to establish a strong brand connect with builders, home-owners and other stakeholders, Narendra Ghate, Chief Designer, Service Design, Tata Elxsi, tells Tamajit Pain of Steel Insights.

Excerpts:

Kindly explain how service design – a new field in India, impacts modern businesses? A competitive edge or differentiator is the key to the success in businesses which is cluttered and highly competitive. In today’s competitive world of business, what separates competition from the industry leader is really the service that comes with the product offering, ie, the buyer experience.

In order to provide a holistic experience, more and more Indian industries are turning towards service design. Simply put, service design is the activity of planning and organising people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and buyer. A well-designed and efficiently delivered buyer experiences enables business success for the organisation. The design of the store can be used to simplify and enhance service value by creating meaningful interactions, spaces and products.

InTERvIEw

Tear along the dotted lineTear along the dotted line

58 Steel Insights, September 2014